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P&G inks bundled deal with Viacom

Jun 4, 2001  •  Post A Comment

Viacom Plus, Viacom’s cross-media sales and marketing unit, and Procter & Gamble, the Cincinnati-based worldwide consumer-products company with more than 300 brands, have reached a $300 million marketing-partnership deal.
The deal, the largest of its kind to date, signals a new era in media advertising in which a CPM (cost-per-thousand)-based system is eventually supplanted by an integrated marketing one whereby media conglomerates such as Viacom, AOL Time Warner, Disney and News Corp. sell “bundled” media across a variety of platforms, including, in some cases, radio and billboards, as well as print and TV. By comparison, P&G last year spent approximately $1.5 billion in total for advertising, according to media reports.
The P&G deal encompasses a dozen Viacom television properties, from MTV to TV Land, and includes BET, CBS, UPN, King World Productions and Comedy Central among the players. The deal’s “base” is for one year, according to Donna Salvatore, chief executive officer of MediaVest U.S.A., P&G’s broadcast agency, but the “intention is to expand beyond that.”
The next largest deal of its kind, according to Ms. Salvatore, was a Viacom Plus deal for $50 million. That deal was with Fidelity Investments, according to an informed source.
The P&G deal also presages additional megadeals, including cross-platform deals between at least one major automaker and one major beverage company and one or more of the media giants.
The next megadeal is likely to involve an automaker, according to Christopher Dixon, global sector coordinator and media analyst for UBS Warburg. Coca-Cola, for one, understands the new bundled cross-platform paradigm and is a “natural” for the concept, he added.
Procter & Gamble’s cross-platform Viacom buy is “very significant” as a place marker in a changing marketplace, Mr. Dixon said. P&G “always sets the agenda” in television, he added, recalling such historic TV moves as mandating the move to video from 35mm film and calling for product demos in 30-second spots.
Announcement of the Viacom-P&G deal comes after more than four months of complex negotiations in which Viacom’s Mel Karmazin played a direct role and was a “major player,” according to sources who were confirmed by Ms. Salvatore. Mr. Karmazin and Bob Wehling, global director of marketing for P&G, “have known each other for years,” she said. “Bob told me they sat down years ago and said, `We’ve got these two major companies. It seems like there should be ways to do business that really utilize the full assets of both of them put together.”’
MediaVest, the successor company to Benton & Bowles, has a relationship with P&G that goes back decades, and the agency manages such P&G TV properties as “The People’s Choice Awards,” which is now expected to get a cross-platform extension as part of the Viacom deal, and the veteran daytime soaps, “Guiding Light” and “As the World Turns.”
While occupying “real estate” is one important component of the deal, it’s not the only one. P&G will now have access to MTV’s research about its teen audience, for example, and it will have “primary sponsor” opportunities across a wide range of Viacom media events, from big-ticket movies to concert tours and sweepstakes.
The deal comes even as agency and network sources continue to predict a slow start to upfront. “This deal could not have existed in the upfront mentality,” said one agency source, who emphasized that while it comes at the verge of upfront negotiations, the deal should be regarded as separate from the annual advertising ritual. This was Ms. Salvatore’s contention, as well. “This was not a deal that was driven by cost [per thousand],” she said, adding that it was “absolutely not the case” that discounts played a part in it.
The deal does, however, augur the day when as much as 40 percent of all media advertising deals will have a cross-platform underpinning, and media mix, programming possibilities and promotion and marketing all will play a part.
The Viacom properties in the deal are CBS Television Network, MTV, MTV2, VH1, Nickelodeon/Nick at Nite, CMT, BET, UPN, TV Land, Paramount Television, King World Productions and Comedy Central.
“The agreement gives Viacom an expanded relationship with P&G and a media investment otherwise unattainable through regular and segmented upfront selling,” said Mr. Karmazin, president and chief operating officer of Viacom, in a statement.
Viacom Plus, founded in 1998, was formerly known as CBS Plus. The unit has done 19 deals to date.