The division will be built on Mr. Stoute's 1-year-old company, Translation, which has worked with marketers such as Hewlett-Packard Co., Reebok and McDonald's Corp. Mr. Stoute will act as managing partner. While, given its provenance, it will likely focus on branded entertainment, Mr. Stoute stressed the plan is to bring "marketing ideas" to the table.
At a lunch at New York City's St. Regis Hotel, Interscope Chairman Jimmy Iovine, wearing his trademark baseball hat and sunglasses, said he and Mr. Stoute are eager to cut deals beyond the roster of Interscope and its affiliated labels.
"We will work with anyone," Mr. Iovine said. "We will bring value to other record companies."
The branded-entertainment space features more than its share of executives who are long on talk and short on results, but Mr. Stoute has masterminded an impressive array of brand/artist hook-ups: McDonald's and Justin Timberlake; Reebok with Jay-Z and 50 Cent; and Shakira and Pepsi. Mr. Iovine praised his partner as "the first guy in entertainment who has really worked in both areas [music and advertising] at a high level."
Now Mr. Stoute will help market artists across Interscope's portfolio of labels, which include A&M and Geffen, and encompass artists as diverse as Eminem, The Yeah Yeah Yeahs and Queens of the Stone Age.
"The volume of the pitch changes with the artist," said Mr. Stoute, who said his role is one of "creating contagious behavior" for both the artist and the big brands.
Neither Mr. Iovine nor Mr. Stoute disclosed the financial terms of their partnership. But Mr. Stoute did profess an ambition to be a major advertising force within five years, one that would be significant enough to attract the interest of one of the agency holding companies.
The move comes as key marketers seek to shift marketing dollars to ideas that break out of a cluttered landscape of ad messages-and as record companies continue to struggle for financial traction in a music industry besieged by file-sharing and fragmenting markets.
Interscope has been arguably the most active player of the major record companies in the branded-entertainment space. Mr. Iovine said the deal with Mr. Stoute is at least partially driven by a key consideration: "We have a record company we run every day."
"The record business is changing. We all know this," said Steve Berman, Interscope's head of marketing and sales, and who has acted as Interscope's point-man on branded entertainment deals. "We believe [Interscope has] just scratched the surface of this space." Mr. Berman said he would "absolutely" continue to be involved in branded-entertainment matters.
Mr. Stoute and Mr. Iovine declined to discuss what upcoming deals are brewing at their nascent partnership. Mr. Iovine said the partnership would be "selective who we take on."
Both executives were careful to note that the kinds of deals Translation is looking to do need to be done with just the right touch if they are to succeed.
"If we try to approach it scientifically," Mr. Berman said, "we've seen it doesn't work. This is art. Every part of it has to be art."
Or, as Mr. Iovine puts it, "Anyone who tries to mandate [branded-entertainment deals] in a contract is going to get their ass kicked."