COMPANY TOWN : Coca-Cola Ends Ad Link With CAA : Marketing: Company’s venture with Disney maintains ties to Ovitz.
Coca-Cola Co. on Thursday formally ended its advertising relationship with Creative Artists Agency, forming a new ad company with Walt Disney Co. and three former CAA executives as minority partners.
The move had been expected, and ends a 4-year-old venture with CAA in which a Hollywood talent agency for the first time was commissioned to create a major ad campaign. CAA, which did ads for the company’s flagship Coke Classic brand, spearheaded the “Always Coca-Cola” campaign for the Atlanta-based soft drink maker featuring playful polar bears.
Although Disney’s potential involvement in the advertising company--which doesn’t have a name yet--received considerable attention in the advertising and entertainment business over the past three weeks, executives with both Coca-Cola and Disney characterized Disney’s role as “minimal” and passive.
“We make no bones about it. We are not going into the ad business,” Disney spokesman John Dreyer said.
Disney is being given a small piece of the new venture--believed to be 10%--at no cost largely so that Coca-Cola and the new agency will maintain ties to Disney President Michael S. Ovitz. As chairman of CAA, Ovitz forged the alliance between the agency and Coca-Cola. He left CAA on Oct. 1 to join Disney as second-in-command to Disney Chief Executive Michael D. Eisner.
Sergio Zyman, Coca-Cola’s top marketing official, acknowledged that the decision to involve Disney stemmed from a desire “to have at least some contact with Michael Ovitz.”
Exactly what Ovitz and Disney will contribute to the new company remains vague, although Ovitz presumably will offer advice and use his extensive Hollywood contacts. In addition, there are possible future links involving Disney characters and the studio’s animation talent. Zyman said Ovitz is not being personally compensated.
Coca-Cola and Disney enjoy long-standing ties through Disney’s theme parks. Disney, however, is highly selective about the use of its characters in non-Disney ads and products.
Zyman suggested there will be virtually no economic benefit to Disney from the venture, adding that the new agency will not do ads for Disney itself.
CAA has produced 80 spots for Coca-Cola and by the end of the year, the number may top 100. The staff of the new company is expected to be well under 10 and will produce 20 to 30 spots a year.
CAA’s initial work for Coca-Cola made a splash. Its spot featuring the animated polar bears ranked first in Video Storyboard Tests annual ratings of viewer recall--and spawned an army of plush “Always Coca-Cola” bears.
CAA hasn’t been able to duplicate that success, however. David Vadehra of Video Storyboard Tests said no new Coca-Cola spots had struck a similar chord with viewers. In the latest survey, Pepsi spots bested Coca-Cola’s. “On the whole, you can say that Coke has gone down,” Vadehra said.
The new agency, mostly owned by Coca-Cola, effectively becomes something of an in-house agency. Except for some department stores, no large corporations rely on in-house agencies, advertising executives said. The deal wasn’t expected to have an impact on the two dozen other agencies that produce ads for other Coca-Cola brands.
The three CAA creative executives--Shelly Hochron, Len Fink and Jack Harrower--will have a small unspecified stake in the entity.
Executives suggested that the venture would operate for at least a year, with its future uncertain after that.
CAA declined to comment, but Coca-Cola’s decision to leave CAA is no surprise. Zyman said that discussions about forming the new company actually began when Ovitz was negotiating this past April with Seagram Co. to head MCA Inc. and became a “fait accompli” once he announced in August that he would join Disney.
