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AdAgeSPECIALREPORT 2.2.04 2ND ANNUAL Momentum picks up as old ways die New business models spring forth as the Madison + Vine intersection blossoms

By HANK KIM he money is starting to follow the call to arms. As the marketing- Mthrough-entertainment Tcommunity reconvenes Feb. 4 at Advertising Age’s second annual Madison + Vine conference, there are tangible signs that advertisers and their agencies are taking a more central role in creating content for a media-hungry public. “There is such momentum and an increase in enthusiasm and support on all sides of the business from brands to the creative community to distributors,” says Tera Hanks, president of Omnicom Group’s Davie-Brown Entertainment, Los Angeles. “And for the first time, with the ’04 budgets, our clients and the brands are actually budgeting specifically for non-traditional opportunities.” It was at the inaugural+ M+V conference a year ago that Coca-Cola Co. President-Chief Operating Officer Steven Heyer, in the keynote address, confidently assumed the role of branded-entertainment firebrand, cajoling both Hollywood and Madison Avenue to “collaborate or die” in creating a new media-neutral marketing paradigm. To anyone in the Rodeo Ballroom at the Beverly Hills Hotel that day, it was a mesmerizing performance marked by boldness and passion. It’s no surprise that the ideas expounded in his call-to-arms speech have been See MONEY on Page S-2

HANKS: Support from all sides.

TV Music Movies M+V conference INSIDE NBC’s ‘The Restaurant’ hustles Pepsi deal with Apple among What beer will the next big AmEx’s John Hayes keynotes to integrate benefits for new trials for industry, but action hero quaff? Marketers Madison + Vine conference its blue-chip sponsors PAGE S-2 dollars getting stretchedVPAGE S-4 get involved early PAGE S-4 Feb. 4. See AdAge.com AD AGE MAIN 02-02-04 B 2 AADB 1/29/04 4:13 PM Page 1

February 2, 2004 | Advertising Age |S-2 AdAgeSPECIALREPORT MADISON + VINE Marketers look to ‘Restaurant’ model

TV: High-profile NBC network to go barter because the series was debuting during the summer when broadcast project involves sponsors networks have smaller programming budgets, and NBC wouldn’t have to pay a license fee. from appetizer to dessert However, NBC wouldn’t renew “The Restaurant” without a straight license deal, By JANET STILSON particularly because the series will move to the regular season. “Had it been a giant hit, dvertisers are still looking for then we would have had more leverage,” Mr. landmarks as they try to navigate the Burnett says. world of TV production. Yet certain Akey signs are starting to emerge, BARTER MORE LUCRATIVE including a growing willingness on the “Economically, a barter deal is way more agency/advertiser side to fund programming. [lucrative for producers] because you’re

The best example is the “The Restaurant,” benefiting from half of the advertising ERIC LIEBOWITZ the reality series that made its debut run on revenue. Then you have the benefit of the TASTE TEST: “The Restaurant” began with sponsor support at its early stages. General Electric Co.’s NBC last summer and advertisers promoting their involvement in will return this spring. “The Restaurant” was the show,” says Mr. Burnett, noting that impression, it far surpassed how it was sold to into its content. extensively underwritten by ads and integrated AmEx used Mr. DiSpirito in its ads, which [the advertisers involved]. Plus we had repeats Kevin McAuliffe, senior VP for cross- product placements from American Express helped spark tune-in to the series. on [NBC-owned cable network] Bravo, and it platform initiatives at Sci Fi’s parent, Co., Mitsubishi Motors North America and Magna Global has produced other TV was sold all over the world.” That additional Universal Television Networks, says the deal Coors Brewing Co.’s Coors Light. shows over the last few years, but “The exposure for the brands was over and above the came together fairly smoothly for a number Interpublic Group of Cos.’ Magna Global Restaurant” is its highest-profile project yet. value promised in the original deal, he adds. of reasons—not the least of which was open Entertainment, whose clients include those The question becomes whether it signals an Mr. Burnett says that one pleasant and friendly discussions among all the units three marketers, and production company increased willingness by the agency side to surprise during “The Restaurant” was that within Sci Fi working on the project, including Reveille bankrolled the rest; NBC paid no finance network TV content. Late last year, while certain people involved “wanted to give programming, ad sales and marketing. license fee. MindShare and Walt Disney Co.’s ABC inked their clients a big benefit for their brands,” the There was also the realization that “It was the first prime-time network a pact in which the WPP Group unit’s clients advertisers themselves asked that their brands Omnicom Group’s OMD Worldwide, New bartered series deal with full integration in a will help finance prime-time sitcoms and be integrated more subtly. York, had a slew of clients whose brands long time,” says Ben Silverman, CEO of Los dramas for the network. The media-buying Nevertheless, many critics of “The encompassed products that were in the script Angeles-based Reveille and the series’ co- giant has tapped veteran TV executive Peter Restaurant,” both in the ad industry and the to begin with. Among the advertisers on creator and executive producer. Because of that, Tortorici as its point man for these viewing public, complained of product- board the “Midnight” project are Nissan it took him a year and a half to put the deal programming deals. The first fruits of this placement overload. North America, McDonald’s Corp., Visa together, first with Manhattan restaurateur linkup are anticipated this year. USA, FedEx Corp. and Clorox Co. Rocco DiSpirito, then NBC, then Magna Such arrangements will implant SMALL GROUP Mr. McAuliffe says he’s learned a few Global and its three clients, and then Mark advertisers deep into the heart of program Mr. Silverman believes the number of lessons that will further refine the integration Burnett, the reality TV maven and creator of development, going well beyond simple, advertisers involved needs to be kept fairly process in future productions: “One is even the “Survivor” franchise, who also served as traditional brand-integration ploys like small. “You don’t want five or six,” the earlier creative discussions about the potential executive producer of “The Restaurant.” product placement. executive says. brands within the context of the story arcs … NBC was on the fence about whether to do The return on investment [on “The But what about a dozen? The miniseries “5 And spending more time talking with the a license or barter deal in the first season, Mr. Restaurant”] was tremendous, Mr. Silverman Days to Midnight,” debuting next June on people on the brands’ marketing side, so they Silverman says, adding that he convinced the contends, because “in terms of sheer cable’s Sci Fi Channel, will integrate 12 brands can think out of the box with us.” ■

