P&G Inks $300 Mil. Viacom Ad Pact


Procter & Gamble Co. inked a landmark advertising pact with Viacom Inc. that should eventually enable the giant consumer-products maker to pitch its many products across a number of media platforms, Thursday’s Wall Street Journal reported.

The $300 million deal allows the maker of Tide laundry detergent and Crest toothpaste to tackle the critical marketing issue of bundling advertising across diverse channels. The one-year arrangement initially calls for pitching P&G (PG) products on 12 Viacom (VIA, VIAB) television outlets including CBS, MTV, VH1 and Nickelodeon. The companies, however, said they expect to expand to other Viacom formats such as outdoor billboard advertising, radio, or Blockbuster video-rental stores, and could extend the accord globally.

The pact is expected to hasten a wave of such deals as big entertainment companies sell advertising across their divisions. AOL Time Warner Inc. (AOL), for instance, is at work on similar deals encompassing its Internet, print and television properties. As much as 40% of all advertising dollars are expected to be tied up in this type of bundle relationship in the future, said P&G and Viacom. P&G has historically been a pioneer in advertising strategy and one of the world’s largest advertising spenders.

The timing of the deal could be good for CBS, which is now pitching its fall line-up to advertisers at a time when there is concern that TV spending will be down this year.

The bundle could also further blur the line between content and advertising. For example, P&G, which invented the soap opera in the 1930s to pitch its detergent, might work with Viacom’s BET unit during black history month to create curriculum for schools, said Bob Wehling, global director of marketing at P&G, based in Cincinnati. BET includes the Black Entertainment Television network as well as publishing, radio and Internet ventures. Mr. Wehling says P&G eventually could also get a peek at Viacom’s research and data on its teenage viewers, something that could benefit P&G brands like Cover Girl and Tampax that target teens.

The arrangement also gives P&G an edge over other marketers looking to advertise on some coveted television slots. In the past, P&G’s beauty brands wanted, but often couldn’t get, time on VH1, Mr. Wehling said.

Until now, P&G’s agencies dealt separately with cable or network TV broadcasters. The agreement with Viacom, based in New York, marks one of the first times a media parent has taken the lead in negotiating with a big advertiser. In theory, dealing with the media company, rather than the TV outlets, allows P&G to take advantage of its enormous marketing budget and lower its overall marketing costs.

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