Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment

by Anita Elberse

  Polaroid joined Lady Gaga’s lineup in January 2010, when the company used the spotlight of the Consumer Electronics Show to announce that Lady Gaga had been appointed as creative director for a special line of forthcoming products. Lady Gaga and her creative team planned to take an active part in the relationship, she said at the time: “Lifestyle, music, art, fashion! I am so excited to extend myself behind the scenes as a designer and to—as my father puts it—finally have a real job.” And a month later, MAC Cosmetics partnered with Lady Gaga, featuring the pop star in the MAC Cosmetics’ Viva Glam advertising campaign that supported the MAC AIDS fund, and releasing products bearing her name.

  For the Born This Way launch, Lady Gaga would be partnering with brands such as Amazon, Belvedere Vodka, Best Buy, Gilt Groupe, Starbucks, and Zynga. Amazon offered the album for 99 cents to promote its new cloud-based service. Belvedere sought to promote its vodka by holding a contest in which participants could compete for tickets to a special live performance by Lady Gaga in London. Best Buy bundled Born This Way with the purchase of a phone. Gilt Groupe offered a lineup of Lady Gaga–inspired merchandise and other special items, including a one-of-a-kind dress worn by Lady Gaga herself and VIP access to special events. Starbucks added the album to the lineup of albums featured in its stores and planned several online initiatives. And Zynga, the social gaming giant, added the Lady Gaga brand to its popular game FarmVille, launching a neighboring Lady Gaga–inspired farm called GagaVille and giving exclusive access to the album prior to its release.

  Lady Gaga’s plans with Target, however, had to be scrapped. The proposed partnership broke down over the retailer’s support for political candidates who opposed gay rights. While Target maintained it was committed to supporting the gay community, the retailer had recently drawn considerable criticism from gay groups. Describing Lady Gaga as an “activist,” Carter said: “We simply had to pull the plug on the deal.” Interscope’s vice chairman Steve Berman agreed: “It was a partnership to drive big business, but when you step back, you are still dealing with an artist, and you can never forget that. We have to stay credible and authentic.”

  “Brand relationships are very important to Lady Gaga, but she has never done a true endorsement, in the sense of her holding up a certain product, telling people, ‘Hey, I’m Lady Gaga, go buy this,’” observed Bobby Campbell, chief marketing officer at Carter’s management firm Atom Factory. “These products are right in line with who she is.” But now, with the launch of Lady Gaga’s new album just a couple of months away, it was up to her marketing team to finalize their plans for leveraging the many partnerships.

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  Troy Carter and Lady Gaga’s approach to forming alliances with companies is quite similar to that of John Meneilly and Jay-Z. In fact, Meneilly has spoken about the partnerships involving Jay-Z in almost exactly the same terms, pointing out that “Jay-Z doesn’t do straightforward endorsement deals.” It is no coincidence that two of today’s biggest superstars are leading the way when it comes to such arrangements: even though the planned launch of Born This Way was not as innovative as the Decoded campaign, corporate partnerships once again played an essential role. But given that Carter had already put together a dazzling array of partners for the album’s release, why did he feel that Gaga could benefit from a partnership with a corporation like Target?

  The answer lies in what Carter called the “enormous scale” of the album’s launch. The fact that team Gaga pursued as wide a rollout as possible, with an intensive marketing effort to support it, is critical. As Carter put it, “A launch of such scale can’t be done with just a record label—they don’t have the resources. In order for the album to be everywhere, we would need nontraditional retail relationships.” Berman agreed: “A big movie launch costs tens of millions of dollars in advertising alone—we don’t have those kinds of budgets. And if we want to go beyond the record stores and other traditional music retailers like Walmart and Best Buy, we have to pursue marketing alliances and work with super fans, bloggers, and the press—and do so around the world.” Especially after the dramatic changes in the music landscape, including the loss of the record labels’ traditional retail partners (which in turn requires new, and often more expensive, approaches to wide launches), music-industry players simply don’t have the means to fund a massive launch of a new product by a superstar. Partnerships with corporations help music companies overcome their shortcomings—and better execute their blockbuster strategies.

