Procter & Gamble is said to be in discussions with America Online about a one-year advertising deal worth as much as $5 million.
The most surprising aspect of the deal, however, could be that the package goods giant is apparently backing away from its previous insistence on buying online advertising based on a click-through model.
PAYING FOR USERS
Over the past two years, P&G and its online media buyer, Grey Interactive's Media.com, cut deals with Web sites under which it paid for ads based on the number of users who clicked on ads to visit P&G sites--not on impressions.
Only about 1% to 2% of users click on ads, according to industry research.
Because of P&G's size and clout, its reliance on a click-through model had set off a storm of controversy. But the click-through model never became the industry standard, a reality P&G appears to be recognizing by experimenting with other models.
One executive with knowledge of the AOL talks said "click-through would still be part of the deal. But there are other elements that P&G would likely find very valuable."
Some of these elements could include important positioning, either on AOL's main screen, e-mail screens, or chat-room screens. Also, P&G could get a certain number of pop-up or interstitial messages.
The new P&G deal would be groundbreaking for package goods online media spending. Package goods advertisers--who have been building Web sites and creating content--have largely ignored media buying.
A $5 million buy is more than three times P&G's estimated $1.2 million online media spending for the first half of 1997, according to figures from Jupiter Communications.
P&G has been experimenting with interstitial ads, which appear as users wait for content to load; several such ads are currently running for P&G's Sunny Delight and Always brands on CondeNet's Phys.com site. P&G is lead investor in Phys.com.
P&G is also reportedly talking to some sites for the first time about upfront, long-term deals.
"We are trying to identify and develop a number of advertising options" in cyberspace, said a P&G spokeswoman, adding that the company realizes different ads have different values. "We recognize that for a new brand, building awareness might be most important, while that might not be our goal with a more mature product."
The spokeswoman declined to be more specific. Myer Burlow, senior VP-interactive marketing at AOL, could not be reached.
P&G is said to be in talks with other sites about deals that would include non-click-through elements. Those deals, involving about a dozen of the most-visited women's sites, were first reported by MSNBC Online.
P&G reportedly wants to advertise Bounty, Scope and Sunny Delight. Olean, P&G's patented olestra fat replacer, also has been mentioned as a potential online advertiser.
Women's Wire has just signed a year-long upfront deal with P&G. The effort launches in February and relies on click-throughs, but also uses other models.
"They have gone from what I would perceive as an inflexible position to saying, `Yes, there are different models we will consider,' " said Gina Garrubbo, exec VP-sales and marketing for Wire Networks. "I am really thrilled these guys stood up to the plate and made an annual commitment."
Another women's Web publisher, Hearst HomeArts also will begin running P&G advertising in February as part of a six month deal, although it is a click-through deal, said T.R. "Rocky" Shepard, HomeArts VP-network advertising sales. P&G is the only advertiser on HomeArts that uses the click-through model, he said.
"It was my decision. They are one of the biggest advertisers and I wanted to see if we could work with them," Mr. Shepard said. "After a test in November/December, we both agreed we could work something out."
Copyright January 1998, Crain Communications Inc.