Unilever signs £320m ITV deal in UK's biggest media contract

by Jennifer Whitehead,, Brand Republic 27-May-02, 09:00

LONDON - Unilever has signed a four-year £320m contract with Granada and Carlton Communications to advertise on ITV, in the biggest media deal in UK television history.

Media reports suggest that the deal, handled by Initiative Media, could have secured Unilever discounts in the region of 25% on the usual rates. It comes at a crucial time for the ITV companies Granada and Carlton, which are both expected to post losses this week after struggling under the weight of their investment in the disastrous ITV Digital.

The Unilever deal is unprecedented in both the spend and the length of the contract. Such deals are more regularly one year in length.

Unilever is one of the UK's top advertisers, behind the government, Procter & Gamble, Ford and BT, spending around £120m a year advertising its brands, including Persil, Flora, PG Tips and Dove. The Anglo-Dutch company will get favoured treatment from the deal, such as a foot in the door of sponsorship deals between programmes and brands.

It will allow Unilever to use the time to suit its own product promotions and the deal reportedly ties Carlton and Granada to incentive payments. Jerry Hill, chief executive of Initiative Media, told The Times: "The deal is structured such that if ITV delivers more audience, it gets more money."

Because ITV's share of audience has been sliding over the past 10 years and the advertising market has seen its worst downturn in living memory, the deal is a piece of cheerful news for Carlton and Granada.

However, should the advertising market pick up pace over the next four years, it will be Unilever which is laughing because it has secured advertising at low rates. It already cut its costs by £60m for the first quarter of the year as a result of lower media rates.

Earlier this year, it signed a £60m deal with JCDecaux, the outdoor ad group, for a five-year contract that also gave it significant savings.

Shares in Carlton were trading up at 265.5p this morning, while Granada was also up, rising 0.6 to 132.75p.

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