iVillage may not be big enough for both of them

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Last week's merger of iVillage.com with Women.com Networks thrusts together strange and potentially incompatible bedfellows, as archrivals Procter & Gamble Co. and Unilever suddenly find themselves partners with the same online media company.

Fierce rivals not only in personal and home care but also for leadership in interactive marketing, P&G and Unilever each forged or expanded partnerships with the then-separate women's portals last year. The deals, which go beyond simple media buys, include content development, e-commerce and other arrangements that make the situation potentially more dicey than it would be if these were standard advertiser-media relationships.

Unilever last fall launched a $200 million joint venture with iVillage to co-develop a beauty-care site on iVillage (www.ivillage.com/beauty) that was to eventually morph into its own site called Substance.com. The separate site will go live in the next few months. In an October speech at the Internet World conference in New York, Charles Strauss, president-CEO of Unilever U.S., touted the iVillage venture as already the largest beauty-care site on the Web.

Meanwhile, P&G expanded its partnership with Women.com, which includes a multiyear, nine-brand sponsorship of the "Beautiful You" beauty care minisite and co-development of HomeMadeSimple.com, a site that supports an e-mail newsletter program, online sampling and other promotions for several P&G home care, food and beverage brands. As part of last year's $15 million expansion of its relationship with Women.com, P&G also turned over content of its former ParentTime.com joint venture with Time Warner to Women.com.

But if the depth of the deals between the package-goods giants and the former women's content rivals is causing concern, no one associated with the properties is saying anything about it yet. Neither P&G nor Unilever would comment on the merger or how it affects their plans.

The deal isn't expected to close until May, and iVillage has yet to decide whether it will operate the two sites separately, how to deal with content duplication or whether to lay off employees. IVillage, however, doesn't foresee significant advertiser conflicts.

Substance.com is open to any advertisers, including P&G, said John Glascott, Senior VP-sponsorships. "There is no Unilever-P&G conflict," he said, adding that Substance.com "is an independent media business that Unilever happens to own 50 percent of."

He compared the situation to P&G-backed soap operas, which get ads from many beauty-care brands. IVillage's $47 million acquisition of Women.com includes a $20 million investment by Hearst Corp., which owned 46% of Women.com.

Still, it's possible that online merger mania, such as the iVillage-Women.com pact, could "trip advertiser wires," said Pete Blackshaw, former P&G interactive brand manager, who negotiated a P&G portal partnership with Oxygen Media and is now CEO of online feedback site PlanetFeedback.com.

Mr. Blackshaw also developed P&G ad and e-mail programs with America Online in the late 1990s, even after AOL's well-publicized partnership with Unilever began. But he says relationships with online media were different then. They involved only banner and button buys, not the intricate deals P&G and Unilever have with portals today, which blur advertising with content and include such sensitive areas as consumer research and database development.

He believes both companies have learned context is more important than traffic in online marketing success as they've seen results vary widely even among pages on the same site. That only intensifies competition for exclusive access.

The likely scenario is for P&G and Unilever to remain mum about the merger until one quietly walks away from its partnership, he said. The rivalry "could be a net win for iVillage," he said, "because they might be able to charge a greater premium for the highest bidder."

Contributing: Patricia Riedman.

Copyright February 2001, Crain Communications Inc.

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