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United Online’s mission is to create value by delivering better ways for people and businesses to connect through value-based communications, eCommerce, loyalty, and social media.
United Online is a provider of Internet-related consumer subscription products and services. The company operates three reportable business segments:
- Communications - Internet access services and devices, including dial-up, mobile broadband, DSL, email, Internet security, and web hosting.
- Commerce & Loyalty - Loyalty marketing service, shopping through online portals, apps, and browser extensions.
- Social Media - Social networking services and products.
In June 1995 Charles Ardai, SVP of investment firm D.E. Shaw, established a subsidiary called Juno Online Services. It would provide free e-mail, which Ardai believed was a powerful service to build a business around. Revenue would be generated from advertisers placing ads and collecting consumer information. Juno launched with 15 sponsoring advertisers, including Land’s End and Snapple.
1997 saw the introduction of another Internet services company, NetZero. In 1998 the firm began offering free, ad-supported services. Unlike Juno, it used a proprietary technology to deliver ads to subscribers called zCast. The feature gathered much more specific information about subscribers than Juno’s, including geographic location and personal interests.
The firms became intense competitors, ultimately introducing paid subscription options. Both also went public in 1999. However, by the end of the decade, like many free Internet service providers, they were posting losses. Consequently, they decided their best option was to merge in 2001, forming United Online. In 2016, United Online was acquired by investment bank B. Riley Financial.
Business model of United Online
United Online has a mass market business model, with no significant differentiation between customer segments. The company targets its offering at all consumers seeking Internet services.
United Online offers two primary value propositions: accessibility and brand/status.
The company creates accessibility by providing a wide variety of options. It offers a broad range of services, including home wireless broadband, DSL service plans, four types of mobile broadband plans, and four types of dial-up plans. This large set of options helps it attract more customers.
The company has established a strong brand due to its success. It has over 100 million registered accounts and serves billions of impressions per month. It has also won a number of honors, including the Association for Corporate Growth (ACG) Award in the Global Company category (2013).
United Online’s main channel is its website. The company promotes its offering through its social media pages, sponsorships, and television/online/print/outdoor advertising.
United Online’s customer relationship is primarily of a self-service nature. Customers utilize its services while having limited interaction with employees. That said, there is a personal assistance component in the form of phone and e-mail support.
United Online’s business model entails providing Internet-related services to its customers.
United Online relies on third-party software suppliers for some components of its platforms. It also licenses a number of applications for billing, advertising, customer support, and other operations.
United Online operates the Refer-a-Friend program, through which customers are invited to refer their associates to its services. Leads that result in a purchase earn a commission for the party.
United Online’s main resources are its proprietary software platforms, which serve over 100 million people.
It depends on its human resources in the form of technology employees to maintain and update the platforms and customer service staff to provide support.
United Online has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions.
Its biggest cost driver is cost of revenues, a variable expense that includes data center, telecommunications, and personnel costs. Other major drivers are in the areas of administration, sales/marketing, and technology/development, all fixed costs.
United Online has three revenue streams:
- Service Revenues – Revenues generated from sales of subscriptions to consumers, who are billed in advance for the subscription term.
- Product Revenues – Revenues generated from the sale of mobile broadband devices, in addition to associated shipping and handling fees.
- Advertising/Other Revenues – Revenues generated from fees charged to companies to advertise their offerings on the company’s platforms. Specific ad services include search, display, e-mail, and text-link opportunities.
info: Jeff Goldstein earned a B.A. in Economics at UCLA Berkeley, a J.D. at Columbia University, and an MBA at INSEAD. He previously served as President of PriceGrabber and BGT Capital Advisors, and held senior roles at IAC, Modern Luxury Media, and Experian Interactive.
info: Edward Zinser previously served as CFO of Boingo Wireless and Chromium Graphics, EVP and CFO of THQ and Vivendi Universal Games, President and Chief Operating Officer of Styleclick, and SVP and CFO of Internet Shopping Network.
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