4As Management 2006

Cross-media ad deals lose some luster

By Published on .

Many large media companies with dot-com offerings have been crossed up.

Doubts persist about whether cross-platform ad deals involving media companies' online operations can generate revenue from the sites, and much of this doubt comes from Walt Disney Co.'s ill-fated Go Network.

Go Network, Disney Co.'s recently aborted attempt at building a broad-based portal, didn't go far because of a flawed model, according to Disney Chairman Michael Eisner, who now asserts there isn't enough advertising to go around for most dot-coms.

But the problem may have run even deeper: Was Go Network too dependent on cross-media deals?

All Disney divisions-including ABC Television Network, ESPN, Disney theme parks, and other retail and video marketing entities-were to generate a significant amount of ad revenue for Go Network by including it in cross-media packages with those established Disney brands. Ultimately, however, Go Network may have gotten in the way of ad deals oriented around specific Disney brands.

individual strength

Financial analysts say dot-coms really need to be strong advertising entities unto themselves in order to be profitable, just as individual brands like ABC, Disney and ESPN have been for Walt Disney Co.

Also, the reality in the industry is that cross-media dollars are a tiny percentage of a media company's overall take for any division, and it can take as long as a year to put each deal together. Each division of a media company is still dependent on its own ad sales team to pull in revenue.

"The dot-coms are not going to live and die on cross-media deals because the problem is there aren't that many advertisers who do cross-media deals," says Karen Agresti, senior VP-director of national broadcast for Hill Holliday Connors Cosmopulos, Boston. "They are going to have to deliver on their own to clients."

"Many companies are still thinking of the Internet as a promotional device for short-term efforts, and they're not willing to think of cross-platform channels as a way to promote brands more widely," says Max Goldberg, a principal with Blue Dog Ventures, a Los Angeles-based business strategy and marketing consultancy. Mr. Goldberg previously handled promotions for the Go Network as VP-integrated marketing at Disney's Buena Vista Internet Group.

powerful way to promote brands

"Advertisers are not demanding agencies cut deals across multimedia platforms," Mr. Goldberg says, "but they should be because it's a powerful way to promote major brands."

Internally, executives struggled with the process of promoting Go Network to the media community.

"There's a lot of difficulty in training sales people to sell multimedia offerings. It's challenging-TV and Internet media are different, the audiences are different, measurement systems are different," Mr. Goldberg says.

Pricing is another problem for media companies' dot-com units.

DISCOUNT QUESTIONS

"A lot of [dot-coms] are not giving any huge discounts for the buy," says Mitch Litvak, president of LA Office, an entertainment marketing and promotion consultancy. "People really need to see what's important to their media plans and if the online component means anything for them. [Dot-com companies] are probably charging a good fee for it."

Some progress is being made, however, on the cross-media front. Some advertisers are saying certain cross-media deals are finally making sense; entertainment giants aren't asking for huge premiums to cinch such deals, and advertisers are getting tangible assets, not just throwaway "added value" such as tickets to sports events.

Still, dot-coms often are considered only at the last minute of crafting an ad package-an orphan piece of the entire media buy.

"Internet is the tail in the deal-it is not the dog in the deal," says Tim Spengler, exec VP-director of national broadcast at Interpublic Group of Cos.' Initiative Media North America, Los Angeles. For many cross-media deals involving the Web, media buyers react with sentiments like "... And they threw in some Internet."

But powerhouses such as Viacom Plus-a cross-media operation that sells CBS properties, Paramount Pictures, MTV Networks, Nickelodeon and other Viacom divisions-say the Internet isn't a last-minute addition but an integral part of it. "We don't throw anything in," says Pam Haering, senior VP at Viacom Plus. "We work for a marketing idea. Everything we do is customized."

A continuing problem for media companies is getting big advertisers to sign on as regular buyers of Internet properties, not merely in special cross-marketing deals. Niche and technology marketers are the most consistent advertisers for entertainment companies' Web activities.

If a media company's cross-media selling unit can't bring in huge amounts of dollars for its dot-com operations, its aim is to at least introduce advertisers to the ad executives who run their dot-com units, media insiders say.

a larger conversation

"What we do certainly helps their [bigger] cause," Ms. Haering says. "We bring them into a larger conversation." For instance, Viacom Plus put together major deals for companies such as Fidelity Investments and Johnson & Johnson's Tylenol brand, both of which have gone on to advertise on Viacom Web sites.

A 1999 Fidelity deal added up to $40 million in paid advertising and included valuable time on the CBS TV network. CBS created special Web site areas, including one called "American Dream," which did profiles of people who achieved their dreams. CBS put together a similar effort for Tylenol called "Hometown Heroes."

"People see the Internet as a nice added piece to a program," Mr. Litvak says. "But it depends how much they want to pay or even if they want to pay. My attitude is that if an entertainment company is providing more value to the Internet site, then the Internet is doing well for them."

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