RealTime IT News

AOL, Coca-Cola Forge Marketing Alliance

Soft drink giant Coca-Cola Co. on Wednesday took its first major step into the world of Internet marketing, forging an alliance with America Online Inc. reportedly valued at $64 million.

Although the companies didn't reveal financial terms, the Wall Street Journal reported that Coke (KO) will pay AOL (AOL) $24 million for access to AOL services. The two companies have also agreed to contribute $20 million each to marketing support over the course of the two-year agreement, according to the paper. The deal reportedly may be extended to a third year.

The deal teams the two companies for online and offline marketing efforts centering on themes like music, movies, sports, holidays and community. They're planning promotions built around the AOL Moviefone brand, Coke's sponsorship of the Olympic Games, and the Christmas holiday season.

"Coca Cola's legacy dates back more than a hundred years, while the AOL brand is barely a decade old, but today Coca Cola and AOL are two of the most recognized and powerful consumer brands in the world," said Steve Case, chairman and chief executive officer of America Online.

"We look forward to helping Coca Cola use the online medium to extend its legacy into this new Internet century."

The deal follows rival PepsiCo Inc.'s (PEP) partnership with the other one-hundred-pound gorilla in the Internet space -- Yahoo! (YHOO) -- and both agreements likely will serve the same purpose. They give the soft-drink makers much-needed visibility on the Internet, and give the online players credibility and distribution in the real world.

Coke says it will use its vast distribution system to make AOL's interactive products and services available around the world. It will also promote AOL through advertising, merchandising, packaging, and in-store promotions.

AOL, for its part, will market Coke's brands across its properties, including AOL, CompuServe, Aol.com, Netscape, Spinner, Winamp, and ICQ.

Besides aligning AOL with a marketing powerhouse like Coke, this agreement is also an example of what online media companies have been hoping for. One of the big reasons for faith in the growth of online media -- especially as dot-com dollars grow more scarce amid stock market turmoil -- is that real-world companies like Coca-Cola will begin spending more of their marketing dollars online.