Connections

By Devendra Mishra, Executive Director, HITS and Chief Strategist, MESA –

The emerging direct-to-consumer (DTC) initiatives of the Hollywood studios and networks have been a long-awaited strategy to gain control over their own intellectual property. I have often wondered how digital marketing is evolving in Hollywood’s transformation from B2B to B2C.

In order to find the answer to the question “Who at the studio is the conduit with the consumer: the chief marketing officer, the strategy officer or someone else?” I reached out to Claudio Ludovisi, the former head of strategy for ABC Entertainment (part of ABC TV Group) and the current Assistant Dean of Strategic Innovation, Marketing and Alumni Relations at the Graziadio School of Business of Pepperdine University.

Ludovisi is recognized as a leader in digital business transformation and fan engagement. He has been passionate about building new, brand-driven businesses and leading teams to extraordinary results by “accelerating a digital, purpose-driven world.” His career has spanned several studios where he served as the SVP of operational strategy at NBC Entertainment Marketing and Digital, responsible for operational efficiency across all online and offline platforms. Earlier he had been the VP of operations for IMAX Filmed Entertainment, VP of business development for corporate marketing at Warner Bros. and head of Warner Bros. Consumer Products licensing in Latin America.

Ludovisi also worked for Booz Allen & Hamilton strategic management consulting in the media and technology practice. His career began at Saatchi & Saatchi Advertising where he managed advertising campaigns for key Procter and Gamble brands in both the US and Europe.

Mishra: For more than two decades you have served Hollywood studios as a strategy and marketing executive. How has the marketing function evolved during these tumultuous times at the studios?

Ludovisi: Technology has had a profound impact on marketing function and process. The scope and diversity of activities that need to be coordinated to create a powerful brand has grown tremendously.

First, the number of platforms that can be used to reach consumers has increased, and therefore the creative assets that need to be deployed have mushroomed. This creates a tremendous operational strain on a product launch. A national campaign can now involve involves print, animated and video assets; web sites, apps, and even interactive games. In this is the age of social media — it’s not just about one-way positioning, or selecting a “single minded proposition” controlled tightly through paid media or advertising. It’s about managing a two-way conversation with the audience becomes an active partner in the process. All this spells more complexity.

Second, there is some indication that traditional paid advertising is losing effectiveness. This is not just about millennials not trusting “the man” or anything that looks “corporate.” It’s about the empowered consumer of all ages who is looking for the truth about a product from a source they trust.

In response, marketing professionals are becoming more analytical, and are more focused. on proving ROI. Media companies are using advanced algorithms and “programmatic” advertising to provide tighter targeting. Companies not just in entertainment but in every industry are experimenting with different content formats and seeing what works best to tell their story … but this only goes so far.

Mishra: You are describing a fundamental transformation. So what is its singular driver?

Ludovisi: In my view, the “holy grail” continues to be personal recommendations. No matter what the purchase, from detergent to a specialized doctor, a car, or a movie or TV show, nothing beats a personal recommendation from someone you believe to be credible in the specific area. Technology is now making personal recommendations available at scale! With the rise of social and digital media, and database technologies that allow you to capture individual data, marketers can now generate “earned media” recommendations organically and at the highest level, even personalize the message.

The process, and skill sets needed to accomplish this kind of marketing are quite different from “rinse and repeat” cycle of advertising campaign after advertising campaign focused on single show launches or product initiatives. It’s about focusing on the customer and building a continuous relationship with them. It’s about partnering with fans and influencers systematically to drive earned media at scale.

Many industries are struggling with this seismic shift and entertainment is the prime example.

Mishra: How has “earned media” become a potent asset in the emerging social- media-driven marketplace?

Ludovisi: Database technology now allows you to keep track of millions of individuals. This opens up the potential of building a direct, continuous, two-way relationship with millions of fans and potential fans — in other words, earned media at the same scale as paid mass media (TV, outdoor, print, digital). Also, fans, if properly armed with content, can become powerful marketing partners … they are like a hidden work force of influencers. I’m not talking about YouTube stars who are considered top “influencers.” I’m talking about harnessing the collective social media power of millions of regular people. Your fans are like a hidden work force that’s willing to help you build your brand.

Mishra: The internet, digital and mobile and social media have disrupted Hollywood. How do you think the studios have responded to the formidable challenges from the perspective of marketing?

Ludovisi: First, people can now watch what they want, when they want, how they want. This has caused massive disruption for traditional scheduled television formats, but — given the drop in prices of huge TV sets, theatrical movie going as well.

The second issue is the amount of content that is now available out there to consumers. It’s unlimited choice! By and large, the competition for eyeballs has gotten more fierce and clearly people with existing direct distribution systems have the edge. Data give Netflix, Hulu, Amazon, etc. an advantage both in terms of content as well as marketing.

