MARKETING STRATEGYWELCOME TO HOLLYWOOD" CAMPAIGN

By the time Hollywood Video launched its ‘‘Welcome to Hollywood’’ campaign in mid-1998 the company had a strong first quarter under its belt—it had opened 88 new stores and reported revenue of $170 million, a 54 percent jump from the first quarter of 1997. The company also launched a new store design that emulated the allure of Hollywood to a greater degree—the bright lights and monitors were accompanied by Hollywood memorabilia and photos of movie stars. The campaign’s ads appeared in major U.S. markets and spotlighted Hollywood Video’s new releases, promotions, guarantee policies, and, as Wattles said in the Portland Oregonian, ‘‘that we love movies. . . . We are Hollywood.’’ Arthur Bijur, Cliff Freeman’s executive creative director, explained in SHOOT that the campaign was designed to show consumers that Hollywood Video ‘‘really gets Hollywood and everything about it, . . . to show that it’s more a place which is really all about movies.’’ To accomplish this, Bijur said, the spots focused on things that were uniquely and utterly Hollywood.
‘‘Action’’ was set in the action/adventure section of a Hollywood Video store. An older cowboy dressed in black attempted to teach two male employees how to throw a fake punch as customers looked on in curiosity. The employee practicing to hit ran into some trouble with the maneuver. The cowboy explained, ‘‘That was a good start, but we don’t actually want to hit the person.’’ The puncher tried again but was unsuccessful. On the third punch the second employee slumped to the ground as the cowboy exclaimed, ‘‘That was so close!’’ Another television spot, ‘‘Don,’’ lampooned movie trailers and featured Don LaFontaine, who actually provided voiceovers for many trailers. In the ad a couple approached the counter with a video and asked the employee to tell them a bit about the movie. The employee knocked on a cabinet underneath the counter and LaFontaine, dressed in a suit, emerged. The employee handed him the tape, and LaFontaine read in his instantly recognizable voice:
‘‘From Flesh to Steel. From Blood to Blade. From Man to Mutant. Evil has a new enemy. Justice has a new weapon. And the world . . . has a new hero.’’ LaFontaine then handed the tape back to the employee and crawled back into the cabinet. Cliff Freeman art director Matt Vescovo explained in SHOOT that ‘‘the whole idea is that Hollywood Video is totally Hollywood, and one of the things we associate with Hollywood is this guy’s voice. So what better guy is there to describe a movie to customers than this guy who’s an authority and knows everything about every movie and everybody has heard his voice a million times?’’ Other spots included ‘‘Birds,’’ which parodied Alfred Hitchcock’s movie of the same name, ‘‘Musical,’’ which featured two male employees dancing and singing about the store’s five-day rental policy, and ‘‘Credits,’’ which spoofed the final credits of a movie. The ‘‘Welcome to Hollywood’’ campaign also included several radio spots. All followed the ‘‘Sixty Second Theater’’ theme and provided a humorous glimpse into the plots of such popular movies as Tomorrow Never Dies, As Good As It Gets, Scream 2, and Good Will Hunting. In the ads the announcer began, ‘‘Hollywood Video presents Sixty Second Theater, where we try, unsuccessfully, to pack all the action and drama of a two-hour Hollywood production into 60 seconds.’’ A comical take-off of the plot ensued, complete with actors impersonating the celebrity voices. The Good Will Hunting spot ended with the announcer stating, ‘‘If this doesn’t satisfy your urge to see Good Will Hunting, and we can’t say we blame you, then rent it today at Hollywood Video, where Good Will Hunting is guaranteed to be in stock, or next time it’s free.’’

COMPETITION OF THE "WELCOME TO HOLLYWOOD" CAMPAIGN

Generating three times as much revenue as the theatre arena, the home video market was extremely lucrative and, as a result, highly competitive. Number-one ranked Blockbuster Inc. (previously Blockbuster Entertainment Corp.), which was three times the size of Hollywood Video, had dominated the field for a decade and at the end of 1997 boasted 4,000 stores in the United States and 6,000 globally. Purchased by entertainment giant Viacom Inc. in 1994, Blockbuster enjoyed a commanding market share of 25 percent at the beginning of 1998. Hollywood, though expanding rapidly, had just fewer than 1,000 stores by Christmas 1997 and a market share of about 5 percent, according to the Portland Oregonian. Blockbuster was not invincible, however, and the company struggled in 1996 and 1997 as a result of financial and marketing blunders. Hollywood Video, meanwhile, enjoyed rapid expansion and healthy profits. Though media reports made much of the competition between Blockbuster and Hollywood, Wattles maintained that he did not view Blockbuster as a rival or an enemy. ‘‘[W]hile Blockbuster is certainly the Goliath, I would not describe us as the David at all. We are not out to slay Goliath,’’ Wattles said in the Wall Street Transcript in 1994. He referred to Blockbuster as ‘‘our friendly competitor’’ and insisted there was room in the market for both superstore chains. Still, the two appeared to be rivals—Hollywood claimed to have the largest number of titles, offered guaranteed availability of popular releases, and had aggressive pricing and rental strategies. Blockbuster, with a new CEO and renewed focus on video rentals, responded in late 1997 by lowering its prices, extending rental periods, providing incentives for returning rentals early, and offering more new releases. Blockbuster also launched a new advertising campaign in early 1998 with the theme, ‘‘Get your movie . . . and go home happy.’’
Blockbuster and Hollywood Video were the clear leaders in the video-rental market, but both companies had to contend with independent retailers as well as national and regional chains such as third-ranked Video Update Inc. and Suncoast Motion Picture Company. The independents, on the other hand, complained that they could not compete with video giants, which were capable of instituting revenue-sharing deals with movie studios that allowed them to purchase videos at much lower costs and thus offer larger numbers of popular titles—the Independent Video Retailers Group stated that independent stores located within three miles of a Blockbuster store suffered from an 11 percent decline in revenues during the first half of 1998.

