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CASE STUDY THREE: Launch a Music Video Division for a Production Company
Objective
Capitalize on the success of the fledgling MTV Channel in the early 1980s by launching KitCat, a music video division for CTA, a successful Los Angeles based production company.
Strategy
To successfully launch KitCat, a pipeline of at least one video per month was required. The challenge the company faced was that record labels were unaccustomed to assigning budgets for this new promotional medium. Videos that were being made were typically for established acts and funded on an ad hoc basis, often by the artists themselves. KitCat needed (a) to help the labels understand that a music video was a powerful three-minute commercial for a new song, and (b) that initial funding could be found by reapportioning existing marketing dollars from less effective programs.
Tactics
- KitCat convinced a smaller independent record label to use the funds previously allocated for life-size cardboard promotional "Stand-Ups" of bands that were placed at point of sale in record stores.
- The video was produced using the same design and budgetary discipline of a traditional television commercial including formal spreadsheets, storyboards, and a production crew recruited from the ranks of Hollywood's feature film community.
- A commercial CPM metric was employed with the debut of the video, to show the value of the air-time to the record labels.
- Based on the success of the approach described, multi-video contracts were negotiated with the major labels against a defined rate card to limit cost-over-runs.
- Key directors were contracted on retainer, and a PR campaign was built around their success and the halo of being associated with celebrity recording artists. This created actual artist demand for particular directors, which strengthened KitCat's negotiating position with the labels.
KitCat under-promised and over-delivered with its first two projects shot on 35MM film and finished on tape. The first was Mathew Wilder's "Nobody Gonna Break My Stride" and LaToya Jackson's "Heart Don't Lie." The videos from these unknown artists soon went into medium rotation on MTV. KitCat funded an accompanying public relations campaign, which garnered the attention of the major labels. Within a year, KitCat was producing dozens of music videos, for most of the music labels including A&M, Atlantic, Chrysalis, and EMI across all genres for the top stars of the day. These included Alabama, John Denver, Kansas, John Cougar Mellenkamp, Diana Ross and the Judds. Staff soon grew to more than 40. A competing music video production company was acquired to increase the stable of directors.
Success Metrics
- Record labels soon recognized the value of the medium and created budgets to support it. KitCat's average video budgets grew from $20,000 to $60,000 and established artists would soon spend over $100,000, leading to the record breaking budgets of Michael Jackson's "Thriller."
- By year two, the pipeline of work had grown from one per month to at least three per month with accompanying economies of scale increasing margins by over 20%.
- KitCat directors became known entities and several went on to make feature films.
- The company won numerous national and international awards.
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