Magazine article Marketing

Ads, Cash and Videotape

Magazine article Marketing

Ads, Cash and Videotape

Article excerpt


Karl Kuechenmeister stepped off the New York to London shuttle last September with a mission in mind. The silver-haired and softly-spoken New Yorker, whose favourite pastime is curling up with a good book, had travelled with the intention of shaking up the 500m [pounds] UK video rental market. Back in New York he headed the media sales division of Warner Brothers Video. He had no counterpart in the UK because video advertising did not really exist. He was here to put it into motion.

Kuechenmeister's first port of call was the Wardour Street headquarters of Warner UK. Warner Home Video (WHV), which would spearhead Kuechenmeister's plans to reinvent video as a media opportunity, is the UK's leading video distributor. It had a great roster of titles to be released in 1990 to attract potential advertisers, such as Batman, Lethal Weapon 2 and Licence to Kill. These films were all still showing on the UK cinema circuit when Kuechenmeister arrived.

Warner Home Video is one of the UK's Big Five video distributors. The others are: CBS/Fox, RCA/Columbia, CIC and the Disney arm Buena Vista. All five are owned by US film companies. When Kuechenmeister arrived, none of the distributors were actively pursuing video advertising--after all, video was one of the fastest growing industries of the 80s, so there was little incentive to take risks. And risks there certainly are.

To succeed, distributors need to overcome a succession of hurdles. The first is the scepticism of advertising agencies. The next is the prejudice of marketing directors. Thirdly the distributors must reassure the dealers who will want their slice of the advertising cake. And finally, there is the British public. Will it take kindly to advertising after spending several pounds to watch a film? Or will viewers simply hit the fast-forward button?

Video advertising is not a new phenomenon. When the medium was in its infancy one of the then leading distributors, Intervision featured cigarette advertising in the run-up to a film.

However, the move failed to catch on and Intervision want bankrupt soon after. Then in 1986 RCA/Columbia -- whose parent company had just been taken over the Coca-Cola -- ran an ad on the blockbuster title Ghostbusters. There was an outcry from dealers, many of whom believe distributors already milk off too much profit. The fact that it was an ad for Coke made matters worse. With burnt fingers, the majors returned to running trailers only. And that was pretty much the state of play when Kuechenmeister arrived.

Very soon he found parts of his well-honed strategy did not travel well. For instance, his presentation contained a chronology of new media opportunities which stated that advertising on radio predated commercial TV -- true in the US of course, but the reverse of what happened here. More seriously, he offered to sell ads on a "package" of films, with each package led by a blockbuster such as Batman.

Says Michael Schlagmann, whose New Media Sales agency now handles WHV's ontape advertising: "One of the initial problems was that these packages were too expensive to allow advertisers to experiment with what was seen to be a new medium."

So although agency media buyers and clients were impressed by the professionalism of Kuechenmeister's presentation, the costs made it a non-starter. Some reports suggest that Warner asked 350,000 [pounds] for its most prestigious package -- a large chunk out of anyone's marketing budget.

Within weeks the pricing and packages were "adjusted" and WHV took on New Media Sales to exploit the enthusiasm for the medium inspired by Kuechenmeister's groundwork. Since then Warner has carried ads on two blockbuster titles, Batman and the new James Bond film Licence to Kill. But important as these deals are, they fall short of Warner's initial intentions of establishing video as an advertising medium alongside satellite and cable. …

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