In the wake of the announcement that America Online has signed a two-year global strategic alliance with The Coca-Cola Company, the two companies have made it clear that they will contribute a significant amount of resources to the partnership.
The first step will be the creation of a co-marketing department that will consist of staffers from both companies. They most likely will be based at the AOL headquarters office in Dulles, VA, according to Scott Jacobson, spokesman for The Coca-Cola Company, Atlanta.
Statements regarding the pact have been “intentionally vague simply because it’s going to require a coming together of our marketing folks and AOL’s marketing folks, and that hasn’t happened yet,” said Jacobson. There are no current marketing campaigns on the table for the two companies.
Although Coca-Cola does have a number of sites, including its U.S. e-commerce site (cocacola.com), this is the beverage giant’s first significant foray into the online world. “This is uncharted territory,” said Jacobson. “This is not a place we have traditionally connected with consumers. There was definitely a feeling around here that, ‘yeah, we need to be online in a much bigger way.'”
AOL, however, has already made a strong push into the offline world. It has formed marketing alliances with Sears, Roebuck and Co., Wal-Mart Stores Inc. and General Motors Corp.
The Coca-Cola deal comes on the heels of the agreement its chief competitor Pepsi made with Yahoo in March. The two companies agreed to launch a summer loyalty program that will bridge the online and offline worlds. Yahoo also will have its logo placed on 1.5 million 20-ounce and one-liter bottles of Pepsi and Mountain Dew available at 50,000 retail outlets.
Consumer packaged goods manufacturers as a whole have been helping numerous online entities to breach the offline world of late. MaMaMedia.com, for example, will have its logo on the back of 125 million Hi-C juice boxes in supermarkets across the country.
Additionally, General Mills is featuring an offer for Chumbo.com Inc. software on its Cheerios boxes. The offer reportedly appears on 25 million boxes.
The Coca-Cola and AOL agreement opens up some significant doors for both companies. Coca-Cola, for example, will make AOL services and products available through its distribution channels, such as advertising, merchandising, packaging and in-store promotions.
This means AOL could now appear at events at which it has never before had a presence. Coke has agreements with the Olympics, World Cup Soccer, Disney Theme Parks and Universal Studios. How these deals will tie-in with AOL is yet to be determined.
Additionally, Coca-Cola has hundreds of products around the world, including 20 in the United States, that can promote AOL and its properties.
On the other hand, AOL will market The Coca-Cola Company’s brands online across its family of interactive entities including AOL, CompuServe, Netscape, Spinner, Winamp and ICQ. AOL has more than 22 million members that Coke is now able to reach. Coke also likely will exploit AOL’s involvement with Moviefone.
“The feeling is the sky’s the limit,” said Jacobson.
From a financial standpoint the companies have already invested millions in the agreement. The total value for the alliance is reportedly $64 million. Coca-Cola reportedly will pay AOL $24 million for access to its services. Each company also will contribute $20 million toward their joint marketing plans.
“Most media buys involve more money than this. It wasn’t about money changing hands,” said Jacobson. “It is about a long-term partnership that’s about getting into each other’s worlds and leveraging each other to better connect with the consumer.”
