Say Hello to Hallmark's Music Mogul

Ann Herrick Helps Bring Exclusive Releases Into Gold Crown Stores

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CHICAGO -- Ann Herrick may well be the music industry's most unlikely mogul.
Ann Herrick leads Hallmark's efforts in offering exclusive music to its customers.

While Starbucks is just launching its own music label, Hallmark's VP-strategic music alliances, has been in charge of the greeting-card giant's recording label since 2003. Since then, the 37-year-old marketing executive has emerged as a powerful figure for legacy artists looking for a soft place to fall and keep their music relevant to the masses.

Reconfigured music platform

Hallmark has produced music CDs for nearly 20 years, mainly as a loyalty marketing reward for core customers in its database. Those records featured three to five tracks from name artists and orchestras such as the London Symphony and the Boston Pops. When Ms. Herrick took over the music business, she reconfigured the music platform so that more consumers could have access to the products.

"We wanted to reach a much larger audience with our promotional CDs and wanted to utilize them to drive traffic and incremental card purchases," she said. She changed the content strategy to focus on top artists and had them record 10 exclusive tracks for the label. In 2004, Hallmark inked a licensing deal with Somerset Entertainment to produce music CDs under the Hallmark Music brand. After interviewing several music agencies, she formed a partnership with Teri Brown of T.B.A. Network, who helped broker Hallmark's first deal with James Taylor for a Christmas album released in 2004.

Backed with national advertising, the chain sold the album for $7.95 (with the purchase of three individual greeting cards) at its nearly 4,000 Hallmark Gold Crown stores. Based on the success of that CD, Hallmark extended the program to Valentine's Day, its second largest holiday.

Hallmark isn't the only retailer that has emerged as a player in the music space. Starbucks last month announced its own Hear Music label with Concord Records by signing Paul McCartney as its first artist to record an album for the label. The deal further demonstrated the power nontraditional music retailers have accumulated in recent years in helping established stars reach an audience that no longer shops in record stores like they did years ago.

Shopping for music in unexpected places

The impulse-purchase factor is key for both retailers and artists in an increasingly cluttered retail environment, said Russ Crupnick, VP-senior entertainment-industry analyst for NPD Group. "The reality is that labels are trying to get some promotional noise from retailers," he said, noting that "over-stored" consumers are shopping for music in unexpected places such as coffee shops and drug stores, while artists are getting less promotional pop from mainstream music retailers.

"If you think about [a retailer] you're not going to get them to promote Bette Midler a lot, but with an exclusive you can put an album in the circular and in point of purchase [displays]," Mr. Crupnick said. "Here's another way that's a little more creative."

Indeed, for Hallmark, it gives consumers another incentive for buying cards at its outlets instead of another retailer. Hallmark this year entered its third season producing albums by top-name recording artists such as George Strait, Michael Buble and Martina McBride. CDs in the catalog have earned four gold and two platinum records, according to the Recording Industry Association of America's awards for wholesale shipments.

Card sales as ROI

Hallmark is a privately held company and doesn't share its sales data, but looks at the incremental card purchases as its dominant measure of return on investment. Because Hallmark doesn't track its sales using the Neilsen SoundScan system, there's no way to verify actual sales of the Hallmark CDs (beyond the wholesale shipments). But the marketer has been quick to adopt the studio publicity model of touting the popularity of its titles -- for example, publicizing the fact that its George Strait 2006 Christmas album went platinum in just a week and Michael Buble's 2006 Valentine's Day CD was certified gold in the same time frame.

With that success, you'd think Hallmark would consider itself part of the music industry. "Believe it or not, that's not how we look at it," Ms. Herrick said. "We're about celebrating occasions and enriching people's lives. We pick products that help achieve those things." The music helps tie into a season and provides customers a collectible expression of the holiday.

With a customer base of women 24 and older, Hallmark carefully researches the artists it selects for each album. Ms. Herrick begins with a list of roughly 60 artists that she tests with online consumer panels and focus groups.

"There may be an artist who may not have as high of awareness but fans and everybody aware of them would purchase them, so they'd have a very high likelihood of purchase score," said Ms. Herrick, who also factors in timing of albums and tours. "If an artist has low familiarity score but their album comes out and goes to No. 1 and then is touring, then obviously you'd see a big change in their familiarity and purchase likelihood," she said. "I always have to take into effect research but also what's going on in an artist's career and where the artist's label and management think they're going to be."

Good word-of-mouth from James Taylor

Ms. Herrick said the success of the initial James Taylor Christmas album helped the company bring on other artists. "I can't tell you the number of artists that told me they talked with James Taylor and he said how great it is to work with Hallmark," Ms. Herrick said. "We want everybody at the end of program to be happy. It's also the artist success. Did we help them sell their studio album? Did we help increase their fan-club base?"

Ms. Herrick has an impressive resume for such a short time in the business. After learning the Hallmark business as a media planner and account executive over five years at local agency Valentine Radford, Kansas City, Mo., Ms. Herrick briefly worked at Bernstein Rein as an account executive on the Wal-Mart business. She then joined Hallmark in 1998 as a promotions strategist, developing promotions for Hallmark's unit that serves mass-channel retailers such as Wal-Mart and Kroger. Over the past nine years, she worked in integrated marketing for the Gold Crown stores and then held a synergy position in which she developed Hallmark Entertainment's Odyssey and Hallmark cable channels. She also worked to build strategic alliances and partnerships for the company. In 2003, she took over responsibility for the music CDs.

Despite her membership with the Country Music Association and attendance at its annual awards show three times, as well as her two trips to the Academy of Country Music awards and the Recording Academy's Grammy Awards, Ms. Herrick downplayed for her own growing influence as an industry player.

"I'm fascinated with other businesses and how they work and learning the ins and outs of them, and I've always had a fascination with how [the music] business worked," she said. "I have met some unbelievable people, hugely talented people in the music industry and I'm fortunate now to call them friends as well as call them business colleagues."
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