P&G GOES HOLLYWOOD FOR INTERACTIVE ALLY;MARKETER TALKING TO STUDIOS TO HONE NEW-MEDIA CONTENT

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Procter & Gamble Co. is casting major Hollywood studios as its partners in the package-goods giant's multimillion-dollar interactive debut.

Fifteen months after former Chairman-CEO Ed Artzt's landmark industry call to action, Advertising Age has learned P&G is in high-level discussions with studios, including Warner Bros. and Paramount, to create interactive content spanning online services, the Internet, CD-ROMs and interactive TV.

Executives familiar with the discussions say the marketer wants to spend as much as $50 million, an enormous figure in interactive media terms. The money would be spread over several years and would be divided among various initiatives.

"They're going to try and use the storytelling skills of the studio," said one executive familiar with P&G's plans.

Executives from Grey Interactive, New York, P&G's interactive agency of record, have spent the past few weeks hearing pitches from studios. The agency, which won the business in January but has shown little of its work for P&G since then, is said to be under pressure from the marketer to move quickly beyond the idea stage.

Grey declined to comment.

The marketing world has been waiting for months for P&G to respond to Mr. Artzt's bombshell speech to the American Association of Advertising Agencies in May 1994. In that speech, he urged agencies and advertisers to take steps to ensure that advertising is part of programming in a new-media world. Now P&G is finally making good on its promise.

A spokeswoman for Warner Bros. Interactive Entertainment said the unit has been in discussions with P&G for several months about a wide-ranging marketing deal but insisted nothing was imminent.

A P&G spokeswoman said no deal has been signed but confirmed the marketer has had talks with studios.

Another potential partner for P&G is Paramount Television Group. The two earlier this year signed a $120 million deal to create TV programming, and Paramount executives confirmed P&G is looking to expand the deal to interactive content.

"We have a strategic alliance with P&G which covers all the various areas of Paramount," said Richard Lindheim, exec VP of Paramount Television Group. "We've been having conversations about new media as well as the traditional forms [of media], such as television."

While one executive close to P&G called the $50 million figure "ludicrous," that amount is a drop in the bucket compared with P&G's annual $4.3 billion advertising budget. Even spending half that would send a strong signal that P&G means business in interactive media.

In addition to the Paramount deal, P&G is a longtime producer of soap operas and other programming like "Circus of the Stars." Shortly after the Artzt speech, Robert Herbold, at the time P&G's senior VP-advertising and information services, told Ad Age the marketer had set aside money to fund new programming ventures.

The studios, meanwhile, are stepping up activities in the new-media realm. Paramount last month formed Paramount Digital Entertainment, and Hollywood insiders are watching closely to see what Steven Koltai, exec VP of the 6-month-old Warner Bros. Interactive Entertainment, will do. Mr Koltai was vacationing last week and couldn't be reached for comment.

P&G has ties to other Time Warner interactive initiatives. The marketer is a client of Time Warner Cable Programming's new Digital Marketing Group that is working on interactive TV projects for platforms including the Full Service Network in Orlando.

The Warner Bros. negotiations, executives said, are separate from the cable relationship, although work done by Warner Bros. on behalf of P&G could end up in interactive cable tests.

Despite the apparent synergies, some say P&G is looking in the wrong direction for interactive expertise. Hollywood studios so far have had only middling success with new-media versions of their own properties, and selling shampoo is a very different prospect from selling a movie.

Still, P&G isn't the only package-goods marketer to look to Hollywood for interactive expertise.

Bristol-Myers Squibb Co. last month said it is working with Paramount Digital Entertainment to develop an online service targeting women. The service is expected to launch before yearend.

"You're going to see a lot of these kind of alliances with advertisers," said Ira Mayer, publisher of The Entertainment Marketing Letter, Brooklyn, N.Y. "Everyone is looking for exposure but not everyone knows where consumers will be down the road."

Contributing to this story: Pat Sloan, Jeff Jensen and Mark Gleason.

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