After nearly 15 years, Coca-Cola Co. and Creative Artists Agency are on the outs.
The beverage giant originally hired the powerful talent agency to gain a bigger profile in Hollywood and gave it free rein to produce much of flagship Coke's ads during the '90s—a move that sent shockwaves across Madison Avenue. Through the years, CAA helped secure plum spots to showcase Coke's brands in film and TV shows, including Fox's hit American Idol. Numerous brands followed in Coke's footsteps, building alliances with product placement and Los Angeles talent shops, creating the surging market for branded entertainment.
In recent years, however, the Coke-CAA relationship, like so many star-studded unions, began to fade with the high costs of CAA's retainer—at one time worth nearly $400,000 a month—rankling beverage execs at headquarters in Atlanta. Coke, which has been re-evaluating several vendor relationships in a bid to cut costs, is bringing more of its entertainment capabilities in-house as it continues to rebuild its once-vaunted marketing operations.
Coke has "taken significant steps to rightsize" its relationship with CAA, according to an internal Coke memo obtained by Adweek sister publication Brandweek. CAA's role will continue "in a limited capacity" with the Coca-Cola North America entertainment department, per the note. It was written by Beatriz Perez, vp, media, sports and entertainment marketing, and sent via her BlackBerry to 20 key execs on Dec. 31. That night marked the bow of Coke's "Welcome to the Coke Side of Life" campaign.
Coke was said to be paying the Beverly Hills, Calif.-based shop an estimated $5 million a year until two years ago, per sources, but that number had recently dwindled to roughly $3 million annually.
CAA declined to comment last week and referred all calls to Coke.
Coke rep Susan McDermott confirmed the memo, but said CAA remained the company's entertainment marketing agency of record. "As a marketing group, we are rebuilding our focus on entertainment," she said. "We're looking at our [entertainment] support resources and how we can best structure all of those things internally and externally to maximize our commitment to entertainment."
While at one time CAA was involved in nearly every aspect of Coke's entertainment marketing activity, more recently, industry talk focused on the shop as being unable to deliver significant results, said entertainment industry observers who would only speak anonymously given the players involved.
"Their relationship is not producing for them," said one source familiar with the move. "They more or less consulted to Coke, gave irrelevant advice and were rarely listened to."
Said another exec, "Their role has been reduced. People are getting wise to the fact that they're getting paid a lot of money to set strategies and come up with a lot of ideas that aren't executed."
CAA helped earn Coke first-look opportunities for script integration and promo tie-ins with numerous film, TV and music projects, and most recently helped broker tie-ins with two Harry Potter films. In 2000, CAA created a marketing consultancy unit with Coke as its first client under team leader Seth Matlins.
But other projects were less fruitful. By many accounts, the "Sprite Liquid Mix Tour," with Jay-Z and 311, which CAA created and executed in 2002, was a disappointment.
The decline of CAA's role comes as Coke is looking to bolster its in-house entertainment team, which last April saw group entertainment director Geoff Cottrill leave for Starbucks on the heels of his predecessor Darryl Cobbin's exit to Boost Mobile.
"John Hackett [svp, marketing and de facto CMO at CCNA] put forth the challenge for us to rebuild our entertainment department and better leverage our external resources as we/our brand look to reclaim our rightful position in pop culture," wrote Perez in the memo.
To lead the charge, Greg Downey will join Coke on Feb. 1 from NBC Universal. Downey, a vp in the branded content space who worked on various film and TV initiatives, will fill Cottrill's shoes. Another new addition: Kelly Flatow, who left a staff post at CAA on Dec. 31 and will join Coke as a contractor in New York.
McDermott confirmed Downey's and Flatow's arrival, along with another as-yet to be hired staffer.
Just as the Coca-Cola–CAA union set trends, its distancing may foreshadow similar moves by corporate clients in Hollywood. "I don't think these agencies ever really lived up to what they promised," said a film company exec. "Coke is only the first one. I think we'll see these agencies that are overpromising and not delivering, losing more clients."
Several sources said in that some cases, the CAA relationship actually makes it harder for Coke to secure deals with talent. For example, discussions with Ryan Seacrest for off-channel Idol activities became awkward since Seacrest is repped by rival William Morris Agency.
"On a day-to-day basis, they would try to integrate themselves into the brand teams, always offering up ideas out of left field with little connection to the actual business," said an exec familiar with the relationship.
Going forward, Flatow will bring Downey up to speed on upcoming projects, namely the new season of Idol, a promotion with the Academy Awards telecast, the first-ever Powerade Sports Awards and a My-CokeRewards.com loyalty program, crossing all Coke trademarks, due later this quarter.
On the ad front, Wieden + Kennedy, Portland, Ore., was named lead agency on the $200 million Coke account last October. Wieden has been pushing the idea of a music, sports, fashion and lifestyle awards show for Powerade. The branded entertainment play, which will see Powerade fully integrated into the show, was presented to MTV in recent weeks and won a positive reception, a source said. Tab Energy will star during the Oscar fest this spring. Two spots, created by Kirshenbaum Bond + Partners, New York, will debut during the telecast.
Atlanta-based Joel Katz will still handle music, and Premiere Entertainment will continue product placement.