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.
