When the media mogul Robert F.X. Sillerman returned to the music business last year after more than a decade, he said he wanted to use online media to unite the huge but disconnected audience for electronic dance music. One aspect of his plan involves the role of marketing and advertising, as evidenced by a new investment from the ad giant, WPP.
WPP, a $20 billion company with major agencies like JWT, Grey and Young Rubicam under its umbrella, will invest an estimated $10 million in Mr. Sillerman’s company, SFX Entertainment.
Mr. Sillerman has said that he plans to build a $1 billion empire largely around the appeal of dance music, and his acquisitions so far have included festival promoters, nightclubs and a music download store, Beatport. WPP’s involvement, he said, could help attract sponsors to those properties.
WPP “recognizes the power of dance music to coalesce and address an increasingly difficult-to-reach audience,” Mr. Sillerman said in an interview. “Clearly their endorsement to the overall marketing community, and in particular to their clients, provides a jump start to fascinating sponsorship and marketing opportunities.”
Martin Sorrell, the chief executive of WPP, said that the SFX investment was a smaller one for his company; he compared it to WPP’s investments in Vice, the Weinstein Company and others.
“These are areas of content that we think are interesting to the younger age groups, particularly in digital, which are the age groups of interest to our clients,” Mr. Sorrell said.
The investment is expected to be disclosed on Monday.
In the 1990s, Mr. Sillerman, through an earlier incarnation of SFX, spent $1.2 billion acquiring dozens of regional rock promoters, establishing a national network to attract corporate sponsors. Those assets, sold to Clear Channel Communications in 2000 for $4.4 billion, now form the basis of the concert division of Live Nation Entertainment, where sponsorship represents more than a third of the company’s adjusted operating income.
Exactly what form sponsorship might take at SFX’s events was unclear. The dance world has largely been run independently, with minimal corporate branding, and that ethos persists even as the genre has become big business. Furthermore, Mr. Sillerman said, the classic model of celebrity endorsement is old-fashioned, necessitating more subtle forms of marketing.
“The days of Yogi Berra holding up a can of Yoo-Hoo are long gone,” he said. “Association with those forms of entertainment that people love is a much more powerful endorsement than a direct one.”
Article source: http://mediadecoder.blogs.nytimes.com/2013/03/18/wpp-invests-in-sfx-entertainment/?partner=rss&emc=rss