  In some ways, today’s alliances hark back to the early days of radio and television entertainment, when consumer-goods manufacturers such as Procter & Gamble served not just as sponsors but also as producers of entertainment goods—that’s how soap operas got their name. Procter & Gamble started funding programs as early as in 1949 through a separate division of the company, then known as P&G Productions and now as P&G Entertainment. The practice continues to this day, whether it is NBC broadcasting two family films funded by P&G and Walmart in 2011, or Lexus paying a share of the production costs for a special episode of the Food Network’s Restaurant Impossible in 2012.

  But the new partnerships with corporations are different in their design and scale. Jay-Z’s partnership with Bing was designed to solve a marketing problem for the entertainer—to build awareness for and interest in the artist’s upcoming book, using Microsoft’s vast resources. Lady Gaga’s multitude of partnerships was created to solve both a marketing and distribution problem. Not only is it team Gaga’s goal to ensure that the public knows of her album’s release; they also want to make sure that Born This Way is within reach when consumers are ready to buy it—or, better yet, ensure that consumers run into the album during their daily routine, whether they are buying coffee, shopping, or playing games online, so they are reminded to buy.

  The genius behind these tactics boils down to the reasons why blockbuster strategies work in the first place. Consider the Target deal. In Berman’s view, “It was a great opportunity to be affiliated with Target. They were going to give us an incredible amount of ‘real estate’ in the store, were going to spend millions of dollars advertising the Gaga brand upon the album release, and would help us sell licensed merchandise and apparel.” Because entertainment products are often bought on a whim, securing a large distribution footprint for an album can be a major advantage. If consumers see a product displayed everywhere, the chances that they will actually buy the product increase. Target would have helped Gaga execute a “pile ’em high, watch ’em fly” strategy in a way that traditional music retailers never could have.

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  In markets that are increasingly global and competitive, and in a time when fashions seem to come and go faster than ever, breaking through the vast media clutter and reaching mass audiences requires enormous budgets. In the film industry, a tent-pole launch now involves thousands of screens in the United States alone, and thousands more across the world. Most blockbuster movies open in different territories within a short time frame—partly to give pirated copies less of a chance to flood the market before the legal alternative arrives—and each major market receives a glitzy premiere and a big publicity push, driving distribution and marketing costs up. In the music industry, the pattern is the same; labels are becoming ever more inventive about pushing their products onto the market with great intensity, which inevitably triggers higher distribution and marketing expenses. With digital technologies putting pressure on revenues and profits, it is only natural that content producers warmly welcome—and actively court—partners willing to help shoulder those rising costs.

  Taylor Swift is another superstar who has embraced this trend. In late 2012, when she released her album Red, Swift did so with “a little help from her brands,” as music-industry magazine Billboard quipped. Target sold a deluxe version of Red and gave it a promotional push via a television campaign. More than sixteen hundred twenty-four-hour Walgreens stores prominently displayed Swift’s new album and put it on sale at midnight the day
of the launch. Even Papa John’s sold Red: the pizza chain’s customers could get a large one-topping pizza and the CD of Red for $22, or add it to any order for $13, $2 below the retail price. Meanwhile, pizza boxes featured the album cover and Papa John’s web site included a page dedicated to Swift that streamed audio clips of the new album.

  Swift’s other brand partners, including Keds, Elizabeth Arden, American Greetings, CoverGirl, and Macy’s, also helped drive awareness. “We’re always looking at, ‘How can we create more doors? How can we make it as easy as possible to get this?,’” remarked Scott Borchetta, the chief executive officer of Swift’s label Big Machine Records. The focus wasn’t just on distribution. The partnerships gave a boost to marketing and publicity, too: Billboard estimated that the combined Red-related advertising spent by the star’s brand partners easily surpassed $15 million, and that did not even count a Macy’s television campaign that also featured Swift. The massive launch worked as it was designed to: Red debuted at the top of the Billboard album chart—and in fact became the first album since Lady Gaga’s Born This Way to break the one-million-copies-sold mark in its first week. Underscoring the importance of the wide distribution strategy, more than four hundred thousand units were sold at Target.

