Netflix Isn't Closed to Advertisers After All; Just Ask Anheuser-Busch InBev

Netflix doesn't feature ads on its streaming video service. It likely never will. But product placement is a different matter. What has been suspected has been confirmed: Brands can arrange to have their products appear in Netflix's original series. Anheuser-Busch InBev has signed a deal to be the exclusive beer marketer featured in the new season of Netflix's original series "House of Cards," which premieres on February 27. The company's Stella Artois, Budweiser and Shock Top brands will appear in the third season's episodes, building on a partnership that dates back to the first season of "House of Cards." The company is not paying for the placement and is instead providing stock for props. "When 'House of Cards' season one came along, we got some copies of the scripts early on. So we're like, 'Hey, let's just send them some beer. This has an opportunity to probably be a pretty good digital series,'" said A-B InBev Director of Entertainment Marketing Jim Holleran. A-B InBev has worked out similar product-placement deals with Oscar-winning films such as "Birdman" and "Silver Linings Playbook" as well as TV shows like NBC's "Celebrity Apprentice." An extended interview with Mr. Holleran about A-B InBev's product placement deal for "House of Cards" can be found at the end of this article. Samsung has also arranged a product-placement deal for "House of Cards," according to two people familiar with the matter. Ad Age was unable to determine whether Samsung paid for the placements. A Samsung spokeswoman declined to comment. Earlier this year, Samsung ran a promotion offering people a free year-long subscription to Netflix when they purchased certain Samsung devices. It's unclear which other brands have signed product-placement deals for the show's third season. Trailers promoting the new season of "House of Cards" showed products from Apple, Coca-Cola and Fiji Water. Rumors have swirled since the show's premiere in 2013 that Netflix arranged product-placement deals. Apple phones, tablets and computers have been featured prominently in past episodes, as have products from Sony, Coca-Cola, Dell, Canon and Nike. However, Netflix has denied doing any such deals for the first season of "House of Cards" and has kept quiet as to whether that remained the case in last year's second season. The show's production company Media Rights Capital, not Netflix, was responsible for securing the deals for season three. Representatives for Netflix and Media Rights Capital declined to comment for this article. A team of outside specialists was hired to negotiate the deals, according to people familiar with the matter. That team consisted of branded-entertainment experts Jennifer Bydwell, Jordan Yospe and John DeMarco. Ms. Bydwell specializes in product placement for Canadian company Panarea Film Productions. Mr. Yospe is an entertainment lawyer who also runs branded entertainment firm Brand-Aide Entertainment, which employs Mr. DeMarco as a principal, according to his LinkedIn profile. Mr. Yospe declined to comment. Ms. Bydwell and Mr. DeMarco did not respond to messages sent to their LinkedIn accounts. In a phone interview on Thursday, Ad Age spoke with Mr. Holleran from A-B InBev about how the marketer's products came to be placed in "House of Cards" and how his team measures the value of those placements. Many people think Netflix is closed off to advertisers. How did you find out this opportunity existed? It's primarily through the early stages of script reading. You get a film, a digital series, a TV series, and you get in early with either a production company or studio that's on the producer level of the project and try to align with them. It comes from just experience from past projects. Basically you've got relationships built up, and then you can read a script and see if your brand objectives align with the genre or the idealism of the program that you're reading. You see some synergy there and if there's an opportunity, you work from the ground floor. You send them product, and then you send them the appropriate scene that you want your product in. And if the prop masters, set decorators, production and ultimately the director on the project likes that brand sitting in there, the parent, which is Netflix, really doesn't have a whole lot of say because it's done through the creative side of the business. And there's not a fee involved. So no money changes hands? It's just a matter of someone's drinking a beer in this scene and here's a beer they can drink? Well, it's not as simple as that. We analyze the script, and we have a scorecard that I break down for every script, whether it's an episode on a TV show or a movie. Even like "The Dark Knight," we'll go over to Warner Bros. and read the script. We have 14 different criteria, some qualitative, a little bit quantitative too: the right storyline, the right scene, character, star power within the show like Kevin Spacey. We had a past relationship with him through [the website for Mr. Spacey's company Trigger Street Productions], which we sponsored for years. We knew that he may like to work with us on a project like "House of Cards." But it's also the social responsibility involved, the historic value of the show, are there opportunities within promotional elements with one of our customers to do an above-the-line promotion with Ralph's grocery story or 7-11 or Hooters? So there are a bunch of different elements that we look at. But as far as fees, no. A lot of time it's just the point-of-sale, which is signage and stuff that can be used as set [decorations]. And then there's actual beer and just sending the beer to the right place where they're filming the movie or TV show. So you're reading these scripts. Did it pop out to you that this is Netflix, this is a place where brands can't normally play? And did that influence your interest? Absolutely. You look at the trends in the marketplace. When "House of Cards" season one came along, we got some copies of the scripts early on. So we're like, "Hey, let's just send them some beer. This has an opportunity to probably be a pretty good digital series." And we were kind of lucky on that, just noticing that this potentially could be something big. We read it. We liked the storyline. And we liked the way it aligned with one of our higher-end brands such as Stella Artois. A sophisticated show for a sophisticated, beautiful beer. So we put the two together and sent it to them. Then season two we got a little bit more proactive, and we asked for scripts upfront to make sure we get them in the right spot. But most of the time it's just doing our due diligence within the actual material and timing the right brand for the right scene, for the