ZO Goes Global With Branded Entertainment

Client demand for branded entertainment campaigns is growing fast and, in response, Publicis Groupe’s Zenith Optimedia is going a step further than most agencies by establishing a global division to meet this demand.

According to PQ Media, spending on branded entertainment grew by 5 percent in the U.S. in 2009 to reach a total of $26 billion. The media research firm expects it to grow another 8 percent to $28 billion in 2010. This has led ZO to establish a global branded entertainment division called Newcast.

The unit will work with clients to develop, execute and manage projects across multiple media platforms, including video, print, digital and nontraditional venues such as event sponsorships and experiential marketing.

A flagship unit, Newcast U.K., was formed over two years ago. At the end of last year, offices were set up in China, India and Spain. A Canadian outpost will launch shortly, followed by locations in Mexico, Latin America and several Eastern European nations, including the Ukraine. By spring, the agency says, the division will be established in 18 markets around the globe with upwards of 200 full-time staffers.

The U.S. operation, getting under way in New York, is headed by Dave Ehlers, president of Newcast and evp, managing director at ZO’s U.S. operation. Running the day-to-day business is Susan Joseph Smith, svp, managing director of Newcast, who joined the agency at year’s end from Rainbow Media, where she created, packaged and sold branded integration efforts for programs such as Mad Men on cable nets AMC and WE tv.

Ehlers, who also spearheads new business efforts at Zenith, said the Newcast approach “will make our offering so much stronger.”

Indeed, it has helped the U.K. operation bring in new business it might not have otherwise won, said Mark Waugh, a managing director at ZO in the U.K., who heads the Newcast unit there and is overseeing the global rollout of the operation.
 
Case in point: Aviva, the financial services company, recently awarded ZO its $250 million global media account based in part on the shop’s Newcast offering.  “Newcast was a central part of that global pitch,” Waugh said.
 
And some brands, noted Waugh, spend their entire budgets with Newcast. He cited client Jim Beam’s Courvoisier as one example.

The U.K. experience is driving global expectations to some extent. Waugh notes that just about every client in the U.K. uses Newcast, which now accounts for 7 percent of the shop’s total U.K. billings.

Analysts say the Newcast rollout makes strategic sense given the growing demand by marketers for nontraditional services in the entertainment marketing space.

Patrick Quinn, president of PQ Media, notes that the growth in branded entertainment expenditures in the U.S. grew at a time when spending in just about every traditional media channel was down. And by next year or 2012 at the latest, he expects the sector to be posting double-digit annual growth again, as it did prior to the recession.

“Relative to traditional advertising and marketing the branded entertainment sector is certainly one of the strongest ,” he said. A major driver of the appeal, he said, is that “such media forms are relatively immune to DVR and ad skipping and fears about where that is leading.”

Broader trends, e.g., consumers relying more on new forms of media to communicate while watching less broadcast TV, are happening worldwide, “so it makes sense that they would be opening offices around the world,” Quinn said of the ZO effort.

Most shops now offer branded entertainment services to clients in some form, although few have taken the uniform, worldwide approach that ZO is rolling out. There are several reasons for it, says Ehlers. One is a desire to create a cohesive unit where best practices are more easily shared from market to market. Also, he said, ROI accountability for clients is critical and mechanisms for achieving that are more efficiently installed and maintained within a single operation. “The sector is still perceived as “a little bit like the Wild West,” he said.