The deal makes Pepsi and MTV marketing partners throughout the world, paving the way for cross-promotions, event marketing and possibly jointly developed cable programming.
It also gives Pepsi exclusive soft-drink sponsorship rights on MTV signature programming, such as the "MTV Video Music Awards," in Europe, Asia and in Latin America.
A GROUNDBREAKING ALLIANCE
For MTV, the alliance breaks ground as its first global deal for media buys and co-marketing. Other advertisers have bought global MTV time market by market, but not in a unified manner or with a long-term commitment.
Although Coca-Cola Co. said recently it won't advertise on MTV in the U.S. this year, the network's deal with Pepsi does not cover the U.S., where Pepsi is a major MTV advertiser. Pepsi has been a "Video Music Awards" sponsor in the U.S. since 1987.
Massimo D'Amore, VP-marketing for the international beverages division, said the deal will cost Pepsi "north of eight figures" in media buys.
The marketer will primarily use the alliance to push its Pepsi and Pepsi Max brands.
PEPSI'S DISTRIBUTION KEY
"Pepsi's distribution is key," said Harvey Ganot, president-advertising and promotion sales, MTV Networks.
That's because Pepsi's worldwide presence in almost 200 countries appealed to expansion-minded MTV. Pepsi has pledged to buy time on MTV in markets where the network adds an affiliate.
Several years ago, Coca-Cola Co. bought time on most MTV affiliates for Olympics advertising that lasted a few days, but never discussed a relationship like the Pepsi alliance, Mr. Ganot said.
"We have been in some discussions with other advertisers," he said. "But it's not easy to find a company willing to make a long-term agreement and substantial financial investment that also has 200 countries of distribution."