Media companies, such as Disney/ABC Cable Networks and Time Warner, are crowing about the expanded possibilities for advertisers as the networks devise new integrated cross-selling packages. Cable TV options meld seamlessly with broadcast, Internet, print and sometimes even event marketing, into one big media buy.
Cable TV has played a starring role in the evolution of these deals because of its versatility.
But troubles are surfacing now as media companies and media buyers and planners explore the new territory of the megadeal, testing boundaries within agencies and the sales departments of media companies.
"Media companies want a significant portion of my clients' budgets in exchange for creating these big, high-impact programs, but in many cases I think I'd get a better deal buying the program a la carte," says Joanne McGill, president of CIA Media Network, New York, who says she has spent hours in meetings and presentations from media companies that led nowhere.
Media giants such as Time Warner are extremely bullish on the trend toward selling more integrated media. Their sales staffs bristle with hybrid "sales consultants" who can spend several months putting together each megadeal involving multiple media elements.
One example of a megadeal was an agreement developed by DDB Worldwide, New York, for client Cigna Corp. The insurance marketer bought an integrated Time Warner multimedia deal themed, "The Power of Caring," encompassing CNN, CNNfn, Headline News, TBS, TNT, the CNN Airport Network, plus a presence on CNN's Web sites cnn.com and cnnsi.com.
Such deals often include added-value perks not otherwise available, such as sponsored interstitial TV programming elements, in-programming sponsorship and deeply integrated promotions cutting across multiple platforms.
But media buyers are unsure whether megadeals necessarily mean a better deal for their clients.
Turf problems and incentive issues lurk within media companies for big-picture executives trying to put deals together, say media buyers. Further, the packaging aspect can be very time-consuming and involve negotiation between multiple departments within the media company and agency. Details like the blockbuster deals' elements, scope and price can bog down the process.
"Unless there is one very powerful authority figure making all the departments within one media company cooperate and really work together for the benefit of the client, integrated media cross-selling will never really fly," says Bob Flood, senior VP-national electronic media at New York-based Optimedia.
IRONING OUT BUGS
Media companies say the bugs will be ironed out in time and packaged media deals will soon become the norm, rather than the exception, in media buying. This year, more than 50% of CNN's sales will be part of some kind of media package, as Turner's entire portfolio of broadcast and cable networks begins to involve cross-media elements, says Larry Goodman, CNN's president of sales and marketing.
"Originally, people thought the movement toward the Internet might take away from media spending, but it's turning out to be plus-plus for us; cable's revenue growth will be matched by media spending in the Internet. It's the first time another media element has been added with zero cannibalization," Mr. Goodman says.
CBS currently has seven people dedicated to CBS Plus, charged with devising "big ideas" for advertisers that will have high-power impact using a thematic platform, says Pam Haering, senior VP-CBS Plus.
"What's important about this equation is it's about gaining incremental money and bringing value to the client, giving them programming options they could never achieve on a single-deal basis," she says.
One such deal last year involved Fidelity Investments, which bought into a megadeal involving most of CBS' media platforms, quadrupling Fidelity's overall spending on the network compared with the previous year, she says.
Disney's ESPN ABC sales operation has made a major commitment to packaged media deals this year, and the company believes its concentration of sports media is especially suited to building an empire of integrated megadeals, says Ed Erhardt, who was hired last year as president of ESPN ABC Sports Customer Marketing & Sales. The department was created specifically to orchestrate cross-platform media deals.
In the last year, ESPN ABC has negotiated such megadeals with Beck's North America and Heineken USA, involving broadcast, cable, Internet, radio and event marketing elements for concepts including ESPN's twice-yearly "X Games."
Fox Family Worldwide is also benefiting from the synergies of its kids' programming properties by cutting a record number of cross-platform deals this year involving multiple kids' Web sites with whom the company has formed partnerships, says Rick Sirvaitis, president of ad sales for Fox Family Worldwide.
He points out that the goal of the company's integrated deals is "not to provide discounts to advertisers, but to create a whole that is greater than the sum of the parts."
The fact that most of the new integrated megadeals do not involve discounts annoys some media buyers. Media companies insist that by harnessing all their various platforms they're giving the advertiser a greater return on investment than they would get through single media buys.
"What we're offering is fusion -- something the advertiser can't get through single-media buys and marketing events -- we can give them a program that includes a print ad that has a secret code that drives the reader to a Web site, and also ties in with a broadcast element, redirecting the consumer to more and more media elements within one campaign," says Mr. Sirvaitis.
FEW GOOD OUTCOMES
Ms. McGill says she has had a few good outcomes in seeking integrated media deals, but so far disappointments have outweighed positives.
Mr. Flood is more optimistic: "If media companies smooth out their internal issues on how they'll structure and offer these deals, it will be a win for everyone, including media buyers, because we can bring better programs to advertisers and deepen our relationships with clients in the process. We're early in the evolution of these deals, and overall they offer great opportunities."