Ad agencies launch entertainment units as a way to own more IP

Hollywood expertise

Agencies aren’t the only ones building out entertainment units. Earlier this year Anheuser-Busch InBev said it would launch an entertainment unit to create original shows, movies and podcasts. The world’s largest brewer enlisted the help of Superconnector Studios, which was started by Observatory founder Jae Goodman and John Kaplan, a partner at production company Alldayeveryday, to help create the unit. Goodman notably helped create Nike’s entertainment unit Waffle Iron Entertainment.

The goal of Superconnector Studios is to connect brands with agencies and production companies to develop content that Superconnector will then have a stake in. Current clients include AB InBev, Sony Pictures TV, Chipotle, TIAA, Major League Baseball, and a dozen more including media and creative agencies such as The Martin Agency, which Superconnector helped connect with Strauss for her new gig.

“All marketers are realizing that, especially when it comes to brand dollars, they have been paying for the entertainment indirectly,” Goodman said. “Brands buy ads, that money makes its way back to the entertainment creators, and then the circle continues. Brands are realizing that they could actually not only make money directly by investing in entertainment but also have more creative input in the entertainment.”

The challenge is being able to prove that agencies can consistently launch projects, which is why shops are tapping into Hollywood expertise, according to Goodman.

Dagger Originals is headed up Lance Krall, Dagger VP, group creative director, and Tara Ochs, head of development. Krall and Ochs previously launched Picture It Productions in 2016, where they worked with producers such as Jerry Bruckheimer, Laurence Fishburne and Drew Barrymore, as well as CBS Studios. Krall also previously wrote for TV shows including “It’s Always Sunny in Philadelphia” and “Last Man Standing.”

The Ryan Reynolds factor

One threat to agencies coming into the entertainment space is the rise of celebrity-owned ad agencies. While Ryan Reynolds’ success with Maximum Effort may be the most well-known example, actors, athletes and entertainers such as Terry Crews, Issa Rae and Pharrell Williams have launched their own agencies. Shaquille O’Neal, Spike Lee, Tony Hawk, Reese Witherspoon, Tom Brady and Jimmy Kimmel have also invested in their own entities.

“I absolutely think they’re a threat” to agencies, Goodman said. “Ryan Reynolds has made some great, good old-fashioned commercials, some of the most memorable in the last few years. It’s also quite easy for them to convert to making brand entertainment.”

Read more: Maximum Effort’s Fubo channel debuts

While the investment in entertainment could provide a new revenue stream for agencies, it’s not as fast turn as advertising; producing a show can take at least a year, Bradfield said.

Ultimately, a focus on entertainment will provide more value for agencies, according to Roth, who said he noticed clients become interested in Known Originals during recent pitches aimed at highlighting the agency’s other capabilities in data and strategy.

“It’s a revenue driver,” Roth said. “You may not make the sale, it may not be a huge thing, but if it brings in that client to do all the other stuff, it’s like a halo. It adds something that I think makes people want to commit.”