Disney: Cross-Platform Deals Are Alive and Well

Apr 18, 2005  •  Post A Comment

Viacom’s proposal some weeks back to split its television assets into two separate companies-one encompassing cable, the other its broadcast network business-spurred critics to declare that major companywide TV advertising deals were officially dead.

Almost immediately Viacom’s main competitor, The Walt Disney Co., vehemently countered the diagnosis, asserting that sales from big multimedia advertising deals-so-called cross-platform media deals through which an ad buy might include a broadcast network, cable networks, local TV stations, outdoor, Internet and radio-are alive, well and growing.

“I felt that our group was being painted with the same brush and that is what I really disagreed with,” said Bill Bund, senior VP of integrated sales for Disney-ABC Unlimited, Walt Disney Co.’s cross-platform selling group. “Because of time pressures at ad agencies today, these [selling] groups are more important. It’s still one-stop shopping for advertisers.”

Here’s the evidence: Disney-ABC Unlimited has continued to grow and revenue is currently up 33 percent versus a year ago, Mr. Bund said. ABC penned 35 deals for the 2004-05 broadcast season, up 21 percent from the year before. In 2003-04, ABC did 29 deals, up 32 percent from the previous season. Those deals included Home Depot, food supplement company EAS, Marshall’s department stores, Toys R Us and the U.S. Treasury.

Though Mr. Bund wouldn’t go into detail, media executives said Disney-ABC Unlimited pulls in about $350 million to $400 million in annual advertising sales. Viacom’s Viacom Plus group does about the same. Time Warner inks roughly $100 million in cross-platform advertising deals, media buying and selling executives said.

Cross-platform media revenue is still a sliver of the billions that media companies post in total advertising sales and hasn’t lived up to its original promise. Early on, growing media conglomerates looked to cross-platform sales as a way to justify big acquisition prices for media businesses. Hoarding media assets was viewed as another way to gain financial clout.

Creative Options

By offering advertisers not only one-stop shopping but creative and promotional executions for their brands, media sellers believed they could charge premium prices for these deals. Originally, media companies believed such big revenue could be generated by cross-platform sales that that the need for upfront sales periods could be eliminated.

Instead, a more modest business has grown, with deals averaging between $5 million and $20 million. Mr. Bund said no two cross-platform deals are alike, and at no time does Disney-ABC Unlimited try to force advertisers to buy certain Walt Disney media assets.

At the same time managers from Disney’s network, cable, syndication, TV station, radio, print and Internet sales divisions are never pressured into joining a proposed cross-media deal.

“We have never had to twist an arm,” Mr. Bund said. ABC said it stumbled onto “diplomacy” with its divisions while other media conglomerates may have taken a harder approach with their media businesses.

As evidence of this, Disney-ABC properties sometimes opt out of participating in deals. For instance, when Disney-ABC Unlimited struck a groundbreaking $1 billion media deal with media agency OMD USA,

cable network E! decided it didn’t want to be included. (E! is

jointly owned by Comcast Corp. and Walt Disney.)

Initially, large media agencies believed their financial clout could match that of powerful media companies. From the advertiser’s prospective, buying across many media assets should warrant a discount in pricing. Media executives sometimes refer to this as “bundling.”

“Some advertisers who don’t know about the integrated world may look to bundle their media,” said Gwen Grech, director of integrated sales for Disney-ABC Unlimited. “But that is not what we are here for.”

Except in one case.

“The only bundled deal we did was the Disney-OMD deal,” Mr. Bund said. “It was a soft marketplace. Incrementally, we got $200 million. Since clients’ budgets didn’t go up by that much [year to year], that money came from other networks.”

Incremental revenues-revenues media companies wouldn’t have received if ads were sold individually by each division-are the focus of cross-media selling groups. Mr. Bund said incremental dollars are up 37 percent over the past five years.

Cross-platform selling groups think they can help advertisers, serving almost as another media agency. “That’s why these groups are becoming more important,” Mr. Bund said. “[An advertiser might say,] ‘Why don’t I see what they can do collectively for me?'”

Varied Approaches

While Walt Disney, Viacom and Time Warner have established separate groups to sell their media assets jointly, others, such as NBC Universal and News Corp., just use their regular in-house sales groups to sell across various platforms. For instance, all of NBC Universal’s TV sales operations report to Keith Turner, president of sales and marketing.

Any NBC Universal sales executive can be the entry point for a deal. NBC network prime-time account executives can, for example, offer simple to complex multinetwork deals at any time. An advertiser could make a first-quarter buy that would include programming on NBC prime time, USA Network prime time and NBC’s “Today” show.

With this strategy, NBC’s cross-platform deals can be numerous and not as extensive as other cross-platform deals that may include special promotion and branded entertainment opportunities.

Media executives say that cross-platform deals are nothing new and that even before media consolidation, advertisers did what amounts to cross-media deals through their media agencies’ regular strategies.

“At the end of day, there are a lot of people who say we had cross-media deals as far back as 20 years ago-that was with the media plan,” said Mel Berning, executive VP of advertising sales for A&E Network. “You now have the concept of one-stop shopping. For some people it helps. If you’re good at bundling assets-and you can do some promotions as well-what is wrong with that?”

Viacom Still in Game

Though appearances might suggest otherwise, Viacom isn’t out of the cross-platform selling game. “You assume that because they split up the companies that they can’t do these deals,” said Rino Scanzoni, president of U.S. broadcast for Mediaedge: cia. “But that’s not true. Viacom’s companies have always had different [profit and loss statements] and will continue to do so. That doesn’t change anything.”

In fact, Viacom said revenues are improving. “In 2004 we saw more demand than in 2003,” said Lisa McCarthy, executive VP of Viacom Plus. She notes new advertisers are still coming to Viacom in 2005. Its big annual deals include buys by Procter & Gamble and Tyson Foods. P&G is Viacom’s largest client; its Viacom Plus deal is worth about $350 million a year.

Still, media analysts note there seems to be less of a push for Viacom Plus because of the departure of Mel Karmazin, who was Viacom’s president and chief operating officer. He was credited with starting Viacom Plus and as being a major driver of the business.

Ms. McCarthy disagrees: “We still are empowered from the top. I report to Tom [Freston] and Les [Moonves], (co-presidents and co-chief operating officers of Viacom). To me, my world doesn’t change much. We have been doing this a long time.”