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Report from Madison & Vine Conference

STEVE HEYER: WHY BRANDED ENTERTAINMENT FAILS

An Industry Pioneer Critiques Marketers' Efforts

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BEVERLY HILLS, Calif. (AdAge.com) -- Three years ago, Steven J. Heyer, then president-chief operating officer of the Coca-Cola Co., issued a rallying cry for Hollywood and Madison Avenue to “collaborate or die.” Three years later, Mr. Heyer has a new message: Don’t bother with branded entertainment unless you understand what your brand is and who your customers are.
Photo: Stephanie Diani
Starwood Hotels & Resorts CEO Steven J. Heyer has been a pioneer of branded entertainment concepts.
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“A lot of companies don’t understand what they sell,” said Mr. Heyer, now CEO of Starwood Hotels & Resorts, during a one-on-one conversation with Advertising Age’s editor, Scott Donaton, at the Madison & Vine Conference at the Beverly Hills Hotel yesterday. And that lack of understanding has made entertainment deals -— from basic product placements to self-produced films or other fare -- ineffective.

'Programming' hotels
Starwood, the third-largest hotel chain, is in the midst of trying to differentiate its brands -- Sheraton, Westin, W, St. Regis, The Luxury Collection and Four Points by Sheraton -- and is using branded entertainment as one way to do that and enrich the experiences of the company’s guests.

Mr. Heyer doesn’t see Starwood as a company that is “selling hotel rooms with a bed,” but as a “distribution company” that is “building programming” as a way to treat its guests “like an audience” and “deliver an experience.” Each of the company’s brands, he said, caters to a different type of customer and can serve as networks.

Hotels or theaters?
Recent entertainment deals include integrating Westin into NBC’s “The Apprentice: Martha Stewart,” through its relationship with Creative Artists Agency. It has partnered with Time Warner to develop distribution opportunities for magazines and home videos and with Starbucks for music. It also built Yahoo suites in the lobbies of Sheraton properties. And for St. Regis, Starwood partnered with Christie’s auction house to offer guests exclusive art or wine auctions or experiences.

But Mr. Heyer wants to take things even farther, hosting virtual premieres of movies in its hotels, testing new TV shows on its in-room TV channels, adding rich media to its Web sites like SPG.com, and expanding its efforts in music, which he considers an “emotional” tool that has been “underleveraged everywhere.”

Few movies right for brands
Starwood doesn’t have a choice: With an ad budget of $50 million, the company is forced to rely on nontraditional advertising

Photo: Stephanie Diani
Steve Heyer and Ad Age editor Scott Donaton on stage at the Beverly Hills Hotel. Click to see larger photo.

to gets its marketing messages across, Mr. Heyer said. For some companies that has meant relying on product placements in films and TV shows. But “at the end of the day, you’re lucky if there’s a movie or two in a year that you really feel your brand belongs in,” Mr. Heyer said. “When you find them you jump all over them. But you can’t spend your media budget against that goal. There are too few of them.”

However, Mr. Heyer isn’t looking for deals that are made for the sake of pure entertainment but as marketing partnerships that are “profit centers” for both sides. For example, Starwood split revenue with Yahoo for customers that the Internet giant signed at Sheraton’s properties.

Bridge for brands
“We’ve got the richest people in our hotels,” Mr. Heyer said, adding that they’re people who can drive sales for partners. “Yet there needs to be a bridge for both brands. When there’s a bridge, everybody wins.”

But in order to broker those entertainment deals, Starwood had to first reevaluate what each of its brands represented and who its customers were -- one thing many marketers still struggle with. “It’s important to understand who your target is,” Mr. Heyer said.

Call for ideas
Mr. Heyer said Starwood is open to branded entertainment ideas from anyone, as long as it helps differentiate the hotel’s brands from its rivals. “We’ll talk to whoever wants to talk to us,” he said. “But nobody’s calling on us. We’re calling on others. Nothing is out of scope as long as it’s effective. Ideas are a good thing.”

But the focus of those ideas should remain on the creative and not how it’s delivered. “It’s less about the vehicle, delivery or genre and more about the content and on-point messaging,” Mr. Heyer said. “We really believe in alternative media, whatever that is. But it requires new ideas and an openness to experiment. I’m afraid of old ideas. I’m not afraid of new ideas. Old ideas have run their course. It feels like everybody’s still in their silo. People want to do the thing that makes sense to them and that they’re used to.”

What it takes
Success in the branded entertainment space will ultimately require “definition of inventory, ideas and guts,” Mr. Heyer said. But it also requires advertising agencies, media buyers, Hollywood reps and middlemen to work together and stop worrying about “who gets credit and fees and get them to serve me,” he said. “I wish they would take the charge and remember why we’re here. Everybody’s being held hostage by everybody else. Everybody needs to get grounded in whose problem they’re solving. If you’re solving the customer’s problem, they’re solving their own.”

Marketers should also stop worrying about what to call branded entertainment. “The labels are very destructive,” he said. “Nontraditional media,” he added, “reads scary. It reads risky.” And too many deals can backfire. “Ubiquity is very overrated,” Mr. Heyer said. “The real challenge is to feel scarce. That creates value.”

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