Mr. Tihanyi acknowledges he’s considering time-shifted TV viewing. new revenue models involving content News Corp. Chairman Rupert Murdoch, Money creation, but he reiterates that at the end of upon closing his acquisition of satellite provider From Page S-1 the day, GM is an “auto manufacturer and DirecTV, said DVRs would become a critical co-opted by players on both sides of the aisle as not a production company.” carrot to lure subscribers away from cable. a manifesto for the space. Like Mr. Marks, Mr. Tihanyi says both The major cable operators themselves are Omnicom, among others, is making good sides have to develop a better understanding of gradually starting to roll out their next- on that call. It’s pursuing new business the possibilities in co-marketing. “When I walk generation set-top boxes with DVRs. Comcast models that could generate ownership and into the room with somebody from Corp., the nation’s largest multiple system brand equity across TV, film and music for its Hollywood,” he says, “it’s like they look at me operator, is developing a proprietary DVR advertiser clients, which include Pepsi-Cola as a walking checkbook, and that bothers me.“ offering. North America and Hewlett-Packard Co. While it’s largely uncertain what impact Reflecting that shifting focus is the implacable digitalization of our economy ALTERNATIVE SOLUTIONS Omnicom’s hiring of Robert Riesenberg last will ultimately have on marketing, 2004 could As companies like Intermedia Advertising month to head a new advertainment unit. wind up as a seminal year. Those with their Group and the much-beleaguered Nielsen TIHANYI: Sees new GM revenue models. Mr. Riesenberg comes to Omnicom from heads in the sand may finally hoist Media Research roll out product-placement Interpublic Group of Cos., where he oversaw themselves out of denial. evaluation tools to offer a tangible return-on- Magna Global Entertainment. there’s still a significant learning curve. Because even if last year’s Yankee Group investment metric, marketers and networks Andy Marks, a partner in Matter, a newly “We have a ways to go with clients in forecast of 20% U.S. digital-video-recorder could become more emboldened in 2004 to formed independent branded-entertainment convincing them to pull the trigger,” he says. capability penetration by 2007 isn’t met, it’s a ante up for entertainment-based alternative outfit, and one of the architects of the Chrysler One marketer who gets it is Steve Tihanyi, virtual lock that more and more average marketing solutions. An improving economy Million Dollar Film Festival, is also optimistic General Motors Corp.’s general director of Americans will avail themselves of the joys could also spur greater experimentation and about the opportunities ahead. But he warns marketing alliances and regional operations. and conveniences of commercial zapping and more risk taking. ■ AD AGE MAIN 02-02-04 B 4 AADB 1/29/04 4:15 PM Page 1

