They launched Xbox on “Will and Grace,” repositioned Heineken for a younger generation through “Austin Powers” and gave the Chevy Camaro transformer powers on the hit summer movie “Transformers.” Now it’s NMA Group’s turn to garner some big name publicity: Bill Gates just bought the firm. The Sun Valley company, which helped to pioneer the $3.6 billion product placement industry, is being acquired by Corbis, the Seattle-based digital media and content licensing company owned by Gates, for an undisclosed amount. Corbis owns the intellectual property rights to some of the most iconic images, music and public personalities of history, including Albert Einstein, Muhammad Ali and Johnny Cash. The deal, announced Jan. 9, gives NMA new resources to expand, especially globally. But observers it comes at a time when interest in product placement may be peaking. NMA President Mark Owens will run the combined operations of NMA and GreenLight, the Corbis unit that provides corporate, advertising, and media clients access to music, film, celebrities, and entertainment content. The companies expect to relocate their combined corporate headquarters to the west side of Los Angeles, but NMA will keep its office and vast warehouse space in Sun Valley, where it has room enough to store thousands of bottles of Heineken and some 400 GM cars used as props in many films and television shows. NMA founder and CEO Norm Marshall said he did not go looking to sell the company, which he launched in 1979, just as the whole product placement category was getting its start with films such as “E.T.” But the offer from Gates was too good to pass up — not just financially, but strategically. He said the deal will give NMA added capacity and resources to expand, increase the company’s global reach and accelerate growth. “We had no ‘for sale’ sign up and this was not a case of needing to sell,” Marshall said. “But the more I looked at the opportunity and where things were headed globally and digitally, the more it seemed like a good fit. We are partnering with a real Avant-garde company.” ‘One-stop shop’ Gary Shenk, CEO of Corbis, said NMA Group complements GreenLight’s business. “We bring the entertainment to the brand and they bring the brand to the entertainment,” he said. “This deal creates a one-stop shop for brands to connect with entertainment and entertainment to connect with brands.” The two companies are merging at a time of seismic change in marketing and media. Most traditional forms of advertising are struggling in a cluttered marketplace that makes it tough for brands to stand out, Marshall said. The penetration of Digital Video Recorders, now nearing 50 percent, have made television advertising increasingly irrelevant, he added, as 92 percent of people with DVR fast-forward through paid commercials. “If you can’t advertize around TV programs,” he said, “you have to do it in them. The whole area of brand integration has grown.” “Alignment with popular entertainment is the last remaining way to break through the clutter,” agreed Shenk. That’s one big reason why Corbis targeted NMA for acquisition. “We did a survey of the market and were very intrigued by NMA because of their global leadership in product placement, which we don’t do.” Aside from NMA’s blue chip client list, which includes companies such as General Motors, Heineken, Puma and Ray-Ban, Corbis was drawn to NMA because it is in a niche business that has done relatively well despite the massive recession that shook the rest of the advertising business. While product placement was not immune from those shockwaves, spending for branded entertainment marketing, which includes event sponsorships, event marketing and paid product placement, dipped 1.3 percent to $24.63 billion in 2009, the latest numbers available from Stamford, Conn.-based PQ Media, a leader in the business of media econometrics. The decline was the first time that branded entertainment marketing spending dropped since PQ began tracking the market in 1975, according to the firm. While the business was down, it has survived the recession far better than the rest of the advertising business, which according to the firm, suffered a 14.4 percent drop-off the same year. Spending on paid product placement in film, TV, videogames and other media — NMA’s specialty — dropped 2.8 percent to $3.61 billion, the data show. The decline came after years of strong double-digit gains from 2005 to 2008. Product placement Michael Belch, professor of marketing at San Diego State University, believes product placement has lost its effectiveness as a marketing tool, but companies will continue to use it, partly because it is so much less expensive than traditional television advertising. Most companies pay just an agency fee, and do not typically pay a production company anything besides the value of donated products, he said. But consumer attention to brands in film and television is not what it once was. “People are now largely oblivious to it,” Belch said. “And when (advertising) people realize consumer interest has peaked they will be less inclined to want to do it.” Marshall said there is plenty of new opportunity in product placement. By 2014, some 90 percent of traffic on the Internet is going to be video, he said, citing figures from Google. Then there are all the new platforms, such as mobile devices. China alone has 900,000 mobile subscribers, half of whom have smartphones with video capability. Product placement in that country is in its infancy, Marshall said. Indeed, the industry recorded compounded annual growth rate of 27.1 percent from 2004 to 2009, according to PQ, which Marshall expects will continue. Marshall banked on that growth for many years. While he declined to reveal revenues, he said NMA Group more than doubled in size in the last 10 years, and as the category leader, Marshall believes his company to be 50 to 75 percent larger than the next player in the product placement niche. NMA employs 48 people in Sun Valley and has offices in New York, London, Tokyo, and Beijing. Marshall has come far from 1979, when he worked at Studio Services Inc. in Van Nuys building trucks for the prop departments of major studios. His first client was Chevy, which he placed on the show “Simon & Simon.” Today, he markets the entire GM line and has more than 400 GM vehicles parked on his lot, ready to go when studio executives call. Marshall said he was approached many times over the years to sell, but none of the offers were quite right. In the end, he made the decision to sell to Corbis because he sees it as a good cultural fit. “My attitude has always been to hire the best people who can get the job done,” he said. “Then I give them the leeway they need to do their job…Corbis is the same way. We’ve had Xbox as a client and I had a chance to see what kind of people they hire. I think we have very similar cultures.” Time will tell if Marshall is right on that score. In the meantime, he said, his one challenge will be getting used to having a boss for the first time in 45 years. “I never worked for anyone in my whole life,” he said. Adjusting to having a boss will be an interesting adjustment, he said, especially one named Bill Gates.
Bill Gates Buys Sun Valley Firm
