EXCERPTS: Steve Heyer sounds off on marketing

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A candid assessment of marketing today by Steven J. Heyer, former president of Y&R Advertising and Turner Broadcasting System, and current head of Coca-Cola Ventures, was a highlight of this summer's AdWatch conference, jointly presented by Ad Age, UBS Warburg and Taylor Nelson Sofres' CMR. Edited excerpts of his remarks follow. Mr. Heyer was questioned by CNN "Money Line" host Lou Dobbs and UBS Managing Partner Chris Dixon.

* On marketing ROI

You recently did a [sponsorship] deal with the NCAA, and paid a lot of money, about a half billion dollars. What is that level of return on investment you're looking for?

If you're looking for a computable ROI, you can never buy any affiliation with any property-ever. On a straight payback basis, it doesn't work

One of the core values of Coke is optimism. We do so much to activate local communities around the things we do-to build connections, whether it's cleaning fields so there are ballparks for kids or making investments in teaching kids how to read. All those pieces come together under the banner of what the NCAA is about. You're going to see a series of programs emerge that won't just look like 30-second spots in the Final Four. You'll see in-store [activities], you'll see pin trading around everybody's passionate alma mater. Women's sports [is] a huge phenomenon in this country today that's been under-marketed.

You're going to see us work a 12-month calendar across probably every brand in the Coca-Cola portfolio-brand Coke being the lead brand. But that full marketing program is really aimed at making people care more about our products. If we do that right, we will get an in-store return volume, a brand return, which is equity based.

* On cross-media deals

Cross media, bundling. How does that play into your current thinking?

It is fundamental to our strategy. But I start in a different place. People don't glue things together for the sheer joy of gluing things together, or buy things because it's easy and convenient. It's not easy, it's not convenient, it's often times more expensive. And, organizationally, based on the way media companies are set up, it's generally a huge pain in the butt. The reason you glue things together is because there's an idea that naturally causes these things to come together. The idea is the glue, not the ownership.

I would rather not be the general contractor, or the architect, or the integrator. I'd love to have other people helping me. But it requires that they understand fundamentally what I'm trying to do with my brands. And then it requires that they don't just come to me and say, "Look at all the stuff I own."

* Where is the agency?

You did the deal with the NCAA. Where was the ad agency?

It started with a vision we created for how we would use that property. It's the same with our Olympic commitment, with the World Cup-all the sports and entertainment properties we affiliate with. The NCAA sold rights to CBS for that 11 years. Then CBS, with [sports-marketing company] Host Communications [Lexington, Conn.], which was a partner in this transaction, set to work to find partners. We found a way to work together. The agencies that represent a wide variety of our brands are involved as advisers to that process, but the lion's share of the work was really internal to Coke.

What does that say about the future of agencies and the degree to which they can bring value to the media proposition?

Maybe in the days of David Ogilvy and before, agencies were the most valued partner a CEO could have. The agency business over the last 25 to 30 years gave a lot of that away. It gave it up to management consulting firms, to bankers-for a variety of reasons. The most serious was that [agencies] defined their contribution too narrowly, as advertising, not marketing, and as making a good creative product, not helping me build a strategy that allows me to build my position in a category.

[Agencies] need a common vocabulary that crosses disciplines, and it hasn't been created. We want the folks in the agencies to understand our brand goals and be our strategic partners. Then we need them to be able to execute against, to use overused words, an integrated media platform. In a funny kind of way for me, it starts with a better understanding of the media plan that ties to consumer touch points more than it does to the creative idea.

* On the Internet

Give us your sense of the role of the Web, and whether it's important going forward as part of an advertising media budget.

What it's not is a brand-building vehicle. Never will be in its current form. That doesn't mean it can't be reshaped. As a way to create transactions, to develop data to establish really strong relationships and make offers that are tailored and targeted and matter in people's lives, the Internet is the preferred way. And the instantaneous way the information flows becomes a real advantage. Long term, there needs to be a different kind of a recognition as to how [the Internet is] a piece of an overarching platform. It can reinforce a message by going more and more targeted. But that's kind of on a want-to-know-more basis, not on the basis of getting out the broad message.

* content-commerce convergence

How do you get involved in taking an increased role in programming?

I am convinced there's so much being thrown at people it's harder and harder for any of it to really stand out. To me, that means making our messaging around our brands, and our brands, part of the fabric of life. That means you're not an intrusion of 30 seconds or 60 seconds; you're a part of what somebody wants to take in. That means that the role of sponsorships, embedded messaging, programming that may even be proprietary [and] the creation of new events that are, in fact, proprietary is very important. That's why we work so closely with Creative Artists Agencies. They're very helpful in giving us an insight into what's the next new thing.

If you look in on this new show on Fox, "American Idol," there's a Coca-Cola lounge embedded in the show. And there's a red couch that the talent sits on in what we now have as the "red room," not the "green room." That's in your face, but we're bringing people something they really want to see, that they're really interested in, that they think is pretty cool. That's a better form of dollars spent on Fox than sticking a message inside of a show that maybe people see or maybe people use as the excuse to get up and walk around, or talk to whomever they're sitting with.

* On personal video recorders

About the future role of personal video recorders: How are you looking to take advantage, or are you, in some of these shifts?

Those technologies represent another way to embed you in the hearts and minds of consumers. If I can own the screens that basically deliver all of the "ER" episodes you want to watch, and it's wrapped with a Coca-Cola commercial, that's something of value. If I can use those [commercial] skipping mechanisms in such a way that [viewers] don't skip my commercials, I have a real interest in the evolution of that business. If I can get them to wrap screens and send messages that cause people to go to another place to see something of interest to them, that's another form of targeted marketing. That's a good thing.

These industries need to decide if they want to evolve in an advertising-friendly way or in an advertiser-competitive way. Then they need to decide if it's advertising as traditionally defined, or some other form of connection. That's where the game needs to be played for us to rationalize all this technology and get back to doing something that matters to people, and that allows advertisers to take advantage of what the technology can offer.

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