WPP, a $20 billion company with major agencies like JWT, Grey and Young & Rubicam and GroupM under its umbrella, will invest an estimated $10 million in Sillerman’s SFX Entertainment, said The NY Times.
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,” Sillerman told the paper. “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, WPP CEO, 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,” Sorrell said.
In the 1990s, 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 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, Sillerman said, the classic model of celebrity endorsement is old-fashioned, necessitating more subtle forms of marketing.
RBR-TVBR observation: SFX needs a partner like WPP to help connect its new crop of EDM (Electronic Dance Music) venues, promotions and concerts to the advertisers that want to reach the patrons of this rapidly evolving music genre. It will certainly start with creating networks out of these venues and events, figuring the reach and demos of each network and then plugging in the rest of the media mix modeling variables to help it make number-sense to the CMOs at the client level. In essence, WPP will help monetize and quantify what SFX is getting into.