Behind Activision Blizzard's hire of ‘rockstar CMO’ Fernando Machado

Activision Blizzard has been rocking it of late—worldwide revenue surged 25% in 2020 to $8.1 billion, as it benefited from pandemic lock-downs. But what the gaming giant has lacked is a marketing rock star as it tries to keep that momentum going and gain an edge in the highly competitive industry as people emerge from quarantine. There is no doubt the company has one now, with the hiring of Fernando Machado, the former fast-food marketer so revered that he has achieved one-name status: “Fer,” the nickname by which he is universally known inside marketing circles. Machado officially joined Activision Blizzard as chief marketing officer this week, after making a name for himself overseeing dozens of buzzy ad campaigns and stunts for Burger King parent Restaurant Brands International, where he served as CMO. “A lot of what ‘Fer’ does is ‘hackvertising,’ hacking into popular culture in general,” says Marcelo Pascoa, VP of marketing at Molson Coors, who up until last year worked with Machado at Burger King. Moving from a world of burgers and fries to game titles and livestreams, Machado will be called on to inject that same creative energy into Activision Blizzard, as it looks to level-up its marketing to build consumer loyalty beyond short-term product launches for its titles such as “Call of Duty” and “Overwatch.” “Activision Blizzard was going down the tried-and-true, but they have reached a stage where they’re looking to be a little more splashier, a little more in-your-face, and Machado is perfect for that,” says one person familiar with the matter who spoke on the condition of anonymity. Jeff Pabst, chief revenue officer at esports organization FazeClan—which has worked with Burger King to promote the Impossible Whopper—says Activision Blizzard’s hiring of “rockstar CMO” Machado is another reflection of gaming’s emergence into mainstream pop culture and believes more gaming companies will follow suit in order to keep pace with today’s “always on” mentality. Historically, game publishers have marketed their titles similar to the movie industry with big pushes around tight release windows, he says, but that strategy has shifted with frequent game updates and the livestream market. “The arrival of highly recognized executive talent like Fernando is only going to push the games business forward,” says Pabst. “The games publishers have marketed their titles rather conservatively to date and I foresee we will see more creative risks tapping into key cultural moments and a different way of reaching the growing gaming audience.” But building buzz for value meals is not the same as making waves in a gaming industry that is becoming more competitive by the minute. And all eyes will be on how Machado goes about it, including what kind of agency shakeups are in store and what former colleagues he might lure to his new corporate home in Santa Monica, California, where Activision Blizzard is based. His “hackvertising” approach will represent new marketing territory in the gaming industry, where advertising has mostly been mostly centered on promoting individual titles over publisher brands. Hits and misses Of course, Machado is well-practiced at defying convention. Named Ad Age’s CMO of the Year in 2020, he’s collected top accolades including multiple Cannes Grand Prix for his out-of-the-box ideas such as Burger King’s “Whopper Detour”—a mobile-centric campaign that drew consumers away from McDonald’s with the promise of one-cent Whoppers—and “Home of the Whopper,” a campaign that extended the life of a 15-second spot by activating consumers’ Google Home devices. More recently, there was “Moldy Whopper," which showcased the chain’s commitment to real ingredients by showing a burger growing green with mold. While he has not previously worked for a gaming brand, his campaigns have explored the category, such as a recent push for Burger King that turned a basketball court in the video game NBA 2K21 into a menu where players could score to win free food. But Machado’s “hacks” have not all been hits—and some observers question just how far stunt-led marketing efforts can drive real business results. Burger King’s recent International Women’s Day campaign—which featured a tweet saying “women belong in the kitchen”—an edgy attempt to promote the brand’s support of female chefs—became a lesson in how not to conduct a social strategy. In another gaming-focused campaign, gamers were quick to share their frustrations when Burger King worked with Ogilvy Madrid to exploit Twitch’s donation feature to promote the brand’s $5 value meal. And despite all the attention Burger King got under his watch, in 2020 the brand lost its No. 2 U.S. burger chain position to Wendy’s. Burger King’s U.S. systemwide sales fell 5.4% to nearly $9.66 billion last year. McDonald’s still dominates, with U.S. systemwide sales exceeding $40 billion. Systemwide sales also fell at Restaurant Brands International-owned Tim Hortons, but rose at Popeyes. Keeping the momentum going Machado walks into a gaming industry that is on fire, as brands benefit from people staying home and spending more time on their devices. The global games live-streaming audience is estimated to reach 729 million by the end of 2021, a 10% increase over the year prior, and global esports revenues will surpass $1 billion for the first time in 2021, according to industry tracker Newzoo. This strong growth comes despite the pandemic temporarily shutting down esports in-person competitions. In March, Activision Blizzard had to lay off dozens of workers, including 50 employees in esports programming, according to Bloomberg. On Newzoo’s Global Games Market Report, which ranks public gaming companies by global revenue, Activision Blizzard currently sits at No. 7, right above Nintendo and Electronic Arts but below the major technology app stores like Apple and Google. Machado must find ways to keep Activision Blizzard’s momentum growing as consumers emerge from lockdown and gaming brands compete for attention across a wider spectrum of entertainment choices. There’s also a need to build brand love, something that gaming companies like Activision Blizzard have missed out on by zooming in on the product. That might have carried Activision Blizzard to this point, but with the space only becoming more competitive, Pascoa suggests the company recognizes the need to build consumer affinity for its consumer brands, rather than only