LOS ANGELES Rich Frank has already been part of one marketing revolution—as president of Walt Disney Studios he was the first movie studio to hire Dennis Holt's [then] Western International Media—so the news that Frank had thrown in with mobile marketing agency Hyperfactory (winner of two Buzz Awards from AdweekMedia at the Next Big Idea conference last week) suggests a new front.
Frank, former president of the Paramount Television Group and chairman emeritus of The Firm talent agency, invested in Hyperfactory with Geoff Ross and Grant Baker, founder and chairman of 42 Below vodka, respectively, and Paul Frank, the current head of television at The Firm. Now Frank has a substantial stake and is sitting on the board of a hot shop in an up-and-coming medium. He talked with Adweek's West Coast editor Gregory Solman.
Q: What is your relationship to Ross and Baker at this point?
A: We're friends and joint investors in Hyperfactory. We don't have any company or anything like that. We got to know each other when they had founded and we were running 42 Below and I joined the board. We ended up selling that company last year to Bacardi.
When did your interest in advertising start?
My first job was working at BBDO Advertising, 1965, New York, 385 Madison Avenue, for $95 a week. I was an assistant media planner when I started. I was always on the media side until later on in life. I left there and went to Petrie and Company as a salesman and ended up being one of the guys who started TeleRep. From there I moved to Los Angeles and became the sales manager at KTLA. Then I became the president of Chris-Craft Station Group. So, it's always been advertising. And at Paramount when I started the syndication division and shows like Entertainment Tonight, that was all through ad support and ad sales.
What was your sense of how media was developing from afar?
It's no different. New technology brings us either new media or new ways to view the current media. No new media ever replaced an old media. Even when you look back to when television started developing creatively, the first few shows brought over were really radio shows. Then the medium came into its own. We've seen that in almost every medium. Now we have mobile which gives us the greatest chance of doing something new in a long time, which is why I'm so excited about it.
Are you particularly interested in activating the celebrity aspect of it?
Not necessarily celebrity for celebrity's sake. I care more about what they're saying or showing you something than just listening to them. For example, why do I care about what anything Sean Penn says about politics? He has no credentials. That's one place, to me, that celebrity doesn't work. On the other hand if it's Kobe Bryant showing me how to dribble a basketball or making a commentary on tonight's game, maybe I'm interested in listening to it.
How did you get to know the Hyperfactory folks?
It was a double whammy that came together at the same time. When we stopped doing 42 Below, Grant and Jeff and I said that we would do something together in the coming years. We'd liked working together. And they knew Hyperfactory from New Zealand. (42 Below started in New Zealand.) And I had been consulting with Zenith Media out of New York for all their clients, Lexus, Toyota, etcetera. They were housed at Saatchi & Saatchi here on the West Coast, and when I first heard about [Hyperfactory], I called some of my friends over [at Saatchi] to check them and they said, "These guys are great. We don't want to let them out of here." They weren't exclusive, but doing so much work for Saatchi they would house them there. We started talking. I met [co-founder] Derek [Handley] and got to see what they were doing. I was very impressed. They were one of the few who weren't just a sales group or someone who comes in and pitches you an idea and if you say yes as a brand, they would try to find some creatives to do it or people to write the programming. They had people in place, in New Zealand and India and England. They were able to function and execute the ideas. It is really what I'd call a full-service agency. Nowadays we have very specific full-service agencies. They do all the creative and media buying. I was impressed with them.
What is your perspective on the period when media separated from creative, the unbundling, now that it seems joined at the hip again?
I think it's good, but I know why it started out the other way, with Dennis Holt [founder of Western International Media] and the companies that could buy media cheaper by going in to local stations. It was very regionalized. It was almost all spot then. There weren't cable networks then. There was prime-time television and it was very hard at the time to even get a regional buy going. So they were able to go in to stations in markets, in most cases marginal stations, make big blocks of time guarantees, then they could turn around a resell by charging a much lower commission. There were also a lot of backroom operations at the time.
The movie studio buying still makes sense, don't you think?
I'm the one who hired Dennis when I was president of Disney. That's the first movie account he had, in 1984. One of the reasons I think we were unbelievably successful for a 10-year period of time at Disney was because with Western we had the buyers on the lot at Disney. I was able to meet with them at 7 a.m. on Mondays and we were able to get our buys placed before anyone else had walked into their offices in town. So we could maximize our purchasing across the United States, market by market, size by size, region by region. I still believe that spot advertising is much more effective than network buying. But buying services don't want to buy spot today because it adds too many people. It actually is labor intensive.
But doesn't that only work for movie advertising because creative and media are not closely aligned?
Well it's not, because the creative for movies is made when we make the movie. We know what it is and what's going to drive you. We have trailer makers and commercial makers. We know exactly what our spots are going to be when we're making the movie. All you need then is well thought out marketing placement, which takes really smart marketing people. On the other hand, if one part of the agency is doing the buying and another the planning and a third is creating the advertising ... well, I've seen some really funny things happening in the last couple of years. Literally the commercials were not matched to where they were buying.
