CROSS-MEDIA: Hype or hope?

The media landscape and those that dominate have been shaken by economic events. Conor Dignam discovers how the vision of strategic cross-media deals has fared.

They were supposed to be the shape of things to come: giant media companies, stretching around the world - delivering audiences and advertising opportunities in every medium and market that mattered.

Synergy and integration were the buzzwords that underpinned the business plans of AOL Time Warner, Vivendi and Bertelsmann.

The vision was that advertisers would benefit from an integrated media world, developing strategic solutions across different platforms and markets.

Media deals would be smarter, bigger, and better than anything that had come before.

But that was before the New Economy collapse, the meltdown in media stocks and the slashing of advertising budgets in the face of global recession.

Today, the media industry is in crisis, with rising debt and falling revenues putting serious question marks against the future direction of many of the world's biggest media companies.

The fall-out has already claimed the scalps of media moguls on both sides of the Atlantic, including Gerald Levin and Bob Pittman at AOL Time Warner; Jean-Marie Messier at Vivendi and Thomas Middelhoff at Bertelsmann.

It has also led some to wonder if the cross-media opportunities these media giants promised will ever be delivered. Was the hard sell on cross-media deals really just a smoke screen to justify the inflated prices being paid for media companies? Is the cross-media future still a reality?

And have the deals done so far really delivered anything new for advertisers?

Jon Forsyth, business director at MindShare, is sceptical. He says that now the hype has subsided, advertisers should take a long, hard look at what cross-media deals really mean for them.

"Too many of these deals, no matter how you dress them up, are still about forcing a group of media brands together and then post-rationalising a strategy to go with them, says Forsyth. "We're sitting at the table with media owners, but coming from completely different positions. They are interested in aggregating what they've got to offer, and we're interested in integrating some of it. The two don't always match. Forsyth argues that many deals include media properties that bring relatively little value to the advertiser.

And he insists agencies can put together integrated solutions without going through only one media owner. "We've been doing integrated campaigns for years, says Forsyth.

But most industry leaders - clients, agencies and media owners alike - predict these deals will continue to grow. Industry estimates suggest 40% of total media spending will be through cross-media deals by the end of this decade.

Martin Sambrook, global account director at Media Audits, the media auditing company that works with 25 of the world's 50 biggest advertisers, says: "These deals are going to keep on happening because the world's major advertisers want them. In five years' time the world's top ten advertisers will all be doing them routinely."

Two of the biggest deals so far have come from Procter & Gamble (P&G) in a £194m tie-up with Viacom, and Unilever in a "multi-million dollar deal with AOL Time Warner. But they are very different alliances.

The P&G/Viacom tie-up is essentially a large media buy - getting P&G brands such as Sunny Delight, Head & Shoulders, and Pringles on to Viacom's TV channels including CBS, MTV, Nickelodeon, and Comedy Central.

Local viewpoint

Bernard Balderston, P&G's UK media director says that media - for all the talk of global deals - remains a local business, with local power brands.

"Look at ITV. For all its problems it remains the most powerful mass-media broadcast brand in the UK, says Balderston. "From an advertiser's point of view, cross-media has always been much more of a promise than a reality. The fact is that large media firms and conglomerates are much harder to manage than smaller self-contained operations."

Another problem with assessing the real value of these deals is getting under the surface to find what they really deliver. Are they driven by the desire to maximise media budgets or a deeper partnership based around the long-term requirements of the brands involved?

Unilever has arguably put together one of the most strategic cross-media deals so far. In January this year Unilever and AOL Time Warner agreed a "multi-million dollar cross-media package for three years and identified four ways they would work together. These are: cross-platform advertising across AOL Time Warner's media properties; using AOL Time Warner's custom-publishing operation; sharing information on developing media platforms and advertising technology; and, lastly, establishing a multi-disciplinary team including executives from both companies to "drive business growth opportunities across platforms".

Unilever's worldwide head of media Alan Rutherford is reluctant to provide details of how the theory is translating into practice. "We have a number of measures to assess the return on investment of the deal, but I'm not going to say what they are, he says, arguing the arrangement is not simply a media deal and involves "the whole communications process".

While the press headlines and industry buzz has been about big global alliances, the reality is that only a handful have been agreed. For the most part, cross-media deals have been about local brands and markets.

Last year Emap Advertising's specialist cross-media department put together 34 cross-media campaigns, all UK-based. This year it is on target to do more than 70.

Jane Kesley, Emap's director of cross-media solutions, says her ten-strong team is working on just one international campaign idea.

But if these deals are worth more than the sum of their parts - media owners still don't feel confident enough to charge a premium for them.

"You pay exactly what you'd pay if you wanted this as a number of separate projects, says Kesley.

Eventually there might be a charge for the work in setting up such deals she says, but not when every media owner in town is fighting furiously for a share of adspend.

All the media owners looking to do cross-media deals deny that there is a discount attached to them - while agencies and advertisers insist that there usually is.

Over at AOL Time Warner, Jonathan Davies, CNN's vice president of ad sales for Europe, Middle East and Africa, who chairs the UK ad council, says that "in the current climate no premium is being put on cross-media packages. Each part of the company gets its share of any cross-media deal, based on how big a part it played in the campaign.

Davies says AOL Time Warner's position is that it will respond to demand in the market for such deals, but "lots of agencies and clients don't want to do these cross-platform deals".

"They will continue to happen, he says, "but they are going to be driven by brand solutions and ideas - not discount."

His views reflect AOL Time Warner's recognition that these deals are going to have to come out of the individual operating companies - rather than be imposed from above. There has also been a significant shift in media owners' attitude. Two years ago there were suggestions that the powerhouse media owners and clients would negotiate directly on these deals, cutting out the agency middleman.

