Does tie-in pose conflict?

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When McDonald's Corp. inked a 10-year global alliance with Walt Disney Co., it locked out archrival Burger King Corp. and other fast-feeders from tapping into Disney's kid-drawing power for movies, videos and cable TV.

Observers saw the deal as a double-edged sword. On one hand, by aligning, the two marketers extended their brand value exponentially. "It's just another form of consolidation," said Tom Pirko, president of consultantcy Bevmark. "One plus one equals two and a quarter." Additionally, because both marketing giants are big beverage partners with Coca-Cola Co., the pact was more like one plus one equals three.

But as each company begins to establish alliances with multiple partners, things get complicated, especially for long-term pacts. Disney and Coca-Cola have begun striking deals that can create conflicts between their partners. "Some [marketers] pledge fidelity to their partner, leaving a significant opening so they can consort with the No. 1 competitor," commented Mr. Pirko. "You have to look at the contract to check the specifics."

Such may be the case for McDonald's, which faces a potentially embarrassing-and perhaps dilutive-scenario since Disney has accepted PepsiCo as a major promo partner for "Monsters, Inc." the biggest event on McDonald's 2001 marketing calendar. Since McDonald's pours Coca-Cola products, the Pepsi tie-in has the potential to confuse customers or worse, water down its alliance.

Executives at the Golden Arches claimed ignorance about the deal. "From our perspective, our customers are clear that our longtime partners are Coke and Disney," said a McDonald's spokeswoman.

But agency executives privately acknowledged the Pepsi/Disney tie-in. "They [McDonald's executives] are burying their heads in the sand because they have a contract with Disney," said one informed agency executive. "It precludes Disney from going to Burger King but it doesn't preclude them from going to Pepsi, and they can't do anything about it."

Tom Lynch, a McDonald's liaison for Coca-Cola at the fast-feeder, referred calls to Coca-Cola's Atlanta headquarters. A Coca-Cola spokeswoman declined to comment on the film tie-ins, but asserted the Coke/Disney relationship is strong. "We've enjoyed a longtime relationship with Disney, which has created many exciting opportunities for both of us, the most recent of these being a new partnership to market children's beverages around the world under the Disney name," she said.

"Monsters, Inc." isn't the only place Pepsi has infiltrated the McDonald's/Coca-Cola/Disney beachhead. Pepsi has been running banner ads on Disney's "Who Wants to be a Millionaire" Web site. On April 19, McDonald's will launch a major tie-in to the game show with its own version of the game. The promotion highlights its Big `N Tasty Extra Value Meal.

Observers suggest that long-term marketing partnerships become even more difficult to pull off in a sluggish economy. "Loyalties are ephemeral when the business environment gets stickier," said Manny Goldman, former beverage analyst and now consumer-products consultant. "It's tougher to make a living now than it was 10 years ago."

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