focus marketing efforts on individual game titles. Pascoa expects other gaming brands will want to rise to the challenge. “No matter how exciting the product is, the brand creates this opportunity to connect with people on a more human level. At the end of the day, what Fernando is going to do is remind people how important it is to build brands people can fall in love with,” says Pascoa. “He is going to remind people that it’s not only necessary, but a lot of fun.” Pascoa says Activision Blizzard first set out on adapting a more creative approach with the hiring of former BBH Global Chief Creative Officer Pelle Sjoenell as global chief creative officer in 2019. Sjoenell is Machado’s built-in confidant at the brand. The two have a long-standing relationship that dates back to his Unilever-BBH partner days. “They’re a great combination,” says Pascoa. “They are two people who are passionate about ideas and believe creativity can make a difference in the world.” A contrast in styles Machado’s stunt-driven, creativity-focused marketing approach is a stark contrast from what the company has prioritized in the past. Machado is taking the reins from David Messinger, known for being a strategic, disciplined marketer with strong leadership skills whose background is made up of both agency and client-side work. Messinger, who is leaving his position after just under two years, was Activision Blizzard’s first global CMO, overseeing the marketing for the company’s three divisions—Activision, which operates video game titles like “Call of Duty” and “World of Warcraft”; Blizzard, whose titles include “Overwatch”; and app-based King, with its popular “Candy Crush.” To this point, Activision Blizzard’s marketing efforts have been designed specifically based on the nature of each video game title, leaning in on game trailers, and partnerships with brands like Pepsi’s Mtn Dew and Doritos to give away in-game prizes to players and using data to target consumers with relevant advertising. One of Activision Blizzard’s most well-known campaigns, “There’s a solider in all of Us” for “Call of Duty: Black Ops,” featured “gamer” celebrities like Kobe Bryant, Michael B. Jordan and Cara Delevingne. It’s not yet clear how involved Machado will be in Activision Blizzard’s esports businesses, which include leagues like the Overwatch League and the Call of Duty League and competitions like the Hearthstone Grandmasters and the World of Warcraft Arena World Championships. Activision Blizzard also operates collegiate esports organization Tespa. An Activision Blizzard spokeswoman says Machado will “support esports marketing,” but did not expand into details. It also remains to be seen how much, if at all, Machado will look to his Burger King agency network, which has included Gut, David, FCB and We Believers. The Activision Blizzard spokeswoman says the company will continue to work with its existing network of ad agencies, which includes 72andSunny. Machado declined an interview at this time. The company, in a statement to Ad Age, said his “wealth of international experience will support our expanding global player base. Fernando is a passionate advocate for diversity, equity and inclusion and will continue to champion activity at Activision Blizzard,” adding that “Fernando has a unique skill in blending creative with measurable results, which he will bring to Activision Blizzard’s core franchises.” He will, of course, need to get up to speed quickly on his new industry, and adjust to making due with a smaller marketing budget. Activision’s 2020 worldwide ad spending jumped 27% to $746 million, as it supported new game releases like “Call of Duty: Warzone,” and “Tony Hawk’s Pro Skater 1+2,” according to Ad Age Datacenter. By comparison, RBI shelled out an estimated $1.2 billion on worldwide advertising in 2020, according to the latest figures from the Ad Age Datacenter. ‘Child-like energy’ But the gaming industry’s business model could be liberating for Machado as he steps away from the fast-food industry, where independent franchisees often have a big say in corporate moves. “It’s much harder to cut through the clutter in QSR space, especially because RBI and other QSR are franchise-led businesses, so there’s a lot of other stakeholders involved in how the brand is managed,” says Rapha Abreu, former VP, head of global design at RBI, who worked with Machado on Burger King’s recent rebranding. “The gaming industry is the fun side of QSR without that portion. I think it’s lighter, it’s a newer industry. I think he will excel even further.” “Fernando is the ultimate gamer. He genuinely loves to be playful, and brings that spirit to everything about his role as a marketer,” says Sara Hyman, CEO North America of Jones Knowles Ritchie, the agency that worked with Machado on Burger King’s recent retro rebranding. And there’s no doubt Machado revels in the fun side of marketing. “He definitely prefers to take risks instead of just playing it safe and when you take risks sometimes you make mistakes,” says Abreu. “But it’s much more valuable to building brands when you don’t play safe, because when you do it right, the outcome is really outstanding.” Former colleagues say he brings an informal, child-like energy to work and has always carried a passion for technology and gaming. Pascoa remembers having talks about the latest video games and watching Machado play video games with his young son, Leo. At the same time, Machado is known for being a pragmatic leader, authoritative without B.S., but willing to take on challenges and nurture creative ideas. “What I love about his leadership style is he supports you when you need but lets you go when you don’t need him,” Abreu says. “He is one of the best managers I’ve had in my 20-year career.” Pascoa adds that Machado is a “fierce negotiator” who would only take on a job where he could bring the kind of creativity he wants. “The difference between Fernando and most of the other marketeers in similar positions is that he truly loves advertising as much as good creatives do,” says Gustavo Lauria, co-founder and CCO at We Believers, which worked with Burger King last summer on an ad campaign aimed to reduce livestock methane emissions, in other words, cow farts. “What is undeniable is Fernando does work that is impossible to go unnoticed,” says Pascoa. “It will inevitably create a reaction.”

Behind Activision Blizzard's hire of ‘rockstar CMO’ Fernando Machado

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