deal for players and industry
Mainstreaming of web to everyone's benefit
By Dave Lindorff
Media buyers largely see the AOL-Time Warner merger as good for the marketplace. Most are enthusiastic.
What they seem to like best is that it promises to take the internet, a medium few have yet figured out how to use or price, and tame it by tying it to TV, a medium media people understand.
And it does this with the biggest name in new media--AOL--and one of the biggest names in mainstream media--Time Warner.
"This deal doesn't reduce competition. It's not like the CBS/Viacom merger, where you're bringing together two entities in a way that's counter-competitive," says Alan Banks, executive media director for North America at Saatchi & Saatchi.
"I'm excited about it," he says. "It's the next step in terms of bringing these two ways of communicating together, and it will enable us to use the new internet media the way we've used radio and TV in the past. It means a richer environment in the new media into which we can imbed our messages."
Paul Benjou, associate media director at Draft Worldwide, terms the merger "brilliant."
Overall, he says, the deal will increase the speed at which the internet grows and become mainstream.
Equally upbeat is Rishad Tobaccowala, president of StarCom IP, the internet advertising arm of StarCom.
"Ad agencies and media companies have been much more comfortable working with the Time Warners of the world than with the AOLs of the world. The Time Warners talk about audiences, not click-throughs or one-to-one marketing.
"With this merger, we'll be able to deal with a company that we're familiar with--Time Warner--but Time Warner will be able to offer us more services.''
The idea of one-to-one marketing on the internet gives advertisers a rush, Tobaccowala says, "but very few businesses have been built on one-to-one marketing. You want scale, and the Time Warner/AOL deal will allow targeting, but also scale."
"This deal provides both companies with something they needed," says Tobaccowala. "Time Warner gets an opportunity to deliver product to internet users, and AOL solves some of its cable distribution issues."
Tobaccowala says an added benefit for AOL is access to Time Warner's seasoned sales force in building subscribers.
"AOL has been selling retail, he says, "but that's much easier than selling wholesale. With Time Warner's sales force, AOL will be much better able to sell wholesale deals, which this industry is going to have to start doing as it matures."
Offering a less breathless view of the mega-deal is Ellen Oppenheim, senior vice president and media director of Foote Cone & Belding.
"I think it's kind of mixed," she says. "Obviously, to the degree that this offers stability to two important companies, that's a good thing, but you have to ask whether it will lead to increased instability for the other
companies.
"The other thing is that this will permit the merged company to offer packaging, but packaging can go both ways. It can be great when there are volume discounts and you get synergies between different media. But it's
not so good when it raises the price but not the value."
-Dave Lindorff covers television and research for Media Life.