SAN FRANCISCO (05/05/2000) - In its first thrust into interactive marketing, soft-drink maker Coca-Cola has announced a multiyear, comarketing agreement reportedly worth $64 million with America Online Inc. The companies said they plan to use each other's brand and distribution channels to promote their products and services as soon as this summer.
Although both companies have declined to release details of the agreement, they didn't dispute published reports that Coke would pay AOL $24 million for technology, products and services and that each company has committed approximately $20 million in marketing activities and staff to direct the collaboration. The deal allows Coke to draw on AOL's extensive marketing experience and appeal to the large number of people who subscribe to AOL and its CompuServe subsidiary, as well as to those who use Netscape products.
For AOL, the agreement could put its name, advertisements and physical products in the hands of billions of consumers worldwide. "Brands need to be continually relevant and to be continually making connections with consumers, and AOL really affords us the opportunity to do that," says Coca-Cola spokesman Scott Jacobson. "We've looked at ways with AOL that we can reach consumers with sports, with music, with holidays and with experiences."
Several weeks ago, Coke announced that it would open an online store this summer for its branded merchandise. At the end of March, PepsiCo announced a comarketing agreement with Internet portal Yahoo, with each side promoting the other's brand and products through integrated online and offline contests and interactive marketing campaigns.
Before Wednesday's announcement, many analysts believed that Coke had been too slow to take advantage of Internet marketing, given the size of its ad budget.
By end of day Wednesday, Coca-Cola was up $2.38, or 5 percent, to $48.50, and AOL's stock was up $0.13 to close at $57.13. With the ink on the agreement not even dry, Coca-Cola and AOL executives are assembling teams of marketing staffers to work together on the project. Jacobson said Coke's first interactive campaign would make its debut this summer.