DOES MADISON AVENUE NEED HOLLYWOOD?

Execs Should Rethink Talent Agency Acquisitions

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To advertising agencies contemplating acquiring or allying with Hollywood talent agencies, I must quote Bela Lugosi's opening lines from the 1950s film Glen or Glenda?

"Beware! Beware!"

Like the doubly eponymous hero of the Edward D. Wood Jr. transvestite classic, the most forward-thinking ad executives are torn by two impulses: the desire to go Hollywood and the need to stay corporate. While it's vital for marketing's future that these urges be reconciled, neither the agency business nor its clients are ready to emerge from the closet dressed in business suit and high heels.

Bridging commerce-content gap
What prompts

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this warning is marketing's need to bridge the content-commerce gap. "That's all our clients are talking about," one West Coast agency president, whose roster includes some of the world's largest marketers, told me two weeks ago. It's an attitude reflected in my conversations with consumer marketing executives. Their reasoning is sound. In a world of increasingly commoditized products and services, the only sustainable differentiation lies in the values, esthetics and information content of the brand, and the originality with which they are communicated to consumers.

To growing numbers of ad and entertainment executives, this means tangoing together. Advertising Age reported in January on ad agency holding companies' interest in such big talent agencies as CAA, ICM, William Morris and Endeavor. It isn't the first time such liaisons have been mooted; a few years back, Interpublic Group of Cos.' Ammirati Puris Lintas explored a link with United Talent Agency.

More bombs than blockbusters
But there are strong forces working against this. First, Hollywood doesn't own the secret of entertainment. The media and entertainment industries are increasingly divided between a tiny number of blockbusters and enormous blobs of money-losing dreck. In seeking access to talent and ideas, marketers and agencies will have to accept this fundamentally unbalanced risk-reward ratio, which is utterly different than the cautious one currently underlying their business. Not only that, they'd have to accept the risks and opacity of entertainment financing at a time when shareholders are seeking safety and transparency.

Second, while the talent agencies can legitimately claim access to stars and ideas, it's unclear whether that access requires ad agencies to own or invest in the Hollywood firms. A version of that come-on was used by various agencies to lure telephone companies into studio relationships in the early days of interactivity. But who today remembers Tele-TV? Indeed, whatever happened to the affair between Coca-Cola Co. and CAA? The fact is that vertical integration and formal alliances can lock out entree to a wealth of opportunity, without necessarily locking in long-term relationships with actors, writers, directors, producers or blockbuster concepts.

Which leads to the third and most important caution: The best ideas spring from the bottom up, not the top down. Ad agencies should indeed explore and act upon the precepts of the entertainment economy. But they might start with pilot projects, with talent they already own or can rent, with clients they already have. The alternative can be monstrously expensive -- and a real drag.

Mr. Rothenberg, an author and longtime journalist, is chief marketing officer at consultancy Booz Allen Hamilton.

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