AOL Time Warner: The Art of the Possible

You've got reach.

An almost unprecedented reach, at least in terms of audience. Time Warner Inc. properties are said to touch one in six people worldwide. The AOL Time Warner Inc. merger results in a company that through its various media properties will reach an estimated 100 million people.

Where other media companies boast large audiences - Disney has a lock on the children's market, for instance - the sheer size and diversity of the new AOL audience represents an exceptional opportunity for advertisers and marketers, who can theoretically go to one company to reach every household in America.

"There isn't anybody who sees the entertainment and advertising delivery business the same today as [they] did yesterday morning," said John Kamp, senior VP of the American Association of Advertising Agencies. Kamp isn't alone in his boosterism of the deal. "We are going into the next stage of evolution of how we as marketers will interact with consumers," agreed Saatchi & Saatchi's Alan Banks, who serves as the chair of media policy for the association.

On its face, the merger means AOL can gain consumers through Time Warner's various magazines and TV networks, while Time Warner's content will likely figure more prominently on the online service's pages.

So how will AOL Time Warner advertisers take advantage of this new resource?

Through a combination of the broadest of pitches and the most particular niche plays, according to advertising experts consulted by The Standard.

General interest advertisers - Procter & Gamble or Kellogg's, for example - could make deals for placement in Time magazine, on Time Warner's local cable stations and on AOL's message boards. Niche markets are available, too: AOL Time Warner could put sports advertisers - automakers and breweries, for instance - on CNNSI, in the pages of Sports Illustrated and on AOL's sports channels.

Advertisers have already forged similar deals with Disney and AltaVista, where sports advertisers can target ABC's Monday Night Football, ESPN.com, and ESPN's cable channels.

Of course, such deals can go too far. In 1995, a pre-Disney ABC News bagged an exclusive interview with Michael Jackson, right after the network's entertainment division agreed to give the recording artist airtime worth as much as $1.5 million - in the form of 10 commercials - to promote his new HIStory album. Critics decried the deal as unethical; ABC denied it was paying Jackson for his appearance.

Indeed, old media may learn a thing or two from new media. AOL earns revenue from banner ad sales, but the lion's share of its ad revenue comes from major sponsorship deals. "I bet Time will start using AOL's sponsorship model," said Mike Donahue, executive VP of the association. "They already have $100 million in deals. Now I'm sure they'll migrate that to TV and cable."

The cable connection could provide opportunities for e-commerce, as well. Time Warner doesn't have a great track record with interactivity, but AOL is using its experience to help advance interactive programming and sponsorships.

Still, whether or not the merger creates ad package deals, AOL Time Warner represents something beside simple synergies. If the new company's executives are to be believed, the deal will accelerate the push to broadband access, long touted as a boon for consumers hobbled by slow dialup connections.

Broadband, however, could be even better for advertisers. Faster speeds mean richer media - for example, banner ads may soon become as primitive as billboards, and Internet users could see TV-like commercials playing online.

"People don't seek out advertising," said Saatchi's Banks. "They seek out entertainment and information. Now content will be in a better house, and advertisers can be part of a more attractive package."

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