eBookers drops AOL deal in online ad cutbacks

The company is expected to concentrate instead on non-internet based adverts and marketing, in a bid to overturn the perceived failure of its deal with AOL Europe to advertise on its websites.

The announcement that eBookers, spun out of London based travel firm Flightbookers, was scaling back its internet advertising operations came on Monday as the firm announced first quarter results.

However, the first casualty of the announcement looks set to be the AOL deal, worth an estimated 15m over two years, and signed by the two companies in February last year, as eBookers aims to enter profitability by the first quarter of 2002.

The deal, coming before the substantial downturn in the internet advertising sector, was widely praised at the time as an example of eBookers cementing its international reach, but is now seen by eBookers as an expensive means of marketing its service.

Nobody from AOL was available to comment, but Dinesh Dhamija, chief executive of eBookers, said he wanted the company to take a less internet-based approach to its marketing, to take them closer to profitability.

"I come from the offline world where the costs of marketing are cheaper and I know it works,” argued Dhamija. “Get the customers offline and then give them incentives to buy online - that is how it works."

The announcement comes on the back of eBookers' results, which showed the firm enjoyed a 20% increase in bookings during Q1 - traditionally a slow time for the sector - and that turnover had risen to 40.1m during that same period.