You’re never likely to see Tom Cruise in an American commercial squeezing Charmin. Nor is Brad Pitt about to become a pitchman for Pontiac. So why are advertising giants suddenly so interested in buying up the Hollywood P.R. agencies that represent these and other celebrities?
Variety recently reported that St. Louis-based Fleishman-Hillard Inc. is in negotiations to buy Hollywood “praisery” BWR (formerly known as Baker Winokur Ryder). BWR, which represents Pitt among other big-name stars, is now the largest independent celebrity P.R. firm in the business, since Cruise’s agency, PMK, was bought in February by McCann-Erickson World Group, which is owned by Interpublic Group of Cos. BWR officials aren’t commenting on the talks.
In the months since the PMK deal, there have been a number of stories speculating on Hollywood’s new role in the marketing business. But it’s unclear how PMK will fit with Interpublic’s other divisions or for that matter how BWR will fit with Omnicom Group Inc. (which owns Fleishman-Hillard).
It’s quite possible that these firms are being acquired as much for the city they call home as for the industry in which they specialize.
“This is a way (for the big holding companies) to strengthen their presence in L.A.,” said Thomas Tardio, co-chairman and managing director of Shandwick/Rogers & Cowan in Century City. “L.A. is the No. 2 media marketplace, and I would argue that it’s even more important than New York.”
Still, Tardio is puzzled as to why Interpublic bought PMK, considering that it already owns Rogers & Cowan also a Hollywood P.R. agency, and the biggest agency of any stripe in Los Angeles. He believes that the holding companies are simply flush with cash and hunting for deals, especially in key markets like L.A. where they don’t feel their presence is currently strong enough.
“I, too, am struggling with the reasons behind these deals,” Tardio said. “It’s not like I can say there are 10 good reasons for doing this It’s a pack-’em-in mentality. (The holding companies) aren’t making stupid decisions, but they’re on a buying spree.”
The local shops in question are too small to have any real effect on the global giants. And they’re not terribly profitable, either; according to the Wall Street Journal, pretax profit margins for celebrity P.R. firms tend to be in the mid-teens, compared to the high 20s to low 30s for corporate P.R. agencies.
After being acquired by McCann, PMK was folded into a company called Momentum Worldwide, a New York-based McCann subsidiary that handles promotional events. Momentum Chief Executive Mark Dowley couldn’t be reached for comment, but he told Adweek in May that even he wasn’t sure how PMK was going to fit in with Momentum.
It isn’t as though owning celebrity agencies will help companies like McCann and Fleishman secure celebrity endorsements. Most big stars refuse to do any form of advertising in the United States because they believe it compromises their image, and there is little sign that attitude is changing (although they’re more than willing to do commercials in other countries).
It also won’t necessarily help them come up with promotional partnerships tied to movie launches, such as the giant partnership between the latest “Austin Powers” film and Virgin Atlantic, or all the companies tied to “Star Wars: The Phantom Menace.” Those deals typically are made by the studio or corporate marketers.
“If Taco Bell wants to be in ‘Phantom Menace,’ they just pick up the phone,” Tardio said. “All you need is money, you don’t need a publicist.”
What publicists do bring to the equation is knowledge and connections. Those can be powerful tools, especially in the incestuous world of Hollywood.
“There are these intertwined relationships in this town,” said Stephen Carbone, an independent entertainment marketing strategist who started and formerly ran the commercial division for talent agency International Creative Management and who helped put together the McCann-PMK deal. “If you’re a partner with somebody, they’re going to treat you a little differently than if you’re just a banker, you’re just the money.”
The fact that PMK was folded into an events division could indicate where McCann feels the agency fits. Celebrity events are a legitimate marketing tool, if not nearly as lucrative for agencies as creating advertisements. They also have the advantage of being able to attract big names; a star who might feel cheapened by pitching a product might well take part in an event sponsored by an advertiser (as long as the event is tied to a noble cause such as the celebrity’s pet charity).
Entertainment publicist Michael Levine of Levine Communications Office points out another reason for the lure of companies like PMK and BWR: They have inside information. Celebrity publicists know in advance what big films are coming down the pipeline that advertisers might like to tie themselves to, or what actors are about to hit it big.
“Information is power, and those publicists have access to a lot of information,” Levine said.
Focus on Santa Monica
The most famous building in L.A.’s advertising industry has new tenants.
The Binoculars Building in Venice, so named because its entire front wall is designed to look like an enormous pair of binoculars, sat empty for several months after TBWA Chiat/Day Inc. moved out last fall for bigger digs in Playa del Rey. But considering that Chiat/Day has a long-term lease on the building and real estate brokers say it’s a very expensive one it wasn’t likely to leave the landmark vacant for long.
Now occupying the property are four agencies owned by TBWA Chiat/Day parent Omnicom, the last of which just moved in last month. They are FMJ, a health care marketing agency; Ketchum Directory Advertising; Razorfish, an interactive ad agency; and the latest tenant, health marketing agency BGMHealth Communications.
“You can feel a creativity buzz here,” said BGM President and Chief Executive Joseph Doyle. “People feel like they’re in such a creative environment. They love being a block from the beach, and in such a signature building in advertising.”
Assistant Managing Editor Dan Turner writes a weekly column on marketing for the Los Angeles Business Journal.
