Coke And CAA: A Rocky Branded Entertainment Marriage

Coca-Cola Inc and Creative Artists Agency's complex, glamorous, relationship could be coming to a close--if reports are to be believed. Seems that Coke doesn't think it's getting much for its money these days. Not for the $3 million a year in fees (down from $5 million two years ago) it pays to CAA.

Coke had been happy with CAA for providing two major entertainment marketing deals: Coke's sponsorship of Fox's "American Idol," the No. 1 show in the land, and tie-ins with two Warner Bros.' "Harry Potter" films, the biggest box office films in the last several years. The problem is not much else has come Coke's way, and so it wants to, if not to quit CAA, at least significantly wind down the relationship.

Coke's biggest ongoing deal is with "Idol." Each "Idol" deal sets the beverage company back some $13 million to $15 million in advertising and sponsorship commitments to Fox. At a $3 million a year agency fee for CAA, this would equate to a very nice agency fee of some 20 percent for that deal alone.



Of course CAA has been doing other work--like getting some CAA stars to occasionally pitch for Coke. But is that worth $3 million a year? Media agency and creative agency commissions are typically microscopic these days. Why should a talent agency get all the fun--and the money?

CAA also brokered for first two "Harry Potter" movies where Coke was a tie-in partner. Back then stories abounded that Coke had forked over some $10 million to $15 million in paid-media support for those movies.

Steve Heyer, ex-Coke executive, comes into play here. Charmed by Hollywood and CAA, he had Coke sign on with the agency. But once Heyer was passed over at Coke, he bolted, which left entertainment marketing executives wagging their fingers, predicting that it would only be a matter of time before the Coke-CAA deal would be kaput.

One telling on-background comment came from Brandweek, who broke the story: "Their relationship is not producing for [Coke]. It seems that 'Madison and Vine' is not working as well as claimed. They more or less consulted to Coke, gave irrelevant advice, and were rarely listened to."

CAA's marketing goal for corporate clients was in offering entertainment information --"intelligence," as CAA executives claim. CAA's corporate clients could act on that information if they pleased.

This worked out well because CAA wasn't exactly responsible for all big deal-making. Why? Sometimes there are conflicts. CAA looks to avoid this. For instance, it not only has Coke as a client, but 19 Television, one of "Idol"'s producers.

Welcome to the unsung, cloudy world of branded entertainment.

Next story loading loading..