P&G, Viacom ink ad deal

May 31, 2001
Web posted at: 1018 GMT

NEW YORK (CNNfn) -- Procter & Gamble Co. has signed an advertising deal with Viacom Inc. under which the consumer products maker will market many of its popular products across numerous media channels, the companies said Thursday.

The one-year, $300 million deal allows the Cincinnati-based maker of Tide laundry detergent and Crest toothpaste to pitch its products on 12 Viacom television networks, including CBS, MTV, VH1 and Nickelodeon. Ads will eventually extend to outdoor billboards, radio or Blockbuster video stores, according to Thursday's edition of the Wall Street Journal.

The Journal said the deal is seen as a catalyst for a wave of such marketing pacts as big media companies sell advertising across multiple channels. AOL Time Warner (AOL: down $0.80 to $51.95, Research, Estimates), the parent company of CNNfn, is working on similar deals for its Internet, print and television properties.

Jim Gingrich, an analyst with Sanford C. Bernstein, agreed.

"I think there are going to be more of these deals because media companies are trying to sell them, and from the perspective of somebody like a P&G they're going to be attracted to something like this if the rates are attractive, particularly with the softness in the advertising environment," Gingrich said.

The paper said P&G (PG: up $0.09 to $63.60, Research, Estimates) and Viacom (VIA.B: up $0.19 to $56.95, Research, Estimates) believe these types of relationships are expected to account for as much as 40 percent of all advertising dollars in the future.

"This agreement is not simply a media deal. It goes well beyond media purchasing to expand opportunities for our brands to strategically leverage Viacom Plus entities," P&G global marketing officer Bob Wehling said. "Through our enhanced relationship with Viacom Plus, P&G gains greater access to desired programming and significantly increased opportunities for co-marketing programs."

The pact comes as P&G struggles with declining sales in the face of stiffer competition and the slowing economy. The company slashed its advertising spending last year to $1.53 billion from $1.68 billion. Those costs are not expected to increase, though more of the dollars will shift to Viacom as P&G focuses on such big brands as Tide, Pantene and Olay.

Gingrich believes the structure of the deal will ultimately save P&G money, allowing its advertising dollars to go farther, which in turn will help them compete on price.

He expects to see a significant impact to quarterly sales within the next five years if P&G is able to extend the deal.

"I think it's a positive, but again you've got to put it in perspective. It's not going to be the reason that anybody is going to go out and buy the stock," Gingrich said.

		Want the full story? Search for free Company Info...
		Enter Company Name:-

P&G sets $5B Clairol deal – May 21, 2001

P&G beats lowered target – May 1, 2001

Viacom disses Yahoo! buy – May 3, 2001

Viacom 1Q tops forecast – Apr. 24, 2001

Procter & Gamble
Viacom

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.