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METROCALL SNAGS MARKETING CONTRACT WITH AOL

Metrocall Inc. announced a two-year interactive marketing agreement with America Online, by far the country’s largest Internet online service with more than 12 million members.

Under the terms of the agreement, AOL will establish links to Metrocall’s Web site throughout the AOL service area and on its aol.com consumer site. At Metrocall’s Web site, users can send text or numeric messages to Metrocall subscribers as well as buy pagers, paging service and paging accessories.

In return, Metrocall will send AOL guaranteed payments over the length of the agreement, as well as possible additional payments based on performance criteria listed in the agreement.

“This marketing alliance is evidence of our confidence in the online medium as a successful distribution channel and makes the strongest possible connection to the online world for Metrocall,” said William Collins III, Metrocall president and chief executive officer. “The opportunity to exclusively market Metrocall pagers and wireless messaging services to AOL’s more than 12 million members is a momentous accomplishment for our company.”

This is the latest in a string of unique marketing strategies for the company. Most recently, Metrocall announced a marketing agreement with Washington Gas under which Metrocall will advertise its paging products and services to the utility’s customers, sending promotional information with their monthly billing statements.

But analysts see the marketing advantages of these agreements as ancillary to the primary benefit.

“The marketing is just gravy,” said Darryl Sterling, analyst at the Yankee Group. “They’re developing relationships with these companies to move later to other areas … Every single thing Metrocall has done this spring has had ulterior ramifications.”

For instance, building a relationship with Washington Gas opens the door for Metrocall to provide the utility wireless airtime for telemetry applications such as wireless metering reading. It also may allow Metrocall to integrate its network with that of Washington Gas, serving as a backup transmission system.

While the AOL deal contains significant marketing advantages, it also establishes a rapport between the two that could lead to more important agreements down the line.

“AOL can filter content off the Internet to paging devices,” Sterling said. “That’s putting Metrocall in a position to compete directly with PageNet for information services.”

Furthermore, Tom Matthews, senior vice president of corporate and business development at Metrocall, said the customers gained from AOL are the type of techno-savvy subscribers the company hopes will flock to its eventual two-way service.

“The customers AOL has fit the profile of users who want high-impact Internet content,” he said. “We really believe of the kinds of customers signed up through the alliance, 50 percent will be alphanumeric subscribers looking for advanced services and will be early adopters for our two-way service. This creates an opportunity to migrate customers from low-end one way to high-end two-way services.”

Key to these deals was an agreement Metrocall signed with Motorola Inc. earlier in the spring to streamline the pager inventory process. Under the agreement, Motorola will provide pagers directly to Metrocall’s retailers and strategic alliance partners.

The deal “simplifies the sales process so other people can sell it,” Sterling said. “The hardest part is getting them the product.”

Once that deal was secured and put into place, Motorola was free to pursue strategic alliances with entities such as AOL. “It shows that paging companies are focusing on their core business, which is providing service,” Sterling said. Metrocall “seems to have an extremely advanced and forward thinking operation.”

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