Merger Mania Fuels Cross-Media Sales11/19/2000 7:00 PM Eastern
The concept of integrated ad sales-which Turner Broadcasting Sales Inc. pioneered back in fall 1994-has spread like wildfire, particularly in the last year or so.
And two media megamergers have accelerated that momentum. In mid-October, Viacom Inc. expanded integrated ad-sales unit CBS Plus-which it picked up in its acquisition of CBS Corp.-into Viacom Plus.
America Online Inc. and Time Warner Inc. are also expected to mine for multimedia sales opportunities once their merger closes.
Many of the other proponents of integrated sales-from ESPN and ABC Inc. owner The Walt Disney Co. to News Corp., with its Fox broadcast and cable assets-are also taking advantage of recently acquired properties spread across different media and demographics.
Next year, there's likely to be a decline in ad-spending growth rates, which reflects "normal ad cycles in a post-election/post-Olympic period," according to a PaineWebber Inc. research report issued late last month. But media giants that can mount such multi-platform availabilities should be able to offset any losses.
The strategy of multiplatform buys, already fodder for various conferences, will next be explored in January at the National Association of Television Program Executives' Conference & Exposition in Las Vegas, during a panel titled "Chasing the Almighty Ad Dollar."
Media buyers and sellers alike see this trend as highly beneficial with virtually no drawbacks.
"Such package deals are effective when they are built around the consumer and consumer insights," said Rishad
Tobaccowala, president of Starcom MediaVest Group unit Starcom IP. "They're ineffective when it's just a bundled sale, as in, 'You need Bundle A and Bundle B because we own them both. 'That makes no sense."
Starcom MediaVest was formed last may when Starcom Worldwide-the media-buying operation of The Leo Group, including Leo Burnett Co.-merged with the MacManus Group's MediaVest Worldwide. Kellogg Co. and McDonald's Corp. are among Starcom's major accounts; Procter & Gamble Co. and Kraft Foods are among MediaVest's top clients.
The "consumer-centric" approach will always be preferred over a media giant's taking packages off the shelf, he said.
LITTLE OR NO DOWNSIDE
Some of Starcom's recent cross-media buys include a deal for Nintendo Corp. of America on Cartoon Network and its Web site, and a Super Bowl-related buy on ESPN and ABC for an unspecified client.
"I don't think there is a negative" in cross-media deals, aside from taking a tack that is not consumer-centric, Tobaccowala said.
Still, in his view, much work remains to be done on both sides of the negotiating table. Not all sellers are truly set up for smooth integrated ad sales, he said, and "the buyers are not necessarily set up to buy. So there's still a lot of work involved."
OMD USA's media buyers approach the cross-platform concept "on a case-by-case basis," said senior vice president Chris Geraci. "Certain clients lend themselves to such media extensions more than others."
In a report released right after the AOL and Time Warner merger was announced, MediaVest said the deal would not only boost ad revenues, but also "give the combined companies unprecedented negotiating leverage."
Undoubtedly, such megamergers are one factor in ad agencies' current consolidation trend. Media-buying shops have joined forces to bolster their own bargaining clout, from OMD to Starcom MediaVest.
In most time-buying negotiations, there is inevitably some give-and-take, with sellers eager to hold the line on pricing and buyers looking to save some money for their clients. But in cross-media deals, most industry sources maintained, there is less of that haggling.
Like other cross-media sales executives, Viacom Plus senior vice president Lisa McCarthy maintained her unit generally does not have to haggle. Because its offerings tend to be unique-and hitherto unavailable in one-stop form-clients are talking more about getting value rather than about the cost per thousand, or CPM.
"It just doesn't end up being a conversation about wanting to get it for less," she said.
ESPN/ABC Sports president of customer marketing and sales Ed Erhardt agreed: "That's not the dialogue we're having. We're not in the discount business."
NO BARGAINS HERE
Like the bigger players, A&E Television Networks senior vice president of national sales Arlene Manos said A&E doesn't offer cross-media opportunities at bargain rates.
"We try hard not to do that because we're giving more than we ordinarily do," she said.
On the buyer's side, Geraci declined to discuss whether OMD presses for price breaks when making such media purchases. (OMD buys media for Omnicom Group's BBDO Worldwide, DDB Worldwide and TBWA Worldwide.)
But Starcom's Tobaccowala said that his media-buying operation "will always look for better pricing. But we're also looking for better value.
"There is an innate discounting involved when companies combine properties into packages," he said.
Turner Broadcasting Sales Inc. senior vice president of global solutions Joe Mangione concurred with the Starcom executive's perspective. "We look at these deals as bringing incremental value to the client, and not just bundled media," he added.
"More clients are coming to us now for cross-media deals," added a TBSI spokesman. In the past, the programmer pursued potential advertisers.
For example, health insurer Cigna Corp.-now in the second year of a two-year, $10-million buy-purchased time on all Cable News Network-branded services as well as Turner Network Television, TBS Superstation, the Time Inc. magazines and various Time Warner Web sites to promote its "The Power of Caring" campaign theme. That was Cigna's first Internet buy, noted Mangione.