Agency involvement

Today media sales teams have learned that going direct to the client can be a risky business, with the prospect of alienating influential media agencies and pitching inappropriate strategies.

Steve Cox, head of planning and insight for Viacom Outdoor, who works with the Viacom Brand Solutions team to create cross-platform opportunities, says agencies are crucial to making ideas work. "We're not in the business of cutting out the agencies, we're in the business of coming up with strong solutions for the client - working with the agencies."

What everyone agrees is that the current structures of advertisers, media owners and agencies makes doing such deals difficult and time consuming.

"At one point during a recent deal we did there were 30 people in the room, all wanting their say, says one media owner. "It was a nightmare, but that is the way the agencies and our own sales operations are set up at the moment. We've all got to change to make these deals work."

Jim Marshall, chief executive at MediaVest, says: "The main issues are structural and cultural in terms of getting people working together for the right reasons. It's still very early days and some of these deals will take shape over the next few years. It's not going to happen next month or next year, but it will happen."

But ultimately it may be that 'cross-media deals' is simply a misnomer - when advertisers and media owners are really looking for something closer to brand and business alliances rather than media buys.

Perfecting partnership

Stephen Knight, senior vice-president marketing and brand manager for Walt Disney International Europe, says: "The term 'cross-media' is probably inadequate if you're talking about a close and long-term relationship that really goes beyond traditional media advertising deals."

Disney's biggest cross-media deal so far was made last year in the US, where DIY chain Home Depot signed a reported £65m three-year tie-up across Disney's ABC network, ESPN sports channel and Lifetime channel.

As part of the agreement, Disney is launching a range of branded children's paints through Home Depot. It has also agreed to purchase Home Depot products for its operations. For many other media companies, Disney's proven ability to cross promote its own operations, and develop long-term marketing partnerships, is the model they want to pursue. Disney has long-standing and valuable relationships with the likes of Coca-Cola, Nestle and McDonald's and works with them across almost every aspect of its business.

"These relationships have developed over the years, and in some cases have simply come out of them being suppliers to Disney of soft drink or confectionery, says Knight. "Now we have a ten-year deal with McDonald's that cross-promotes Disney movies through Happy Meal promotions in its restaurants, but it goes much deeper than that, with activities across the Disney operation.

"You have to make a distinction between media deals and marketing partnerships. It's fair to say that we are more advanced in terms of developing marketing alliances than cross-media selling. But that's where we and our partners see real value."

In the long term it is these kinds of deals that advertisers will be looking for; not just a commercial message delivered via more platforms than ever before, but longer term relationships, with shared goals and initiatives. If cross-media deals are ever to deliver on their promise they will have to be driven by ideas - not just inventory.

AOL TIME WARNER

How does it work?

AOL Time Warner has set up ad councils in key markets. The UK council was launched in July this year. Sales and marketing people meet monthly to discuss possible deals across different divisions and media brands.

What's on offer?

AOL UK, IPC magazines (ranging from Loaded to Woman), Turner (including CNN, Turner Classic Movies, Boomerang and Cartoon Network) and Warner Bros.

Big deals?

There have been major US deals with Unilever and American Express. In the UK there has been just one big deal so far - with AOL and IPC linking up to provide an integrated web and magazine package to support the launch of Citroen's C3.

The campaign targeted ABC1 women aged between 25 and 44 and used family-friendly sites on AOL and advertorials in IPC's Woman, Practical Parenting and Essentials.

VIACOM

How does it work?

Viacom Brand Solutions launched in the UK in January 2001, designed to make cross-platform deals a reality. There's also the Viacom Marketing Council, with staff coming together every two months to look for cross-media opportunities.

What's on offer?

MTV, VH1, Nickelodeon, Paramount, Viacom Outdoor, 700 Blockbuster stores, 40 multi-screen UCI cinemas, publisher Simon & Schuster.

Big deals?

Procter & Gamble in the US locked in a £194m deal largely for television. In the UK there have been a handful of smaller deals including a campaign for Diet Coke around the launch of the Bridget Jones video, bringing together MTV and the Blockbuster chain.

Viacom last summer ran a campaign linked with Impulse to find a VJ for the channel, called Is She MTV? Viacom has recently signed a major cross-media deal with Wrigley's.

EMAP

How does it work?

A team of 10 working with different Emap brands and divisions to deliver integrated media packages for advertisers.

What's on offer?

To name but a few, FHM, Smash Hits, Heat, Q and a host of other magazines along with their respective web sites; radio including Kiss FM, Melody and Magic, and music cable television (The Box).

Big deals?

Not big, but plenty of them - 34 last year. This year the unit plans to more than double that figure and contribute 10% of Emap's total ad revenues this year. Its biggest deal so far: £2m from Nestle in a deal that included working on Smash Hits magazine and its brand extensions. Emap is working on an international project to create a TV show based on FHM's Bikini Heaven competition. It is in discussions with potential sponsors, including Foster's lager.

WALT DISNEY

How does it work?

Disney's ABC Unlimited in the US is the starting point for most cross-media deals on the other side of the Atlantic, starting from Disney's television network and then offering other opportunities across the group.

In Europe, managers admit there is no official structure in place for cross-media deals, and that Disney is probably more in the business of buying rather than selling cross-media agreements.

What's on offer?

In the US the ABC network, ESPN sports, Lifetime channel. Of course there's the Disney Channel, Disney movies, videos, DVDs, theme parks and radio interests.

Big deals?

DIY chain Home Depot's cross-media deal by Disney in the US, with a £65m spend across its TV interests. But the biggest deals for Disney remain its marketing alliances, with around ten global partners including McDonald's.

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