P&G signs historic ad deal

P&G products: advertised, through a single deal, on websites, billboards and television

By BBC News Online's North America Business Reporter, David Schepp

Consumer-goods maker Procter & Gamble invented the soap opera in the 1930s as a way to sell more detergent.

Since then, the maker of Tide detergent, Crest toothpaste and Pampers diapers has become the single largest advertising buyer, spending in excess of $1bn each year on ads spanning mediums as diverse as radio, television and print.

Now, the company has signed a landmark deal with media-giant Viacom that would eventually allow P&G to pitch its products across a variety of media platforms - from the internet to billboards - a strategy the ad world sees as the shape of things to come.

The $300m deal involves, for now, just Viacom's television properties, which include no less than 12 broadcast and cable television channels.

Among them are CBS, music television outlets MTV and VH-1 and UPN, as well as premier cable channel Showtime.

Fewer middle men

The new pact eliminates numerous middle players in the ad-buying process, explains Doug Ray, managing partner at DiMassimo Brand Advertising, a New York ad agency.

"With this kind of deal you can theoretically get it down to working with one or two senior-level media individuals on the buying side, and one or two integrated sales individuals on the media side," Ray says.

It is the kind of deal that only two huge conglomerates such as Viacom and P&G could make.

That is not a fact lost on P&G executives, who are clearly keeping their options open over striking deals with other media outlets, such as AOL Time Warner.

The deal "clearly demonstrates that P&G is the industry leader in continuing to develop and pursue marketing innovation", said P&G spokesman Bob Wehling in a written statement.

Smarter spending

But beyond the hyperbole, the deal just makes sense, P&G spokesman Tom Milliken told BBC News Online.

"It's a smarter piece of spending on our behalf because what we get besides our media purchases is [for example] access to research from MTV on teenagers," Mr Milliken says.

The deal also gives P&G greater access to Viacom's other cable outlets such as Black Entertainment Television (BET), which, Mr Milliken explains, allows his company to work with the BET on projects such as Black History Month.

"We went to the umbrella parent, and we said, 'all these are attractive properties to us. Let's work with you to negotiate a deal for across your properties,'" he says.

"We're seeing with this P&G deal a prime paradigm of why CBS and Viacom merged a few years ago," says David Gertzel, reporter for Advertising Age magazine.

Mr Gertzel explains that the chiefs who signed that deal, Mel Karmazin and Sumner Redstone, saw that the companies synergies might allow them to make such as deal possible.

Trend setter?

Aside from AOL Time Warner and Viacom, conglomerates such as Walt Disney and General Electric's NBC also offer extensive cable television and internet offerings.

Advertising Age's Gertzel says he sees other deals on the level of Viacom and P&G coming forward.

"It wouldn't surprise me if General Motors or Ford did it," he says. "It wouldn't surprise me if one of the big fast food advertisers did it."

"I think we'll see a couple more of the these of similar scope. Maybe even another one with Viacom before the end of June."