Mind the gap
Letter to the editor
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After drying up the foreign markets and the insurance industry, Hollywood wants to know the next source of "other people's money." Apparently, it is the ad agencies and their deep pockets with their client's money to spend ("Madison Ave. should buy into pix," Oct. 9).
Much has been said and written lately about the dawn of "advertainment," "sponsored programming" and the overall eventual convergence of Madison Avenue and Hollywood. To be sure, there are some significant "synergistic" advantages in the brave new world of branded entertainment but the advertising world should tread lightly.
This is particularly true when it comes to "gap" financing, a highly specialized area occupied by a few professional lenders who know how to analyze and assess the risk. Remember, the world of entertainment financing is highly risky and is at best unpredictable and speculative.
To begin with, sponsorship of entertainment content is nothing new. Companies and their advertising agencies have long allocated dollars into their marketing plans for sponsorships. In fact, promotional tie-in dollars have often helped to finance the P&A costs associated with the film.
The problem remains that while it may be true a $20 million investment would buy BMW "The Fast and the Furious 2" featuring BMWs. Assuming, arguendo, no creative or consumer revolt (which is another issue), it could also buy BMW "Two Lane Blacktop." You just don't know.
Sophisticated brand managers however do know the value of their company's brand. They spend millions of dollars building, establishing and protecting that brand equity. Associating that brand with entertainment content can be a stroke of genius or it can be the death knell of a marketer's career. Add to that the reasonability of picking what film is going to deliver a return on investment for their client's and you will see a lot of heads roll in the near future on Madison Avenue.
There are advantages in the future for advertisers in entertainment and there are integration models that work and make sense for brand, content, consumers and the creative community, who have not sold out years ago; but advertisers should know that while the medium is the message, financing the message is still a very tricky business.
President, Pier 3 Entertainment
