Sign Deal With WPP; Continue Talks Other Ad Holding Companies

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LOS ANGELES -- Harvey and Bob Weinstein are no strangers to changing the way Hollywood works. But the brothers could soon reinvent the way the studio system deals with promotional partners.
After leaving Miramax, Harvey and Bob Weinstein have established their own studio, which has already signed a brand integration deal with L'Oreal. The Weinstein Co. is heavily dependent on marketing support services provided by marketers in return for brand inclusions.

Only officially open since Oct. 1, the Weinstein Co. -- which also includes the genre label Dimension Films -- has already lined up an impressive roster of advertisers to help promote the independent company’s slate of films and other projects.

Last week, the Weinstein Co. announced a $25 million investment from WPP, giving the ad agency holding company a long-term first-look deal for its stable of clients that include American Express, Procter & Gamble, Nokia, IBM and Rolex to back film, TV, print and other Weinstein-produced properties.

The week before that, the brothers brokered a two-year marketing alliance with cosmetics maker L’Oreal Paris. The deal will include product placement, marketing support and the co-sponsorship of events, including film premieres.

Other holding company discussions

The Weinstein Co. may not be finished making such alliances. Executives are currently discussing WPP-like deals with other ad holding companies.

Studio executives, while still under the Disney banner at Miramax, made a number of deals with WPP clients, including American Express for "The Aviator," Campbell's Soup for cooking show "Semi-Homemade" and L'Oreal, General Motors and Cotton Inc. for the reality show "Project Runway" on Bravo.

The deals are significant because they provide insight into the kinds of advertisers the Weinsteins consider desirable. While major studios devote much of their attention on securing big spenders like automakers and fast-food chains, the Weinsteins are instead focusing on lining up players in every category.

"Name any brand and there will be an opportunity for it," said Lori Sale, the studio's executive vice president of worldwide promotions. "The properties run the gamut."

Miramax brand deals

Weinstein Co. execs are no stranger to brokering partnerships with brands: While at Miramax, executives forged deals between mainstream marketers like McDonald's for the "Spy Kids" franchise and "The Adventures of Shark Boy and Lava Girl." "Shall We Dance" had a partnership with DSW Designer Shoe Warehouse, among others, and the studio had an overall multiyear deal with Coors.

However, at the new company, the Weinsteins aim to become a bigger player when it comes to promotional partnerships. The reason: The Weinsteins don’t have a choice. They need all the marketing muscle they can gather.

Although they’ve raised $490 million in financing, the brothers aim to spend much of that money on the actual production and distribution of a slate of movies, whose budgets will be capped at $40 million. After factoring in the company’s overhead, that leaves very little for the actual marketing of its films.

The cost to make and market a movie continues to skyrocket, costing on average $98 million in 2004, according to the Motion Picture Association of America. Producing smaller specialty films, of course, costs less, coming in at around $40 million, with companies like Miramax spending an average $11.4 million on marketing per project.

Turning to Madison Avenue

Nearly $12 million to market a film may not seem that hefty, but the Weinsteins are known for spending much more to hype their properties, especially those with Oscar potential. That leaves the Weinsteins with few options other than turning to Madison Avenue for help.

As the Weinsteins -- and other studio marketing mavens -- have learned in the past, a partnership with a major advertiser can expose a movie’s release to audiences in nontraditional arenas such as a brand’s various distribution and marketing channels: retail outlets, print ads, TV spots, billboards and Web sites.

Even more important, it can expand the awareness for a film internationally, where some advertisers are willing to spend more around a tie-in with a film or television property.

Ms. Sale said she's particularly looking forward to the worldwide opportunities that could take shape under the WPP alliance, given that the holding company represents powerful global brands. WPP is the world’s largest buyer of media, volume-wise.

What marketers will likely get in return is access to a slate of prestige films that often turn into Oscar contenders by year’s end, projects that in the past have included "The English Patient," "The Aviator," "Finding Neverland," "Chicago," "Gangs of New York" and "Shakespeare in Love."

Period pieces

But that list includes mostly period pieces -- properties that aren’t necessarily product placement friendly, which could prove a sticking point in the future. And if Miramax’s previous offerings are any indication, advertisers could also end up with a lineup of projects that could be too hot to handle -- R-rated or controversial movies like "Sin City" that are aimed at an adult audience, for instance. Some movies that the studio acquires, which are already produced and have no room for product integration, wouldn't be co-marketing candidates, either.

Weinstein Co. execs stress that their upcoming slates will be varied enough going forward to fit with mainstream brands.

For example, the company struck a deal with BMW to be featured in the upcoming teen-skewing spy film "Stormbreaker."

The Weinstein Co. won’t just be focused on film. As was the case at Miramax, the company will continue to produce TV shows, such as "Project Runway," now entering its second season, and TV projects, books and magazines revolving around lifestyle guru Sandra Lee, behind the "Semi Homemade" franchise. There are TV projects in the works based on the best-selling novel "The No. 1 Ladies’ Detective Agency" and the feature films "Sin City" and "Rounders."

Either way, the Weinstein brothers’ open-door policy to advertisers will put marketers in an enviable position.

First-look opportunity

WPP clients have a first-look opportunity on Weinstein Co. films, though the fledgling studio is not exclusive to the holding company's roster. Studio executives may still make deals with non-WPP marketers for product placement, integration and co-promotions. Traditional tie-in partners like fast-food restaurants and toy companies are fair game, and the studio could mix WPP and non-WPP clients within the same project.

A major advantage of the WPP deal is that the company's clients can be involved in the earliest stages of an entertainment project "so they can get the most out of the relationship," Ms. Sale said.

Other studios have for the past several years forged long-term alliances with individual brands, such as DreamWorks SKG and Burger King, Walt Disney and McDonald’s and NBC Universal and Volkswagen. The Weinstein Co. deal stands apart because it was bartered with an ad holding company with an extensive and varied client list.

Some Weinstein philosophies won't change. Executives will continue to look at scripts early for possible brand integrations that could lead to full-scale marketing partnerships. They are looking for overall deals, like the one recently signed with L'Oreal. Product placement, instead of being under the production division as it is at most studios, will continue to be under the purview of the studio’s marketing and promotions unit.

Meanwhile, studio executives will continue to look at a brand's distribution channels and marketing savvy as key drivers for a deal, rather than expecting that brand to fork over cash in return for being part of a Weinstein Co. project. A number of Hollywood studios have already shifted to this way of thinking because marketing partners have access to consumers in a variety of channels now considered vital promotional platforms.
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