Don't rush to show biz deals

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Now that the Screen Actors Guild has tentatively agreed to allow ad agencies or their parent companies to make equity investments in talent agencies, is a flurry of deals likely? Not so fast, please. Let's take a deep breath on the subject of entertainment marketing-or what's better characterized as "marketing through entertainment." It's a paradigm we pioneered at General Motors Corp. more than 10 years ago.

Given the attention and ambiguity surrounding this marketing hot button, taking a breath is not a bad thought. There's been lots of speculation about "big deals," joint ventures and acquisitions, but the reality is that both industries, marketing and entertainment, are just beginning to understand how to harness and leverage the power of entertainment as a marketing tool. Further, the suspected deals between the major talent agencies and advertising/marketing companies seem to be just, well, suspect.

This is only a temporary condition, however. There's a growing acceptance of the power of entertainment as a sustaining marketing tool when it's conducted more professionally and in a bigger way. Still, there are a number of issues that need to be addressed before marketing through entertainment can get to this next level.

First, marketers and talent agencies need to understand they share one strong, common bond: They both make their living managing brands. For the talent agency, it might be an author or an actor-but it's a brand, nevertheless. While talent agency methods may be more subjective than those used on Madison Avenue, both want the same end result: a strong, uniquely positioned brand worth a premium to the consumer.

No replacing talent agencies

The advertising business needs to recognize talent agencies are the main portal to the entertainment business, and they won't be replaced by ad agencies. On the other hand, ad agencies "own" the client relationship and brand stewardship. While this line may sometimes blur, it can't move.

Having seen both businesses from the inside, there are a lot more differences than appear on the surface. Talent agents exist in a world driven by broad, upstream entertainment knowledge and deal making. They can be superb at creating brand content in an entertainment context. The ad agency's processes are far more disciplined and strategic, and their ability to bring clients to a deal is critical. Here are other key issues.

* Marketing through entertainment needs to be viewed as a strategic, needs-based tool and not a limited tactical weapon. Measurement needs to be created to enable a more fact-based understanding of value. Clients, who pay the bills, need to see it this way.

* The sector is broader than product placement in films and TV. It is the entire world of entertainment platforms: music, theater, digital media, publishing, place-based media and on and on. In other words, it's about connecting brands and people any place, any way and any time.

* Entertainment initiatives should be leverageable and translatable across platforms and geography.

* A process and champion to nurture entertainment initiatives through ad agency and client organizations will be required because, at this point, these ideas have no natural home at most companies.

As both parties come together on these key points, the major deals will be pursued more realistically. However, there will be financial issues. The talent agency business is essentially a fee-for-services model. It's not obvious that there's enough revenue available relative to the risk to be attractive to the big public holding companies.

Further, ownership of a talent agency isn't required to develop a "first look" arrangement; the ad agencies' ability to bring clients to the table, or a willingness to use media-buying clout to help create distribution is sufficient inducement.

The issue on the talent agency side is that, in their risk-taking, fast-moving, transaction-oriented world, a relationship with an ad agency could slow them down and make them potentially less attractive to the very talent that is their lifeblood. If talent agencies can own bigger shares in content, particularly in TV shows, as the tentative SAG pact would allow, the model changes. This could easily increase the upside of a holding company investment in a talent agency because content ownership is where the big money lies-and also the bigger risk.

Until this happens, the talent agency is still a fee-for-services business in Hollywood. The main opportunity for advertising agencies is in bringing value-added services to clients, and gaining revenue opportunities, through their participation in the execution that grows out of entertainment-based ideas.

The blending of these two businesses under a new model is inevitable. But it will be built on solid business and marketing principles, where clients need to come first.

Phil Guarascio is chairman, PG Ventures, Detroit, a media and marketing company, and former VP-corporate advertising and marketing, General Motors Corp. He recently was a consultant for the William Morris Agency, whose clients include GM.

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