Mitch Kanner, formerly a partner at IEP, and Dave Baram, the president-chief operating officer of The Firm, have handed strategic and creative duties to relaunch Virgin against its teen and young adult market to a group of advertising students at the Virginia Commonwealth University Adcenter.
After first looking at "highly creative West Coast ad agencies", Baram and Kanner—who sits on the Adcenter board—gave the assignment to Adcenter Managing Director Rick Boyko, the former Ogilvy & Mather honcho. "Boyko's creative department [by definition] never ages," said Kanner. "Traditional ad agencies do [top-notch qualitative and quantitative] research, but in this particular category, the people actually creating messaging are out of the category." The VCU students will not be paid for their efforts but will be able to tout their work to future employers.
The Firm—which created a 50-50 joint venture with Virgin Chairman Richard Branson called Virgin Drinks North America in the Fall of 2002— is determined to avoid the disastrous results of Branson's first foray into the U.S. market nearly a decade ago. Back then, he tried to take on Pepsi-Cola and Coca-Cola in a volume play and was squashed in his efforts. This time, the brand is being positioned as "more of a premium, private label play" in the words of Baram, focusing on leveraging its primary distribution deal with 7-Eleven as the exclusive national convenience store partner.
The brand will launch regionally in June in California and roll out in Nevada, New York, and Florida with a national launch slated for early 2005. According to Boyko, the brief to his young charges stressed "the unique retail situation" with 7-Eleven. "With limited media dollars, we told the students to look at the physical [7-Eleven] environment as the principal [branding] medium. What could we do with wild postings and print components? How do we leverage The Firm's entertainment assets to create buzz?
In effect, the marketing tools being emphasized, according to Baram, are the traditional grass-roots tools that The Firm typically employs in launching musical artists as they have with bands like Korn and Limp Bizkit. Baram would not divulge the launch marketing budgets for Virgin Cola until the strategy and creative executions are finalized.
LEARNING FROM PONY
Last year, The Firm sold its majority stake in sneaker brand Pony to Global Brand Marketing Inc., handing over the manufacturing and distribution duties while retaining marketing along with its 40% minority stake. "We made a lot of mistakes on Pony in terms of getting too involved in manufacturing and the design of the shoe," said Baram. "But what was amazing was that despite those mistakes, the marketing and branding platform was so strong."
Baram went on to say that The Firm made three "fully-financed offers in conjunction with private equity firms on other brands last year" that weren't consummated because parties couldn't agree on valuation. "But it demonstrated to us that the platform is really attractive to brand financing partners to go after brands together. Bringing in [the IEP] guys will accelerate this process."
%%PULLQUOTE_LEFT%% Kanner, who launched IEP with Rich Frank, former chairman of Walt Disney Television—who becomes chairman of the board at The Firm—, and Chris Gebhardt, a former Ogilvy executive, had originally touted the company's "Switzerland neutrality" as a mediator between brands and entertainment. Last week's news marks a decided shift in strategy.
"If entertainment is now the driver of commercial messaging, then you need to be in the entertainment business. You can't be an intermediary in the business," said Kanner.
The Firm founder and CEO Jeff Kwatinetz and Firm partner Rick Yorn will keep their co-chairman titles alongside Frank. Frank will consult with The Firm's top members on strategic issues as the entertainment and marketing communities draw closer together. He will also focus on developing the company's TV and film initiatives under the aegis of Firm Films, run by Julie Yorn. Terms of the deal were undisclosed.