Another multipronged buy ended on Election Day (Nov. 7). DaimlerChrysler, PaineWebber Inc., Pharma, DiTech Funding and Akamai Technologies Inc. had co-sponsored
Election 2000 coverage on CNN's cable network and Web site since last March. Each client received category exclusivity as well as entitlements and billboards.
In addition, IBM Corp. and Nortel Networks bought cross-media sponsorships of technology-themed features, while American Suzuki, Hyundai Motor America and Johnson & Johnson backed sports-related fare.
But by far the biggest integrated purchase at TBSI was The Coca-Cola Co.'s $200 million-plus, 10-year deal signed earlier this year. That arrangement entails buys on Turner's various cable networks and sponsorships at the new Philips Arena in Atlanta.
Once the AOL-Time Warner deal concludes, Mangione said, Turner will be able to add its namesake online service as a key cross-media sales component. Various clients already are "expressing enthusiasm" about adding AOL, he said.
"We need to figure out how all that fits" once that deal is final, he said.
The fact that virtually every major media giant now offers similar, across-the-board sales packages "just reinforces that we at Turner had the right idea [six] years ago.
"Used to be, we had to sell the concept of integrated marketing," he said. Now, said Mangione, most advertisers are well aware of the strategy and its worth.
In announcing CBS Plus' transition to Viacom Plus in October, Viacom president Mel Karmazin said: "Cross-platform sales and marketing represent the next generation in advertising spending."
Viacom Plus aims to "customize platforms to address clients' needs," said McCarthy. For accounts seeking the family audience, she suggests packaging the CBS Television Network, Nick at Nite, TV Land and Nickelodeon.
For a music-themed integrated package, the pieces could encompass time on anything from CBS'
Country Music Association Awards
to MTV, VH1 and Country Music Television, she added.
Since last January, McCarthy's sales force has inked cross-media deals with Johnson & Johnson, Schering-Plough Corp.'s Dr. Scholl's division and DaimlerChrysler.
It also signed Fidelity Investments, which had a $50 million buy for 2000, to a similar deal next year.
For Chrysler's Town & Country minivan, McCarthy's operation developed various elements tied through the "On the Road" theme. That buy, which began in October, is about family-oriented travel.
Elements include an "On the Road" segment on CBS' The Early Show
and 60-second vignettes on 11 of its owned TV stations, with suggestions on "one-tank trip" destinations. In addition, Viacom Plus adapted the concept to radio and helped the automaker develop a
Fidelity will continue to support its "American Dream" campaign. That will entail sponsorship of an "American Dream" featurette highlighting the World War II generation on
The CBS Evening News with Dan Rather
Other components will run on CBSMarketwatch.com, Rather's CBS radio show, 16 CBS-owned-and-operated TV stations and an "American Dream" mini-site on CBS' Web site, McCarthy said. Fidelity's commercials aim to get that demographic to invest.
Johnson & Johnson is seeking to enhance the "caregiver image" of its Tylenol pain reliever, and made buys linked to
Touched By An Angel
and the CBS Web site. The 16 CBS owned-and-operated TV stations are also running Tylenol-sponsored "Hometown Heroes" profiles of community caregivers.
In a departure from customizing buys for clients, McCarthy said Viacom Plus now is using the hit CBS series
to develop a pre-built integrated platform-the "CBS MarketWatch
will bow after January's Super Bowl telecast.
Calling the winner-take-all contest "where
meets Wall Street meets Main Street," she said local investment clubs will pit their investment skills against one another during the 15-week contest, using $500,000 in Monopoly
Each week on
The Early Show, the two lowest-ranked clubs will compete, with the loser ousted. The winning club will win $500,000.
There also will be elements in syndication (a CBS MarketWatch report distributed by King World), as well as in radio.
While this concept has been aimed mainly at prospective financial clients, McCarthy said others "looking to stand out" or launch a new product or service also could benefit.
CBS' first integrated deal-for Pennzoil-Quaker State Co. in August 1998-inspired CBS Corp. to form CBS Plus that October, McCarthy recalled.
Since becoming Viacom Plus, the entity's sales team has been working on "five or six projects" that incorporate MTV Networks' cable channels, MTVi Web sites and Paramount Pictures Corp.'s syndicated shows, said McCarthy. She said she hoped to have those deals signed by year-end.
November started with Viacom announcing yet another deal, the acquisition of BET Holdings Inc. McCarthy is looking forward to adding BET's properties to the media mix once the sale is finalized.
Fox Family Worldwide began cross-media sales efforts last year. Executive vice president of ad sales Barbara Bekkedahl said the company has a host of integrated sales assets that can reach kids ranging in age from preschoolers to kids aged 6 to 11 to "tweens" aged 9 to 15. Platforms include broadcast television (Fox Kids Network), cable (Fox Family Channel), radio syndication, the Web and print, with a magazine with a quarterly circulation of 3.6 million.