From a distribution standpoint, some studios are responding by shifting to ownership, so they can make money no matter where the shows are viewed. Others like Disney, HBO, CBS, are trying to establish their own “over the top” or direct to consumer distribution offerings independently from giants like Netflix and Amazon.

From a promotional standpoint, however marketing process is lagging technological innovation. Promotion teams are often short staffed or stretched at key launch times. They are focused on pumping out lots of product launches each year. They are a continuous campaign machine, that relies to a high degree on a “rinse and repeat” approach. It’s very difficult to innovate when you are short staffed and have tremendous pressure to deliver box office or ratings week after week, regardless of product quality.

Studios are developing “database management” capabilities, but these resources often reside outside the immediate purview of marketing or the CMO and the capabilities are not developed or utilized to their full potential. Just having a CRM does not mean that the marketing process is actually using it or relying on it. After all, if companies could reach customers directly, media agencies and media companies who sell advertising would be out of business.

I believe there will always be good use for paid media, especially if you believe in the value of a controlled context. We all know that there is value in reaching a consumer in the midst of a relevant conversation they are having as a part of an active online community. However, I also believe that most companies still rely mostly on paid media because that’s what they know how to do, period.

With DMP’s (database management platforms), magic can happen: if you can find a respectful way to get someone to give you their name and email address, you no longer need to rent their attention from a media company … you can own it and build it just like a personal relationship with a friend!

Then you can truly partner with your fans to drive earned media.

Mishra: How has fan engagement become a missionary objective of marketing executives?

Ludovisi: For clarity, let’s distinguish paid media from fan engagement. The former is like “renting” a relationship with a consumer through a third party. You pay a third party (the media agency and ultimately the media company) to give you access to an audience. The latter is building the ability to reach your audience directly. This requires the management and cultivation of a real direct database, earning your way appropriately and respectfully to personal data, and then fostering a continuous, direct, two-way relationship … a vastly different mission.

The value of direct fan engagement goes way beyond entertainment, to any industry really. The best consumer products companies are developing direct fan relationships and content that tells a story that people want to hear behind or around their product. This is where purpose and authenticity come into play … big time!

Mishra: From an organizational standpoint, how should fan engagement be planned and executed?

Ludovisi: Fan engagement needs to be planned and executed consistently across every consumer touch point, and this can pose an organizational challenge in siloed environments.

Despite recent DTC efforts, studios and producers of film and television have not had a direct touch point to consumers – for many years they gave control over to intermediaries like theater chains, ticket distributors, MVPD (cable/satellite companies) and digital MVPD’s/OTT players.

In addition, in these classic entertainment businesses, the CMO or the “president of marketing” typically only controls two out of the five marketing “P’s”: They don’t control product – that’s called “development”; they don’t control price – that’s usually determined downstream and licensing or transfer pricing is determined by finance and strategy people; they don’t control placement/distribution – that’s called “distribution!” What they focus on mostly is positioning and promotion. Therefore coordination needs to happen:

Within marketing:
• Marketing strategy
• Media planning and buying
• Creative development and production
• Digital and social marketing, SEM, SEO
• National promotions

With areas often outside marketing but that already coordinate closely with marketing:
• Digital Product development (coding/engineers), UX,UI
• Consumer research
• Database management
• Publicity/PR (which often reports to CEOs directly)
• In addition to these departments, many other areas need to be coordinated outside marketing:

Areas completely outside marketing:
• Sales and Sponsorship (partnerships)
• Retail/distribution or whomever manages “the front of your store.”
• Customer service call center operations
• IT
• Strategic planning
• Finance
• Legal (especially with all the sensitivities these days around data privacy)

Mishra: What is your recommendation to your former colleagues in Hollywood?

Ludovisi: I have a white paper that lays out a helpful step by step process to involve all these areas without having to perform a massive organizational restructuring, but in essence, here are the steps:

1. Get top management support to ensure the necessary breadth of support with senior leaders of each required function (above).
2. Form a cross-functional “core team” that is empowered and ultimately responsible for both sales success and also building fan engagement capabilities.
3. Develop a fan engagement vision without regard to your current capabilities but make sure it is tied to an authentic company Purpose, then perform a gap analysis:
• How big of a direct and usable a database do you have today vs. what you need to support sales (without continuing to rely only on paid media)?
• Is your content good enough to be passed on organically by your fans?
• What are the data gathering, data management and privacy issues to keep in mind?
• What kind of proof would you need to generate to feel comfortable taking down your paid media spend?
• What’s worth personalizing and what is not?
4. Gather key insights about your fans.
5. Develop a comprehensive/holistic “always on” fan engagement strategy, one that goes well beyond specific product launches.
6. Create Two-way digital fan engagement assets that pass the “pass-along” test.
7. Gather and manage fan data.
8. Leverage data to personalize fan experiences.
9. Track progress and keep learning.