Verizon CMO John Stratton Warns That Marketing Money is in Motion

Old Ad Model Broken, And Who Knows What Will Replace It

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The failure of traditional marketing solutions is putting billions of dollars of advertising budget into play-and branded entertainment proponents are bent on proving they are worthy recipients of the checks.

In a barnstormer of a keynote speech, John Stratton, VP-chief marketing officer at Verizon Wireless, told the 400-strong audience at Advertising Age's Madison + Vine conference that the ad inventory and approach used for the last 50 years "no longer works."

"Major money is going to be in motion in the next decade and yet no one really understands exactly where it will land or even if it will land, or just disappear altogether," added Mr. Stratton, who wields a $2 billion marketing budget.

Branded entertainment might be one of the places that money will land. It has already grown into a $5 billion business and much of the talk at the conference emphasized that it is fast evolving beyond product integration into strategic alliances that marry such marketer-cum-media companies as Mr. Stratton's Verizon with others who are similarly blurring the lines.

Still there are serious challenges for those in the space. Several speakers concluded that in the stampede toward branded entertainment, marketers are pushing through programs that are ineffectual-or harmful-to their brands. Content providers are still wrangling with agencies for control of those marketers' dollars. And as all three factions grapple for answers, the consumer is getting lost in the process.

Building new bridges

"We have to identify the consumer and ask what they want," said Peter Dang, chief marketing officer, Bragman Nyman Cafarelli, "and then look for nontraditional bridges to speak to them."

Steven J. Heyer, CEO of Starwood Hotels & Resorts, said marketing dollars are being wasted for those who don't have a clear vision of their brands: "A lot of companies don't understand what they sell." Mr. Heyer doesn't see Starwood as a company that is "selling hotel rooms with a bed," he said, but as a "distribution company" that can "deliver an experience." (See related story, left).

Stephen Berkov, director-marketing for Audi of America, cautioned that "you must be very clear about what you stand for and why you deserve a place in the market," and that means "you start with knowing your brand DNA."

Panelists said advertisers need to study their audiences and better understand how to connect emotionally in an ever-noisier environment. Traditional media don't cut it, and even though it's difficult or impossible to measure, branded entertainment can be a means to that end. "The customer is in control," said Chris DiCesare, Microsoft's director of Xbox marketing. "The cornerstone is to understand how you can engage them."

Marketers who have overlooked that crucial first step have wasted time, energy and money and, likely, made some misguided marriages that damaged their brand. Hollywood's not without fault either, panelists said, sometimes sacrificing the integrity of the story for the sake of the deal. "A lot of people approach entertainment as a tactic and not a strategy," said Paul Bricault, senior VP, the William Morris Agency.

`Ideas and guts'

What's clear is something has to change. "Last year I spent well over a billion dollars buying space, time, air, hits and clicks across a multitude of mediums," said Mr. Stratton. "So if you've been selling me this stuff, you probably need to know that I'm not perfectly happy. And I'm not alone."

"Your clients are in trouble," added Mr. Stratton. "They are looking to you to save them." In the process, he said, "your clients will fire, hire, fire, and hire agency after agency."

He added that marketers' tenure is likely to get even briefer as CEOs recognize "how much money they are blowing on antiquated media plans," he said. "So even if your CEO really loves you-if he goes down, you're going with him."

Success in the branded-entertainment space will ultimately require "definition of inventory, ideas and guts," said Mr. Heyer.

Frank Cooper, VP-promotions and interactive marketing at Pepsi-Cola Co. North America, suggested there are more commonalities than differences between the parties. "We're all telling stories," he said. "We're all trying to create meaning."

"We have the same challenge," said Linda Yaccarino, exec VP-sales and marketing at Turner Entertainment. "Position or perish."

contributing: alice z. cuneo, t.l. stanley

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