Many of these buys are driven by Fox-owned characters or series, such as
S Club 7,
Current cross-media clients include Procter & Gamble Co.'s Sunny Delight tween-targeted beverage line; video game producer Code Masters and Universal Home Video, she said.
Sunny Delight is sponsoring a "Super Send-Off" contest tied to the Fox Family series
S Club 7
and Fox Family's Web site; there's also some on-package promotion. The grand prize is a trip to Tampa, Fla., to hang out with the cast (a British pop group) and attend the Super Bowl.
Fox Family's Web site offers a version of a Code Masters video game, she said, while Universal promoted its horror films on video, as part of the network's "13 Days of Halloween" programming stunt.
As its promotional materials point out, integrating Fox's online and off-line assets can deliver "maximum reach."
"Advertisers are very proactive in understanding this is how kids handle media-they're fluid," Bekkedahl observed.
For example, the Fox broadcast network's Saturday-mornings kids' shows drive traffic to the Web site. "Page views skyrocket," said Bekkedahl. "It's almost like a direct-response model."
Parent News Corp.'s "News Corp. One" unit is also targeting prospects on adult-aimed integrated sales, largely centered around Fox primetime programming.
"If they pitch an advertiser where we may make sense, we're in those proposals," said Bekkedahl.
Last August, sister networks FX and National Geographic Channel began joint sales via a new entertainment-ad sales force, supervised by Rich Goldfarb, senior vice president of media sales for Nat Geo and Fox Cable Networks. The American launch of Nat Geo is set for January.
MORE THAN SPORTS
Goldfarb said he was looking forward to cross-media packages that would also include
magazine and the National Geographic Society's Internet and international cable properties. That's not to mention opportunities on the Fox Broadcasting Co. television network and other News Corp.-owned media outlets.
With so much integrated-sales activity, "there's no question it is the flavor of the month," said ESPN/ABC Sports' Erhardt. But it's here to stay because in today's media world, both media companies and ad agencies have organized themselves in this way.
"The key to being sustainable is to offer concepts, programs and ideas that move business," he said. "If that happens, this will blossom" even more so than it has to date.
Moving product-and not simply offering "a great deal with a lot of eyeballs"-must be the primary objective, Erhardt said.
ESPN and ABC parent Disney made its first move toward integrated sports selling last year through the ESPN/ABC Sports unit. In February, it lumped all of its kids' avails together into the "Disney Kids' Network," then took the one-stop approach company-wide with "ABC Unlimited."
ABC Unlimited is close to signing its first client, said a network spokeswoman. Erhardt said his operation has joined with ABC Unlimited to pitch at least one client on a multi-year, multi-platform deal that includes not only ABC and ESPN National Football League games but ABC daytime and primetime, as well as avails on E! Entertainment Television and Lifetime Television, two networks in which ABC holds a stake.
Whether traditional or non-traditional new-media companies, clients are sold on the concept, Erhardt said.
For example, Nokia bought across ABC, ESPN and ESPN.com to promote 3Play, an online interactive game on ESPN's Web site that allows phone users to play Web-based games via free software. That buy and the ITV application "helped Nokia sell a lot of product," Erhardt said.
Microsoft Corp.'s Microsoft Network Internet-service provider is another new-media account, he said. MSN has bought National Collegiate Athletic Association college-football coverage, as well as an ESPN.com component.
At Discovery Networks U.S.,
Inside the Space Station
is the next big programming event and the latest example of cross-media selling on a global scale.
Due on Discovery Channel in primetime Dec. 10, the hour-long "Watch with the World" event has been sold to British Airways and Sun Microsystems Inc. across 149 countries, and to MasterCard International in the U.S.
As was the case with March's
and last year's
In Search of a Legend, advertising time and space for this hour will be available not just on cable, but on the Internet and Discovery's retail-store chain.
In the case of
Mammoth, Ford Motor Co. and Computer Associates International were the international co-sponsors.
A&E IS IN THE GAME
Though its integrated selling efforts are on a smaller scale than the media giants, A&E Television Networks has also seen success. Manos said A&E started crafting such deals two years ago, following the launch of its Web sites and
The guiding principle for doing such multi-platform deals, she said, is that "there must be some connection grounded in programming."
Examples range from The History Channel's annual "Great Race" to an annual "Viewer's Choice"
special on A&E. The Great Race generates sponsor interest nationally and on the affiliate level, the latter along the actual race route; elements include content on the History Channel and its Web site.
special is decided by votes generated from ballots in Sunday newspaper supplements (ads are placed by the sponsor, a drug marketer) as well as in
magazines and on A&E's Web site, Manos said.
The sponsor of A&E's special
The Impressionists, due in June, will also buy space alongside a related feature story in
magazine and on a special area of the A&E Web site. It will also sponsor a tie-in contest, offering viewers a trip to France to see impressionist paintings in person.
"We can't compete with the giants [except] in a targeted situation, in which an advertiser wants to reach an upscale audience" with programming like
Impressionists, Manos said.