Can you give me one vivid example?
Understood. Let's talk more about your plans for Hyperfactory. Should we interpret your seat on the board as you investing enough to have a controlling interest?
I don't want to define it that way, but Grant and Jeff and Paul and myself have made, let's just say, a substantial investment in the company. What I hope to bring to them is help them get through the right doors and tell their story to people who run what I'll loosely call studios—I say that because the studios own the networks and various channels. So, getting them in the right rooms in town.
How do you imagine it playing out?
What we have now, because most companies don't know where all of this is going to go and they're very protective of their content, and because there is no set business plan that's been established, they're in such a small testing mode that nothing's happening. It's a logjam. I think that the more they know, the more that they're able to test, the more they are able to try something and see how it works, the more they'll free up their content. And like any medium that starts, you can't afford new content right away. You have to rely on content that has been produced someplace else and repurposed. I think you will start with that and you'll start seeing content created. You're just getting into the heyday now with cable networks. They started with re-used content and suddenly USA Network has Monk, then everyone says, "Look what that did for them," and the next one produces Nip/Tuck. All of a sudden there's lots and lots of original programming. The same thing is going to happen here, but it's going to take awhile because it hasn't even made its way through the Internet yet. But it is going to happen, because mobile has many more advantages than the Internet had, and drawbacks, too.
Think about what's happened in our lifetime. Everything that was wireless went to wired, then everything wired went to wireless. We used to get up in the morning, drive 30 miles for an hour, park a car and go into a giant building that had to be heated and air conditioned, and what did we do? We picked up a telephone and called a guy in the next building because the telephone was tied to a desk. Now we don't have to do that. On the other hand, we got our television signals over the air, and it was a horrendous signal, and eventually we realized it came better through a wire. So things flopped. You look at countries like India that never developed a regular phone system. So they went right to cellular and it became gigantic over there. The United States always paid the penalty, technologically, for being first.
Are we especially behind on mobile?
Half the things I'm going to try to introduce to my friends are being done in Japan every day. They have bigger bandwidth and better technology. Teenagers watch soap operas in Japan while they're crowded on the train. Now, if you ask me if I want to watch the Super Bowl on my phone, I don't think so. On the other hand, if I'm stuck in traffic and I can't get someplace, it's better than just listening to the game. So would I rather watch it on a 50-inch HD set? Yes. But any port in the storm, sometimes. But we haven't gotten there. And we haven't got the financial side of mobile down. Kids pay $2.99 for ring tone when they can buy the whole damn song for 99 cents. And most of them steal it, but they're willing to pay. You pay for something over the Internet, you have to use PayPal or your pocket wallet or give them a credit card. On a phone you push a button and it comes through your phone bill. It's easier. On your phone, they know where you are. But using short-range Blue Tooth technology, you're driving around and saying, "Where is the new Denzel Washington picture playing?" It knows where you are and will show you the two theaters. And it is so easy following that, since they generally should know a lot about you, with "Do you want us to deliver pizza to your babysitter and kids?" and "Here are two restaurant suggestions." There's a lot you're going to be able to do on the phone. You can certainly look at the trailer for Bee Movie and American Gangster and decide on one over the other, then book it. There's a lot you can do that's not necessarily conventional programming. I love the creative process and the creatives who come up with these things, and if we introduce the technological capabilities to creative people, especially in Hollywood, we'll get a lot of new creative content.
Years ago I made a prediction that studios would be bypassing all distribution channels and selling movies in the aftermarket directly to consumers via studio servers. Is that going to happen?
Theoretically, I don't believe you're wrong. I'll even argue that movies in five years will be released a day before to be fed to your home for viewing the same day they go into the movie theater, for larger amounts of money. If I'm a young married couple and I have to pay a sitter to go to the movies and have dinner, it's a $70-80 night for me. If I can get American Gangster tonight for fifty bucks, I might be willing to do that. It will be not as good, but good enough. There's a value to time. The whole studio system has been built on slicing the salami thinner. It goes first to theaters, then to DVD, because God forbid we go to cable or they'll tape it off the air, and so on and on. They even decide "when it goes to nursing homes, prisons, airlines." It's all laid out. But there is also a value to not only when, but where, and how big, and what the devices are. And I believe you can charge differently for that.
And I'm sure it hasn't been lost on you that one advantage would be that the studio would have a direct connection to the ticket buyer, to build up a database like Netflix or Amazon, right?
But look at big companies. I worked at Disney. I don't know what they are doing now, but we had 30 million people a year walking through the parks. We had 15 million people a year staying in our hotels. We had stores that were out there. We were never able to put that database together. Maybe they have it now—I've been out of there for 12 years—but back then I would have loved to know every mother and father who took their kids to Disneyland, because if I knew I could reach them, I could get them to go to the matinee next Saturday when the next movie was opening. We didn't have that information. But that's happening more and more.