WPP's Mediaedge:cia last week became the latest media agency to jump on the branded-entertainment trend, acquiring a 20 percent stake in New York entertainment consultancy The Leverage Group.
As media agencies become more heavily involved in negotiating content-commerce deals for their clients, they're crafting deals that go beyond product placement and devising ways to better measure results.
"Although conceptually this type of marketing is as old as television," said Alexia Quadrani, a managing director and ad analyst for Bear Stearns & Co., "this is a new iteration, and ad agencies and media buyers are simply trying to evolve and help move the process along."
Mediaedge:cia's worldwide chief executive, Charles Courtier, said the shop plans to increase its stake in Leverage, which represents Sony Music, Warner Strategic Marketing, The Tribeca Film Festival and LavaLife, to 50 percent within three years.
While the marketing resources allocated to branded entertainment in all its forms are difficult to measure, Mediaedge:cia and Leverage Group research projects spend for "strategic alliances"—including product placement, sponsorships and cause-related marketing, consulting and advertising—will be close to $140 billion by 2004.
Among other holding company initiatives in the area, Omnicom Group bought entertainment consultancy Davie Brown last year; Interpublic Group acquired entertainment public relations powerhouses PMK and Bragman, Nyman & Cafarelli in the past several years; WPP brought London-based production marketing company Shine to the U.S. last year.
Media shops are looking to outside entities for help, says Tim Spengler, national broadcast director for IPG's Initiative, because "I don't think you can expect someone who's concentrating on the planning and purchase of media to be a programming expert. You need to segment out those different areas. And the holding companies are onto that."
The role of media agencies in the branded entertainment world is being driven partly by new economic realities. "This is a trend that major marketers are leading, mainly because it's value for money," noted Arthur Anderson, principal of media consultancy Morgan Anderson. "Network costs have gone up substantially, for one thing. Plus, marketers are much more interested in integrated communications, and media companies are responding to that."
Spengler, who earlier this month brokered a multiyear branded-content deal for Initiative client Home Depot with ESPN's College Game Day, agrees that, "The economics in television are necessitating a change. The P&Ls are not what they used to be, and the networks are trying to find more creative ways to monetize their properties."
Most media agencies have in-house entertainment divisions, including Starcom MediaVest Group's Starcom Entertainment and IPG's Magna Global Entertainment, and have executives with years of experience doing Hollywood sponsorship deals, such as Jeff Grant at SMG's MediaVest and Guy McCarter at Omnicom's OMD, among others. Media agencies have been responsible for several high-profile content-commerce deals, such as Coke's relationship with American Idol, negotiated by IPG's Universal McCann.
But some media buyers noted that with 60-plus broadcasting and cable networks, additional resources need to be brought in to spearhead programming opportunities for advertisers.
Mediaedge:cia opted to purchase that expertise with the Leverage investment because, said Courtier, forming a division or bringing in an expert can lead to "a siloed entertainment practice that is not integrated enough with the dollars that are being spent in the media marketplace."
Four-year-old Leverage, which specializes in crafting alliances between entertainment entities, nonprofits and marketers, will eventually move into Mediaedge:cia offices with its 17 employees; it will retain its name.
Branded-entertainment execs says the next step beyond product placement will be for media shops to devise value-added partnerships. "In bringing clients together with networks in producing programming, product placement isn't what they're looking for," said Mart Martin, a spokesman for Coca-Cola. "In order to have the most impact, there has to be a retail function, a way to reach people physically as well."
SMG Entertainment, for example, has negotiated for client Kellogg's to sponsor this summer's American Idol Tour. "It's taking advantage of an entertainment property that's proven successful, and now we're taking that property and leveraging it beyond television," said Laura Caraccioli-Davis, vice president-director at the shop.
"Marketers are looking at what particular values a property like an American Idol possesses and seeing what values can be joined with the product in a meaningful way," said Mark Stewart, director of strategy for Universal-McCann. "Just sponsoring something or being all over something is not it. There has to be a deeper relationship involving shared values between the marketer and the entertainment."
One of the biggest challenges to media agencies at the moment is the difficulty of measuring results. "With branded content, there are so many factors at work, and it's hard to measure the elements that go into figuring out the impact," said Caraccioli-Davis. "I'm sure that all the agencies are at work on proprietary research, because that's the only way we're going to be able to take it to the next level."
"Clients are looking for ... some of the quantifiables out there for some of these sponsorship opportunities," says Leverage president Richard Yaffa, adding that greater accountability is top of mind for agencies.
More immediately, agencies are working interactive components into branded entertainment, allowing TV viewers to "opt in," which lets marketers know that consumers are paying attention to the message and are interested in hearing more, said Stewart.
While branded entertainment harkens back to the days of Sid Caesar, the new alliances are as yet largely experimental. "We're still in the nascent stage of these deals," said David Doft, an independent ad industry analyst in New York, "but because of audience erosion and TiVo nipping at the networks' and advertising agencies' heels, they will become more important, if only for those who can afford it."