Why P&G Is Spending $100 Million to Advertise on OWN

Apr 23, 2010  •  Post A Comment

By Brian Steinberg
Advertising Age

On the face of it, $100 million is nothing to Procter & Gamble. The consumer-products giant spent $2.7 billion last year on traditional media and web-based banner ads, according to Kantar Media. So why should anyone care if Oprah Winfrey’s fledgling cable network got a taste of a couple of Tide, Crest and Pampers-created pennies?

Procter & Gamble has agreed to advertise on the still-to-be-launched Oprah Winfrey Network, the Discovery Communications experiment that aims to find out if a cable channel centered around a popular media personality has what it takes to make a sustainable media business. People familiar with the pact valued it at $100 million or slightly more. The agreement lasts for three years and also encompasses the ability for P&G to purchase integration of its marketing messages into OWN programs, these people said.

A P&G spokeswoman confirmed the company has struck an ad pact with OWN, but declined to comment on specific details. An OWN spokeswoman also declined to comment on deal specifics. The ad pact was first reported by The Wall Street Journal.

The deal seems small for P&G but is a relative bonanza for OWN, particularly because the channel doesn’t launch until early next year. How many fledgling cable networks secure upfront deals before the broadcast marketplace even opens? And getting an advertising seal of approval from Procter & Gamble, the nation’s biggest advertiser in 2009, often sparks the attention of other marketers, which feel they ought to be where P&G sees an opportunity. P&G spent approximately $1.35 billion on broadcast and cable TV advertising in 2009, according to Nielsen Monitor-Plus. In cable, the consumer-products giant spent most heavily on Lifetime, MTV and USA.

But for Procter, the early buy could also help it wring decent marketplace concessions for a relatively small ad outlay. Advertisers who get in early at new media outlets often are able to secure lower-than-normal prices that continue as the media property ages and, perhaps, begins to command higher rates from latecomers. P&G may also earn early looks at new shows and have a better pick of potential integration opportunities before other marketers come crowding around.

Ms. Winfrey’s planned cable network is already attracting a lot of attention. At a presentation made to advertisers in early April, the talk-show host promised a programming slate aimed at inspiring viewers to improve themselves and their lives. Ms. Winfrey is set to appear in at least two reality programs that will follow her last season at her broadcast-TV talk show and as she travels the world.

Other shows will feature experts who have come to prominence on her daytime series, or pull at the heartstrings. One program, "Kidnapped by the Kids," shows parents forced to scale back on workaholic tendencies in order to spend time with family.
"It’s not just another cable launch," said Andrew Donchin, director of investment at Aegis Group’s Carat. "There’s some pizazz to it. It has a pretty decent shot at being something special."#


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