  A third pop-music diva, Beyoncé, is getting in on the action, too. In late 2012, she closed a $50 million brand partnership with Pepsi that, as representatives for the company put it, set out to develop “a new way for brands to engage with musical artists, moving from sponsor to partner.” The deal involves the kind of terms often found in standard endorsements—the pop star will appear on a limited-edition Pepsi can, for example, and be featured in commercials and other advertising—but it also covers support for the singer’s chosen creative projects. Don’t be surprised if much of the promotion blitz will coincide with the launch of Beyoncé’s new album. Given its long-standing ties with numerous retailers, Pepsi should be able to help give any new music the star might release a marketing push at least as big as the campaigns that powered Born This Way and Red.

  However, relying on allies also has downsides, as the collapse of Lady Gaga’s deal with Target illustrates. Adopting and executing a brand-partnership strategy is hard: partners, after all, will bring their own brands and their own goals to the collaboration. These different and often competing agendas create numerous challenges. One is to ensure that a star’s brand connection with a company is credible; in the case of Lady Gaga and Target, political differences ultimately made that impossible. Another challenge is matching timelines with corporate partners. Carter described how this affected team Gaga’s planning: “In the music industry, everything is done within months. The corporate world is playing on a different time scale. They often set marketing strategies two years in advance.” The need to accommodate these kinds of schedules was a key reason why Carter started crafting his plan for the launch of Born This Way several months before work on an album release usually commences.

  Structuring the partnership behind Jay-Z’s Decoded campaign had its challenges, too. Tellingly, the Spiegel & Grau team kept working on what Grau called “Plan B”—a traditional marketing campaign, with book signings and an advertisement in the New Yorker—in the event that the Droga5 campaign fell apart. By June 2010, five months before the book was due to be published, conversations between Droga, Essex, Meneilly, and the Microsoft Bing team had led to an initial agreement. Bing would play a major role in underwriting the campaign, bing.com/jay-z would be the central hub for all activities, and Bing’s search and maps functionality would be used in both the street and online components of the launch. Jay-Z would lend his name and likeness to the campaign, be intimately involved in the entire process, and personally sign off on all aspects, but he would receive no fee. The Spiegel & Grau team would be responsible for finalizing the text and the book’s complex design. They would also keep the Droga5 and Bing teams informed of any changes, since completing the production of the book would overlap with the planning of the campaign. Droga5, meanwhile, would oversee the entire campaign and be responsible for its design and execution. They would also lead the team from Microsoft. “Bing will not have an independent team working on this,” Essex explained. “Their tech guys work under our guidance. We will customize their search and maps technology with their help.”

  But an early presentation of creative concepts set off a contest of strength between Microsoft and Roc Nation. First, the size of the Bing logo, visible on each of the pages displayed on outdoor and bespoke media, became a source of contention. Microsoft knew it was fighting a familiar battle. “It is the joke of advertising—the client always wants to make their logo bigger,” said Mehdi. “Well, the first thing we said after reviewing the materials is ‘We want our logo bigger.’” Meneilly was quick to counter. “We can’t do anything that overruns Jay-Z,” he said. “People already need Bing to play the game. But we should not go too far. Microsoft even wants to put three logos on a billboard on Times Square that consists of three separate panels but is essentially one image! They have to remember that if it weren’t for Jay-Z, this whole campaign wouldn’t exist.” Grau sided with her author: “This is not a Bing campaign—it has to be about the book.”

