MEDIA FORUM: Creating a new landscape for cross-media deals - The new Communications Bill will lead to more cross-media ownership, but will this inevitably increase cross-media deals?

It is a media conference classic, isn't it? The cross-media deal.

First session after lunch on the second day. Followed by a panel discussion.

The thing is, it has always been one of those concepts that's infinitely more exciting in theory than in practice, a phenomenon always on the verge of making it big, but whose time never quite comes.

Well, think again. Maybe that's about to change. Because if we can be sure about anything to come out of the forthcoming Communications Bill, it's that it will clear the way for a lot more cross-media ownership.

And if big conglomerates own a spectrum of media properties they will inevitably try to package them up in one way or another.

So that's one factor. The other big factor is America. In contrast to the UK, where in the past there's been relatively little cross-media ownership, it has been a factor in the US for years. But only in the past 12 months or so have we seen greater efforts over there to leverage that ownership.

Last year, for instance, Procter & Gamble signed a huge deal with Viacom - the owner of the Paramount film and TV properties, MTV, CBS and radio and outdoor assets. Unilever has since responded with a deal with AOL Time Warner. Many US commentators argue that recession was a big factor behind this sort of deal, with media owners desperate to shift inventory in any way they can. But in a telling development back in May, we saw the first mega-deals struck on a agency basis when OMD USA negotiated agreements with both Walt Disney and Viacom. Each deal was reported to be worth in excess of $1 billion.

So is it almost inevitable that, once the dust has settled, we'll see the same sort of thing here? It's widely accepted, after all, that the big US companies are likely to enter the market here following enactment of the Bill.

Meanwhile, the only media owner with any real in-depth experience of cross-media sales in the UK is Emap. For years, it has been selling a youth audience across its radio and magazine brands. Just what can Emap teach us? Dave King, the managing director of Emap Advertising, cautions against jumping to premature conclusions. The market, he argues, isn't going to change overnight, whatever happens.

He believes there are a couple of stages of consolidation that the market will have to go through before truly diversified media owners will emerge.

First, he argues, we'll see intramedia deals - TV companies, for instance, buying other TV companies.

The second stage will see cross-media ownership as a driver but it will only be after multimedia companies have consolidated on an international basis that we'll see more media owners turning their attention to cross-media sales. Meanwhile, Emap continues to steal a march on its rivals.

"We're able to offer these sorts of deals right now - the Bill doesn't take effect until the end of next year. Advertisers who want truly media-neutral solutions already want to do it. In the meantime, other companies want to try to do it but it can't really work where you don't have full ownership of the media, he states.

King says that Emap's cross-media sell continues to be popular. He adds: "Agencies and clients want to be more accountable and the issue of media neutrality is driving the whole issue. You have to speak to your customers in the right place at the right time and in the right tone of voice. Advertisers recognise that it's not just about buying a whole lot of ratings on TV - the audience they want to reach has a range of media usage and you have to reach them in using a range of media."

What do advertisers think though? Surely there are potential downsides here? Alan Doyle, the communications manager of Volkswagen, states: "It's difficult to give a definitive view. It's all very speculative at this stage and we don't know how companies would approach this. But if aggregation leads to a higher ability to provide fully integrated solutions then that would be welcomed. If it leads to conditional deals being thrust on you - for instance, if you want to use magazines, being told you must use the online versions of the magazines - then that would be a bad thing. But anything that gives the client side greater flexibility, greater responsiveness, greater discount or greater integration - that has to be a good thing."

The company with the greatest experience in this field worldwide is arguably Viacom. Is it already gearing up to reinvent the UK market? Paul Curtis, the managing director of Viacom Brand Solutions, can't comment on that.

But he does say that the issue is far more complex than most people appreciate. It's not just about bundling loads of inventory together.

He says: "The real opportunities in the Communications Bill are to be found beyond simple vertical and horizontal models - adding scale will not necessarily add any extra advertising value. Advertising continues to provide bedrock brand support for most clients but consumer brand perception is influenced by a range of factors including direct marketing, sampling, word of mouth, promotions, in-store product placement and packaging.

"A total communication effect is best achieved through touching the consumer in as many places as possible and in as many different moods as possible.

Viacom is very fortunate to be able to combine strong media brands, extensive intellectual property rights with significant retail distribution enabling it to touch millions of clients' consumers in a multiplicity of places and mindsets."

All of which sounds useful - but scary too. The big media owners will wield a lot of power, won't they? Perhaps, Nick Theakstone, the head of investment at MindShare, says: "Yes, it is likely that there will be a great deal more consolidation - not just on the media owner side, but among agencies and clients too. Global clients may well be able to benefit from the cross-border deals on offer from global media owners, for instance, but they might be less good for clients that are less global."

On the other hand, Theakstone adds, it's not always easy for media owners to structure themselves in the right way to leverage their cross-media properties. "There are often many different profit and loss responsibilities, so it might not be in the interests of individual operating units to put something together. At the very least it might be difficult for them - and I can think of only a few examples of where it has actually happened. But where there is greater integration there are potential benefits for advertisers, as long as we can ensure that we are strong enough and organised enough to match the power of these big media companies, he concludes.


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