Marketers may be first to benefit from media merger

As they undertake the ambitious goal of integrating traditional media with the Internet, executives at the newly merged AOL Time Warner Inc. are promising to put consumers at the center of the process. AOL Time Warner chairman Steve Case calls it "connecting the dots" for consumers by offering integrated packages of communication, entertainment and media services through every means possible, computer, phone, television and wireless devices. And while consumers will surely benefit from all this, so will advertisers. For the first time, heavy users of advertising such as automakers and soft drink companies will be able to reach their customers with combined campaigns that span cable TV, magazines, and the Internet all at once.

That means consumers could see ads for the same car on CNN and HBO, in Time magazine and on their AOL screens, AOLTV or pocket devices."The first thing you'll see are a variety of marketing announcements," says Chris Dixon, media analyst at UBS Warburg. "Old media allows you to raise brand awareness, while new media allows you to actually connect with the product and purchase it."Then there's the idea of cross-promotion _ using different parts of AOL and Time Warner to promote each other. Various such efforts were undertaken even before the formal merger won final regulatory approval on Thursday, a year after it was announced. More are sure to come.

AOL says it has already sold half a million subscriptions online to Time Inc. magazines such as People, Sports Illustrated and Fortune. And those ubiquitous AOL software CDs may start turning up in even more places, such as with discs from Time Warner's music division, Warner Bros. In terms of changes in the media people use, look for more content from Time Warner's music, movie and magazine empire to turn up online. Sports sites on AOL can borrow from Sports Illustrated, news sites have access to Time magazine stories, and AOL's emerging TV business can tap "ER" and other television shows from the Warner Bros.' TV studio.

Such synergy at first made consumer advocates wary. When the merger was announced last year, several consumer groups, including the Consumers Union, released a joint statement saying, "Consumers do not want to be beholden to a giant media-Internet dictatorship, even if it promises to be a benevolent one." But after the government set strict limits to keep the company from crushing its competition, consumer advocates cheered. Gene Kimmelman of Consumers Union said the government had "transformed a merger that threatened competition into one that could actually expand consumers' choices."As for next-generation services such as interactive TV, details on what those would look like and when they would appear remain unclear. For now, relatively few U.S. homes are set up to handle the high-speed connections necessary to make such sophisticated services a reality.

But plenty of new services are in the planning stages. AOL Time Warner CEO Jerry Levin says the company hopes to offer video subscription services that would allow viewers to pick out programs they wanted to see. Similar subscription models are also being considered for music, where a monthly fee would allow an unlimited number of downloads. Even while plans for such consumer services remain vague, the company has been offering details on how it plans to build up revenues with cross-marketing and promotion deals, while also using its vast media holdings to build up relationships with advertisers.

Case, speaking at an investors' conference last month, said that of the top 100 advertisers on AOL, Turner Broadcasting and Time Warner's magazine publishing division, there were only four that were on each list, presenting a major sales opportunity. Citing those opportunities as well as AOL promotions for Time Inc. magazines and the Warner Bros. film "The Perfect Storm," Case said that with integrated marketing efforts across the company AOL Time Warner wanted to "expand what advertising can achieve."