WPP And Its Clients Are Ready For Their Close-Ups

With its estimated $25 million investment in The Weinstein Company, the new film studio from Harvey and Bob Weinstein, WPP Group has brought Madison Avenue and Hollywood a little closer.

WPP’s investment is said to be the first time an ad agency has invested directly in a film studio. The quid pro quo is two-fold: potential profits from the investment itself as well as a “first look” at branded entertainment opportunities in the studio’s films and TV shows. WPP execs stressed that the first look arrangement was the deal driver.

Branded entertainment is almost as old as the movie industry itself, and such deals helped get television off the ground 50 years ago, with series such as Texaco Star Theater. But in the last decade, efforts to integrate brands and products into entertainment content have taken on greater urgency as technology has given consumers both a greater array of media choices and the ability to disengage from traditional ad vehicles such as the 30-second TV spot.

Back in 1991, Los Angeles talent agency Creative Artists Agency made a groundbreaking deal with Coca-Cola; it took on ad assignments that sparked talk of Hollywood “taking over” Madison Avenue. In the following years, the agency holding companies have forged closer ties to the film and TV production community by acquiring or starting companies or units that focus on embedding their clients’ brands into entertainment.

Omnicom, for example, formed The Radiate Group, which contains sports marketing, product placement and branded entertainment companies, including Aaron Walton Entertainment and Davie-Brown Entertainment, both based in Los Angeles. Interpublic owns PMK and Bragman Nyman Cafarelli—PR firms that handle publicity for movie stars and films. IPG started Magna Global Entertainment, specializing in advertiser-supplied programming, and also has a stake in Endeavor Marketing Solutions, the marketing arm of a talent agency of the same name, whose clients include American Express.

But WPP’s stake in The Weinstein Company is different from that of other holding companies in that it’s an investment (roughly 5 percent) in an actual content producer. Some observers last week said that crosses a line and raises potential for a conflict of interest between the holding company and its clients. “So, do they steer their clients there because it’s good for the clients or because of their investment?” asked the CEO of a competing agency. A senior WPP exec replied, “That’s silly. If we owned the company outright, there might be some merit to that. The investment is inconsequential, and we didn’t invest to generate profit. We invested to have an inside position on these [branded-entertainment] opportunities.”

Michael Kassan, who runs Media Link, said, “What Martin [Sorrell] did was very smart because what he did was something no one else has thought of, which is to give his clients a first look at projects that are coming out of potentially one of the successful film studios.” Kassan said he was a bit surprised that Sorrell, with a reputation for being frugal, is investing in a company “with guys very much known as profligate spenders.” But he said that underscores the importance of branded entertainment “in capital letters with italics.”

WPP’s media agency unit GroupM will be responsible for managing the relationship with Weinstein and bringing clients, including Unilever and Ford, opportunities to consider. A source said that the process for doing so was just being set up and that no projects had been set yet.

The film studio’s first theatrical release, set to open Nov. 11, is Derailed with Jennifer Aniston and Clive Owen.