right character, for the right episode. As the exclusive beer marketer for "House of Cards," what kind of input do you have in terms of how your products appear in the show, how often or even during what type of scene or storyline? There gets to be a comfort level. Like I said earlier, it's grassroots. It's talking to prop masters and set decorators, the people on the ground that are on set back east in Washington, D.C., and Virginia where they film it. We worked with the folks on that show on prior projects. So you build a relationship and trust, the ability to get them beer and signage really quickly. We have 700 distributorships across the country, so our geography is very, very flexible. I'll call our guys in D.C., and they'll get beer and signs -- exactly what I want -- within a 24-hour period. We're actually a department within our own company, A-B InBev. I run our entertainment marketing department and have the flexibility to make the call on it. A lot of other beer brands are represented by agencies. They have to go the agency and then go to the brand and then get approvals, so there's a lot of different steps. In season two of "House of Cards," there's a scene where two journalists are drinking Stella Artois in the newsroom, but one of the journalists is a bit down on his luck and may not be the type normally associated with a high-end brand. At any point, did Media Rights Capital's team reach out to give you a heads up about the scene and see if it was cool with you? Yeah. And that's all through the relationship as well. We hope that, because we're providing a good service with them and trying to be a good partner, that they'll come back to us with a scene that may be in question for them. The communication level is key there. We'll give them the okay if we think it works for our brand. If we don't think it works and somebody's brown-bagging a Stella on a bus and it's not the right place for our brand, then we'll let them know that we'd prefer not to be in that scene. Ultimately it is the choice of the creative team, the director and the actors involved in it. We don't have the ultimate say on it, but we can make a strong suggestion on where we want to be. And Netflix is pretty hands off? They don't have any involvement? From what I know, the production team brings them the final product. And from what MRC and different companies that work with Netflix have told us, they're great to work with. And the creative side of the business is left up to production. I've heard nothing but great things about Netflix. There's value any time a marketer can get its brand or product in front of people. But what's the unique value here, given that it's Netflix and "House of Cards"? To me the unique value was hitting the ground running and getting on the ground floor of a top-notch digital series before digital series really took off. Netflix with "House of Cards" was probably the first critically acclaimed digital series. For us to even be affiliated with it, it compliments us that we're looking at new trends in the industry and trying to provide our great service to something that is trending really well. Do you work to quantify the impact of these product placements on sales? We do. We have a formula that we use. Unfortunately we can't use it with Netflix because we don't have numbers from them. They don't provide the number of viewers or the levels of audiences and demographics that a studio would be able to. I'll give you an example of how we track our return on investment for a film. If we do a placement in "Birdman" -- which we did recently, we had Stella Artois in an Academy Award-winning motion picture, it's like a 5-to-7-minute scene -- what we'll do is we take the box office number and times it by a recall number. We use Cinemascore out of Las Vegas, and they poll four different theaters of somewhere around 300 people and get a recall number, [which is] a percentage of the audience that noticed Stella Artois in "Birdman." Say 59% of the people surveyed recognized Stella in "Birdman." Then we get the box office number and times it by that 59% and divide it by the average ticket price. We can get a general number of impressions. Then we weigh that number of impressions versus a buy that we would make, a media buy, and we can get a return on investment based on that number. And the key to that whole equation is your brand being in the right place in that film or TV project. Because if it isn't in the right place, then all this exposure is taking your brand in the wrong direction. How do you calculate the ROI given Netflix's limitations? It's more just the marketing prowess and the partnership with a great show. And then the buzz of the industry, companies like you guys coming to us and asking why we're affiliated. The marketing value of being involved in Netflix, which is on fire, along with a great show and a great brand where our volume trends are doing really well on the brand too. So you can put the whole mix together that Netflix and "House of Cards" has been good for Stella Artois because over the past [two] seasons, the brand trends are really good from a volume standpoint and from a profitability standpoint. Season three premieres Friday. What can you tell me about how we'll see Stella Artois or other A-B InBev brands on the show this season? We sprinkled quite a few more brands around this season too, just to diversify our portfolio within the show. This year Stella Artois is our main brand because of our past alliance, but we put in Budweiser, the king of beers, in a few scenes as well that we appropriate. They were authentic type of scenes, genuine, about friendship. So we figured that Budweiser was a better fit for those particular scenes. We have a brand called Shock Top, which is a Belgian wheat [beer] and a really fast-trending brand for us, and we put that in to get that some exposure. That's more in a party type of scene where the people in the background are drinking it, not primary characters. So with our diversified portfolio and a show like ["House of Cards"], if we do our homework and read into the right scenes, we can place the right brand into those scenes. We think season three is going to be exceptional. It's already done. It's in the can, and we're looking forward to season three. Are there any plans to do any supplemental marketing to bank on being in "House of Cards"? This is something we'd have to go through MRC and Netflix, but we'd like to be more proactive from a digital standpoint and send out still shots or clips of the scenes that we're in and actually help market "House of Cards" for Netflix with our marketing arm digitally.

Netflix Isn't Closed to Advertisers After All; Just Ask Anheuser-Busch InBev

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