February 2, 2004 | Advertising Age |S-4 AdAgeSPECIALREPORT MADISON + VINE

Apple Computer’s iTunes Music Stores. The going away overnight, and neither is the program, kicking off this week seeds under- promotional burden of radio play, concert the-cap codes among bottles of Pepsi, Diet tours and co-op advertising. Pepsi and Sierra Mist. “As fast as digital music is growing, it’s still Pepsi raises bar “Apple gets a huge boost in launching its a small slice of the pie and a lot of music is still music brand through Pepsi’s big media tentacles. being sold through traditional formats,” says The artists get paid for the music Mr. Stimmel, who insists his they make and consumers get free marketing budgets aren’t for music deals music, which is what deals in the Focus on shrinking, but instead are being future should look like,” says stretched thinner to cover ever- How we Courtney Holt, head of new media get our tunes: broadening sales channels. CD sales, because “demand for music has and strategic marketing for Ad agencies seem eager to MUSIC: Marketers join 245.3 million— never been higher, people are transferring and Universal Music Group’s retail unit sales of CDs, help music marketers share sharing music like never before, and the Interscope Geffen A&M Records. January-June 2003, promotional and media costs, but in recording companies’ devices for listening to music everywhere are Illegal downloading and file- down 9.7% from the results of high-profile artist- multiplying.” sharing of music is expected to previous year. specific marketing tie-ins have new distribution channels But record labels aren’t the only ones continue, but legal vehicles to buy 30 million-plus— been mixed. driving the biggest deals in music; advertisers digital music are expanding, total number of songs “I would never claim to know By KATE FITZGERALD are now beginning to pull those levers, says providing new opportunities for sold at Apple’s iTunes why a spaghetti sauce marketer Rishad Tobaccowala, president at Publicis marketers to ride along. Music Stores. changes the color of their product s the selling of music goes digital, the Groupe’s Starcom MediaVest Group, More innovative tie-ins are 2 million-plus— box, yet advertisers always seem number of iPod digital ad industry is becoming an Chicago. expected to flow this year from music players Apple to believe they know which artist increasingly important player in the “Let’s face it, the record company’s job is to Apple’s new alliance with has sold since their is the right fit for their Adistribution process. identify talent, and they don’t do that very Hewlett-Packard Co., aimed at introduction. promotion,” says Tami Levy, “We saw it taking hold last year, but we’re well,” he says. “Artists need distribution for expanding the market for its 99¢- Sources: Recording Industry VP-strategic marketing for Time on the verge of an explosion of marketing their music, and as the distribution channels a-song music service beyond the Association of America, Apple Warner’s Warner Bros./Reprise deals between record labels and advertisers go digital, they don’t need an independent hot-selling iPod music player. Computer Records. that will take the music industry in new retail marketing machine behind them. They Plans for a similar service called In fact, Warner Bros. rejects directions,” says Lee Stimmel, senior VP- need marketing partners, and they need direct Connect are in motion at Sony Corp., and the vast majority of artist tie-in proposals strategic marketing and business access to digital platforms.” retailers are reportedly exploring their own pitched by agencies because they don’t pass development for Time Warner’s Atlantic Advertising and music industry executives digital music stores; Wal-Mart Stores already the “smell test” of being certain not to Records. agree that a likely prototype for major music has such an operation. alienate an artist’s core fans, Ms. Levy says Mr. Stimmel is bullish on the outlook for deals of the future is Pepsi-Cola Co.’s Despite price cuts and volume sales The benchmark for dashed hopes may be selling music, despite the alarming decline in giveaway of 100 million free songs through declines, traditional retail CD sales aren’t last year’s much-ballyhooed $14 million tie- Beer choice crucial to ‘Sahara’s’ tone Next action hero Reloaded” from Time Warner’s Warner Bros. FILMS: and the “Austin Powers” flicks of New Line Cinema, also part of Time Warner. franchise links sponsor “A franchise is appealing because, over time, your product could become tie-ins to role’s personality synonymous with the character,” says Andy Glaser, marketing director for Heineken. By T.L. STANLEY “And if you’re involved in script development, you can be more influential in hen hollywood a-list actor the editing process instead of just paying to Matthew McConaughey suits up as help market the film without even knowing Dirk Pitt, a rough and tumble secret- your brand is in it.” agent-cum-treasure-hunter in the “Sahara,” based on the best-selling novels LEE ROTH W MCCONAUGHEY: Actor gets plum role to play Dirk Pitt in “Sahara,” but what beer he drinks is open to discussion. upcoming “Sahara,” he won’t be a cocktail by Clive Cussler, could be a three-film series, swilling character like James Bond. Chances mirroring “Indiana Jones,” another are, he’ll be a beer-drinking kind of guy. Paramount franchise. It also could be a sign of Marketers are mulling over a number of Film Festival. The brand of beer he chugs will be pivotal things to come, where brand marketers ways to make their messages pop with Any of those scenarios would be an for both the creative tone and the business demand and receive a more significant role in consumers, from creating minimovies for the evolution from the tie-ins that have become potential of the film. Whichever marketer shaping Hollywood’s entertainment and their Web, a la BMW of North America’s plentiful and, some say, diluted in the steps into the starring role, that company is part in it. groundbreaking series, to minimovies for the marketplace. The structure has been set over likely to structure a deal that will extend far big screen. In these cases, the brand could the past decade: a studio gets a fat media buy beyond product placement. EARLY OWNERSHIP make a deal directly with a famous filmmaker and the brand gets to borrow the film’s Co-marketing and cross-promotions will It’s happening in TV already, with brands and release the project themselves. equity for advertising and promotional happen on the back end, near the movie’s taking an ownership position in Brands also could go into business with a campaigns. possible fourth-quarter release, but programming, and footing part of the studio partner and co-finance a feature film. Even if a brand spent mightily on its film collaboration will be key in the early stages of production bill accordingly, to create a Though one high-ranking Hollywood association, there was no guarantee, or the feature, which Viacom’s Paramount platform for their products. In the feature film executive has championed the idea, it’s yet to sometimes even promise, of brand inclusion Pictures hopes to turn into a modern-day world, with its stratospheric budgets and become a reality. Marketers wonder if it’s in the content. “Indiana Jones”-style franchise. delicate talent relations, executives on both possible, saying it would be more likely to Last year’s top-grossing movie, One marketer vying for the spotlight is sides of Madison + Vine are trying to figure take shape on small, niche films or through a Disney/Pixar’s “Finding Nemo,” for Heineken, which has had successful tie-ins out a new millennial model that works better brand’s sponsorship of up-and-coming instance, had nine marketing partners and no with films as diverse as “The Matrix for both. filmmakers, like the Chrysler Million Dollar paid product placement. Universal Pictures’ AD AGE MAIN 02-02-04 B 5 AADB 1/29/04 4:16 PM Page 1

