Consumer Behavior Prompts Euro RSCG Deal With Warner Music

Companies Look for Shared Revenue Streams as Content Creators

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CANNES -- In grand Cannes Lions fashion, Euro RSCG announced its newly inked partnership with Warner Music with a small celebration -- and a performance by Warner Music artist, James Blunt.

Euro RSCG Worldwide CEO David Jones on the deal with Warner Music: 'We charge a fortune for a commodity and give away added value. It should be the other way around.'

At a time when both the advertising and music industries are seeing a shift in the way consumers use them, this partnership is an attempt to be the first to spot and direct where the industries are headed.

"These businesses are going through a period of transformational change," said Justin Nesci, senior VP-digital sales, Warner Music. "The driver is consumer behavior, so the challenge is, how do we best capitalize on that change?"

Three priorities
The partnership has three key priorities. First to build branded-entertainment programs that will work on behalf of both the brands and the artists. Second, to share best practices, helping the agency best use music to promote brands and helping the music company to use brands to further promote artists. Third, to create tools and technologies to enable the partnership.

Any co-investments in technologies or events will result in the sharing of revenue, said Mr. Nesci.

While future projects are only in the brainstorming stage now, Euro RSCG has already had some success in the cross-promotion of a brand and music. For a recent Evian campaign in Europe, Euro created an album of music that included a recording of children singing the Queen hit "We Will Rock You." According to Euro RSCG Worldwide CEO, David Jones, the agency made more money off the record sales than anything else.

"We charge a fortune for a commodity and give away added value," Mr. Jones said. "It should be the other way around."

Mr. Jones believes that companies don't want to pay agencies less, they just want better return on investment. If both client and agency have the same incentives -- a co-investment in a product and shared profits -- then the two will truly be aligned.

Potential revenue stream
Several agencies have already dabbled in this kind of financial arrangement with their clients, but Euro's nascent deal with Warner acknowledges a potential revenue stream for advertising agencies that is the reverse of media companies buying marketing services.

"We're actually content generators," he said. "We create brilliant ideas that spread, create power and impact consumers. Why can't we do the stuff we do and make money from it?"
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