Shops Form Units For Product Placement

There’s no business like show business for media shops, within which branded-entertainment divisions are proliferating like American Idol hopefuls. Last week two more agencies—Aegis Group’s Carat Americas and Interpublic Group’s Initiative—launched their own product-placement divisions.

They join Omnicom Media Group, IPG’s Magna Global, WPP Group’s MindShare and Publicis Groupe’s Starcom with units dedicated to an area in which media shops are increasingly taking the lead. MindShare, for example, has an exclusive deal to create sponsored programming with ABC; Magna worked with client Coca-Cola on the soda maker’s extensive involvement with Fox’s smash hit American Idol.

Instead of just taking advantage of product-placement opportunities within shows put on the air by broadcast and cable networks, one of the roles of these units will be to come up with development ideas and funding that they can take to the networks and studios on behalf of their clients.

Robert Reisenberg, who heads Omnicom’s Full Circle Entertainment and who before that started up Magna’s entertainment unit, said last week’s announcements “are great validation that this area of business makes sense to advertisers. It’s really rewarding that advertisers are beginning to see this as more of a necessity than something they might want to do.”

The new unit at Carat, to be called Carat Entertainment, will be headed by veteran media agency and production executive Michael Yudin. It will be part of Carat’s National Broadcast Group and will report to Andy Donchin, evp and director of national broadcast.

The Initiative unit, called Initiative Innovations, has been operating in Europe and is being brought to the U.S. The unit will be headed by former ABC and NBC marketing executive Alan Cohen. Initiative Innovations will work closely with Tim Spengler, evp and director of national broadcast for Initiative, although its mission is to enhance buys across all media.

Donchin said the new Carat division has been under evaluation for about a year. “Our question was not if we should enter this space but how,” he said. “We determined that the most advantageous position for our current clients and prospective clients is to become a focal point for creative ideas. Carat Entertainment is structured so that we can work directly or indirectly with any creative developer, talent agency, programmer or distributor. If an idea is right for one of our clients, there are no external barriers to success.”

Yudin most recently operated his own production company, but he was previously svp of sponsored programming at Viacom Entertainment.

“We’re not going to be a production company,” Yudin said. “We are not going to put our clients’ dollars at risk by leveraging or partnering in shows.” But he added that he will pitch programming ideas and use client dollars to help fund programming to get it on the air. Because Carat does both media planning and buying, “our unit will be a line item in the media planning process [within the agency],” he said.

Yudin is hoping he can get Carat’s clients to set aside money in their budgets for the next TV season, and that some programming deals with the networks can be done for shows that can air this summer.

Carat Americas CEO David Verklin said, “In an increasingly fragmented media landscape, branded entertainment is a vital tool, offering advertisers protection from DVRs and commercial clutter while reinforcing a client’s branding before key audiences.”

Although Initiative is affiliated with Magna, which has its own branded-entertainment unit, the feeling was that while Magna Entertainment is primarily involved with creating and producing original programming for advertiser clients to sponsor or have their products embedded into, Innovations will get into some more nontraditional advertising areas and also get involved in a client product marketing role.

“We have had clients in shows like Trading Spaces and The Restaurant and had the AOL Running Man in sports telecasts,” said Alec Gerster, CEO of Initiative Worldwide. “Tim Spengler’s group has done fantastic work in this area. This will give us additional internal resources to take it to another level beyond product placement.”

In addition to broadcast, Gerster said, the new unit will examine areas such as advertiser involvement in video on demand and in videogames. “And when we have programming ideas, we will work with Magna Entertainment,” he said.

“We want to figure out ways to get our clients involved in things over longer periods of time, and it doesn’t just have to be within a show,” added Cohen. “It can involve different types of marketing multimedia promoting a show before a show airs. It will involve a lot of experimentation. Maybe we can do some custom-published magazines, cell-phone advertising, interactive TV ads. Anything to extend the advertisers’ reach to the consumer.”