February 2, 2004 | Advertising Age |S-5

in between DaimlerChrysler’s types of music deals suit them, says “We are not looking to exploit Chrysler Group and Celine Dion. Pete Laatz, marketing alliance anything to the point where it “Artists need That deal failed to inspire people to manager for Miller Brewing Co. appears forced and attached; nor buy Chrysler’s new Pacifica and The Milwaukee-based unit of are we a bank handing out money marketing put agencies on alert about major SABMiller is teaming with Roxio’s in appreciation for a great song,” tie-ins that could burn both sides. Napster starting this June for a Mr. Laatz says. “We will pay what partners and “It must be exactly the right fit promotional tie-in with Wenner the association is worth to us, and between the artists and the product, Media’s Rolling Stone to give away we expect results. The music access to digital and finding that balance is an art,” a Samsung Napster music player business definitely needs to says Mr. Tobaccowala. and $50 in Napster music credit to become more accountable in the platforms” Measuring the results of music thousands of fans through a two- area of an accounts-based model as tie-ins is an elusive task. A success month retail and on-premise they begin to take in more dollars —RISHAD TOBACCOWALA ■ is defined by the fact that both sides promotion. from brands.” CHRIS CASSIDY walk away happy, though numbers are hard to come by, say music marketing executives. Anheuser-Busch’s Budweiser was delighted with its “True Music” radio campaign last fall with Warner Bros., says Ms. Levy. The effort introduced new singles from established artists such as the Goo Goo Dolls, Trapt and John Michael Montgomery on 30- and 60-second radio commercials. “Budweiser wanted to link its brand to authenticity, and these artists have credibility with younger consumers,” Ms. Levy says. “The radio spots introduced certain sought-after music at a very strategic moment.” Increasingly, advertisers are drawing up new rules about what

“Cat in the Hat” had 11. “If we go to a brand and basically tell [the marketer] we’re only interested in their media dollars, then that’s not valuing the relationship,” says Marc Shmuger, vice chairman at Vivendi Universal’s Universal Pictures. “We need to understand their business.” That’s not to say that traditional tie-ins deals are dead. A number of them will surface this year around tentpole releases like Sony Pictures Entertainment’s “Spider-Man 2” and Paramount/Nickelodeon’s “SpongeBob SquarePants Movie.” But for some brands, that’s just not enough. Several studios, among them DreamWorks SKG and Walt Disney Co.’s Miramax, focus on long-term relationships with marketers, structuring formal or informal deals that keep the two working together on consecutive projects. The leg up for these two studios in this area is their product placement, consumer products and promotions divisions are all under the one roof. The studios’ size, much smaller than Hollywood’s majors, actually helps by making the process smoother. “We have access to the property from the very first moment, and we can look at it as a marketing platform,” says Lori Sale, Miramax exec VP-promotions. “It enables us to bring a brand along from the start.” ■