HALLMARK EXPANDS MUSIC MARKETING BUSINESS

Latest Exclusive Mega Hit CD Is Michael McDonald Christmas Album

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The deal: Hallmark steps up marketing around the branded CDs it sells seasonally in its 4,000 stores, using network TV spots for the first time for a Michael McDonald Christmas record. The marketer also launched an all-out publicity push with Mr. McDonald appearing on TV shows "The Tonight Show with Jay Leno," "Emeril Live" and "Live with Regis and Kelly."

The result: The new CD, "Through the Many Winters -- A Christmas Album," went gold, with 500,000 copies sold, two weeks after its release. It continues to sell strongly.



LOS ANGELES -- First and foremost, Hallmark is about greeting cards.
Michael McDonald's Christmas music CD is the third Hallmark exclusive album to rack up huge sales in the marketer's card stores.



But executives at the retail chain are delving further into music -- saying it helps round out the warm-and-fuzzy message of the brand -- after a string of successes that includes the recent gold record from former Doobie Brothers member Michael McDonald.

Third hit in a row

This is the third branded Hallmark CD in a row to hit lofty heights. Last Christmas, a James Taylor album was certified platinum by the Recording Industry Association of America -- 1 million units sold in 44 days. Early this year, a Martina McBride CD pegged to Valentine's Day went gold in nine days.

That track record has caused a bit of a groundswell at the venerable marketer, whose name has been long associated with the heart-tugging family fare of the Hallmark Hall of Fame. Artists now are contacting the chain, instead of the other way around, looking for ways to work together.

This year for the first time, Hallmark Gold Crown Stores expanded their music offerings with the Valentine's Day CD and it intends to push further into the business in '06. The chain will repeat a limited-time Valentine's Day CD, with pop crooner Michael Buble, and add Mother's Day and Father's Day-themed music to the stores, with artists to be announced later. There will be another holiday record next Christmas.

Exclusive CDs

Each CD is exclusive to the Hallmark chain and sells for about six weeks.

Hallmark didn't set out to become an alternative distribution channel for music, though it has carried seasonal CDs in its stores for two decades with little marketing fanfare around them. The goal was to put product in stores that would complement the cards and gifts already there and cater to the core female 25- to 54-year-old consumer. The CDs, impulse-buy priced at $7.95 with the purchase of three greeting cards, also aimed to drive more traffic into the stores, hooking in casual or lapsed shoppers. Splashy marketing was put in place for the first time with the James Taylor record.

"To us, it was a natural brand extension," said Ann Herrick, Hallmark's integrated marketing manager. "Music conveys feelings and emotions, just like our core product, and it's important to our consumer."

The marketer did research through its database of its loyalty card holders, asking them to rank certain artists to see what types of music would be in demand. They also consult with Teri Brown, a music industry veteran and consultant at TBA Network in Los Angeles. Executives then approached the musicians, many of whom no longer had record deals with major labels, and asked if they wanted to record a seasonal CD for the chain.

'Could be more artistic'

Mr. McDonald, who has had a soul-tinged solo career in the years since the Doobie Brothers disbanded, said he was intrigued by the idea because he felt he could experiment and stretch creatively. He wrote two original songs for "Through the Many Winters," including the title track, co-written with his wife, Amy Holland. He also selected some classic Christmas standards for the 10-track release.

"I could be more artistic and try things that I might find difficult to get past a major label," Mr. McDonald said. "I had more latitude, and I could really just have fun with it."

He also played a number of instruments on the record, from guitar to accordion to dulcimer, which is rare for the Grammy-winning singer.

Hallmark, he said, is acting almost like a small record label back in the '50s and '60s, when musicians could try something a little different. Major labels now, as part of larger entertainment conglomerates, tend to stick to formulas they know will sell.

"These retail avenues don't have to worry about having a hit single or getting songs on the radio," Mr. McDonald said. "It gives artists like me a chance to do music we probably wouldn't be able to do otherwise."

Reviews songs and lyrics

Hallmark executives review the songs and lyrics, though Ms. Herrick said they've never asked an artist for changes.

Marketing around the CD included radio, direct mail, online and in-store promotion, plus a high-profile publicity campaign and the first national network TV spots. Though Hallmark executives wouldn't specify the marketing budget for the current Christmas CD, they did say it was a more significant commitment than any other record release. The music has been playing in stores during the busy holiday shopping season.

To carry the music theme even further, Hallmark plans to launch a new line of greeting cards in early 2006 that contain sound chips. Dubbed song cards, they will play bits of well-known songs such as "Wild Thing" and "I Will Survive." Around Valentine's Day, there will be a song card with a snippet from Michael Buble, bringing the message full circle.

"We're not interested in becoming a music retailer, and we have no desire to compete with record stores or Wal-Mart," Ms. Herrick said. "But we know these seasonal CDs are working, and we'll keep doing them."
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