  The issues involving the logo foreshadowed a larger debate about who really held the cards in the partnership. “This is our money, so we want the opportunity to say ‘We are the approver,’” Mehdi commented. “Of course it has to fit Jay-Z’s brand, too, but when the purchase order comes in from Clear Channel for that three-story billboard in Times Square, it is not going to Roc Nation or Random House—it is going to Microsoft.” Mehdi added: “We would have not even considered this deal if we believed we were second to anyone: we demand creative control when it comes to our brand. This is about growing the Bing user base.” Meneilly disagreed. “In the end, this is Jay-Z’s campaign to sign off on. If Microsoft wants a launch event with Jay-Z at the Delano Hotel in Miami … they have to come up with a very good reason for him to be there. Jay-Z is not just a billboard. We want creative control. Bing may pay for the campaign, but the key objective is to sell Jay-Z’s book—to open at the top of the bestseller list.”

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  These examples illustrate the kinds of obstacles and challenges that need to be overcome in blockbuster launches powered by brand partnerships. It’s one thing for stars like Jay-Z to love this kind of deal—the campaign for Decoded was a great, free way to draw attention to the book—but why are companies like Microsoft or Target willing to endure the headaches that often come with these partnerships? In this case, too, the answer is math: more often than not, alliances with superstars are worth it. Behind these deals lie many of the same reasons why content producers bet on blockbuster properties and invest in stars, as well as the same reasons why consumer-goods brands are willing to pay handsomely to secure celebrity endorsements. In an intensely competitive and crowded marketplace, engaging in brand partnerships helps companies draw attention to their products and brands, reach new or broader audiences, or otherwise capitalize on the power of stars like Lady Gaga and Jay-Z. All of this translates into a better financial performance for those companies.

  In the case of the Decoded campaign, Microsoft was looking for a way to break the twelve-year stronghold its rival Google had on the online-search market. When Microsoft launched Bing in 2009, it embarked on a $100 million mass-media advertising campaign to promote its new search engine. One year later, however, Google still dominated the market with a 66 percent share (and upward trends in both volume and share of search), while Bing’s share was below 10 percent. To make matters worse, Bing’s core users tended to be white middle-aged women in the Midwest. “That’s not a growth segment, and it does not help us in being seen as an innovative choice,” noted Mehdi. “Young people shape what is next in technology. And they have grown up with Google as the only real choice.” As part of an effort to improve Bing’s market performance, Microsoft sent a so-called open brief to a number of advertising agencies—in
cluding Droga5. The brief challenged the agencies to find ways to grow Bing. The central goal was “to break the Google habit,” as Mehdi put it.

  Droga5’s plans for Jay-Z’s campaign seemed a perfect fit: “The beauty of our scavenger-hunt idea was that it seemed on-brief for Bing, and was sure to generate a lot of heat,” said Essex. “We also knew they are used to working with celebrities and sponsoring campaigns—more so than Google—and that they’ve earmarked a substantial marketing budget for such activities.” It was Meneilly, Jay-Z’s manager, who suggested they reach out to Microsoft. The new Bing search engine not only fit the scavenger-hunt idea, it featured a unique maps function that could actually improve the experience. “I realized this is all about search, and it could showcase Bing Maps. And Microsoft sponsors Jay-Z’s annual dinner with LeBron James, so there already is a relationship,” Meneilly recalled. Essex recounted what happened next: “So we called them and said ‘Hey, we got something for you, and it’s pretty cool. We have this idea, and it involves Jay-Z. Do you want to hear more?’”

  The Bing group was immediately enthusiastic. “Jay-Z is one of the biggest stars on the planet, so he can drive awareness,” commented Mehdi. “He appeals strongly to African Americans and those between eighteen and twenty-four years old, which are underrepresented groups among Bing users. And the campaign zeroes in on the kind of Bing features we want to emphasize most.” Mehdi acknowledged that he and his team took quite a leap: “I have learned that sometimes you just have to go with your gut. There is no hard data that tells you that blanketing a pool or putting a jacket in a Gucci store window is going to get you buzz, but at some point you have to swing for the fences.” Mehdi is right about the difficulty of predicting results, and even after a campaign it can be hard to prove causal effects. But Microsoft saw Bing reach a 12 percent share during the Decoded campaign—its highest since the search engine’s launch—and Bing did enter the top 10 of most visited Web sites for the first time.