TARGET MARKET OF THE "WELCOME TO HOLLYWOOD" CAMPAIGN

More than 80 percent of households in the United States owned VCRs in the late 1990s, and these households were filled with potential Hollywood Video customers. As a result Hollywood’s target audience was quite broad. The company’s advertising agency indicated that Hollywood’s target market consisted of those aged 18 to 45 as well as suburban families with children. Wattles discussed the company’s consumer target in an interview in the Wall Street Transcript in 1994 and said, ‘‘ . . . when the advertising agencies ask what your demographic profile is, I say, ‘Alive.’’’ Nearly everyone, Wattles elaborated, enjoyed watching movies. ‘‘One thing that’s nice about our business is our demographic profile. It’s so simple. Obviously there are demographic profiles of people who watch more movies than others but the curve is very slight. We’re not just a teenage business, or a midlife business, or an X-generation business.’’ To appeal to this wide audience, Hollywood Video stores focused on the one thing all the customers shared—the love of movies. ‘‘Our store design, our marketing, and our advertising reflect the name and image of Hollywood,’’ he explained. ‘‘We try to create an exciting environment that is movie and/or movie star oriented.’’ Though Hollywood Video’s audience was sizeable, many viewers were growing increasingly distracted by new entertainment technologies and options, such as pay-per-view television programming, digital video disks (DVD), the Internet, and expanded offerings from cable television and direct broadcast satellite. Industry analysts labeled the video-rental market mature, with little growth left. According to a study for the Video Software Rental Association, total revenue from the rental market declined 4.2 percent in 1997. Tom Wolzien, an analyst with Sanford C. Bernstein, pointed to a 1996 poll of 1,000 households with satellite television programming that discovered a 70 percent drop in video rentals. Still, many believed an audience for video rentals remained. Roffman Miller Associates’ Marvin Roffman told the Los Angeles Daily News: ‘‘There were a lot of people on Wall Street that were giving the death knell to the industry . . . [b]ut it’s probably not going to die for a long time. Home video is still a very viable business.’’ Hollywood Video believed this as well, and to continue to attract customers the company implemented many customeroriented policies, such as lower rental prices, guaranteed availability of popular rentals, and five-day rentals on every video in the store. According to the Portland Oregonian, Wattles was not intimidated by new technologies or forecasts of doom; Hollywood Video would, Wattles stated, change with the times and with clientele tastes. ‘‘As long as interest in movies continues, . . . there will be opportunities,’’ Wattles vowed.

HISTORICAL CONTEXT OF THE "WELCOME TO HOLLYWOOD" CAMPAIGN

Hollywood Video first opened its doors in 1988 with one store in Portland, Oregon, run by owner Wattles and his wife. From the outset Hollywood Video stores were large, brightly lit with an abundance of neon, and had 50 to 70 television monitors blasting the latest video offers. Employees dressed in red bow ties and cummerbunds. Every detail was designed to mimic the excitement and bright lights of Hollywood. And like Hollywood and the movie industry, Hollywood Video moved quickly and aggressively—only five years after its formation and with a total of 16 stores, the company went public. With the acquisition of Texas video-rental chain Video Central in 1994, the number of Hollywood Video stores rose to 100, and by 1995 the company was the third largest video-rental chain in the United States. By 1996 Hollywood had assumed the numbertwo position, and the company reported net income in 1996 of $20.63 million, a surge of 75 percent over net income in 1995, which was $11.79 million. The company had more than 500 stores in 29 states by October of 1996. Wattles told the Portland Oregonian, ‘‘In the third quarter [of 1996], we averaged better than a new store opening every 36 hours . . . and in the fourth quarter we plan on averaging over a new store every 24 hours.’’ In 1997 the company opened 356 new stores, and net income continued to rise—in the second quarter of 1997, Hollywood enjoyed an 83 percent increase in profits.

OVERVIEW OF THE "WELCOME TO HOLLYWOOD" CAMPAIGN

Hollywood Entertainment Corporation hurtled into 1998 at a screaming expansion pace for its chain of Hollywood Video retail stores—the company planned to open more than 353 new stores in 1998 to bring the total number up to 1,260 by year’s end. The decade-old chain of superstores had quickly become the second largest video-rental chain in the nation, and chairman, founder, and CEO Mark J. Wattles believed that Hollywood Video had ample opportunity for growth. ‘‘[In 1993] we were a 15 store chain and embarked on a very aggressive store opening schedule.’’Wattles announced in a prepared statement. ‘‘Last week [April 13, 1998] we opened our 1,000th video superstore and we plan on opening our 2,000th within the next three years. With over 20,000 employees, and a very strong management team, we are not only focused on growth, but the continued improvement of our operations, as well.’’
To position Hollywood Video as the superlative entertainment store, Hollywood Entertainment launched its first major branding campaign in May 1998. Developed by
New York-based Cliff Freeman and Partners, an agency known for its creative, cutting-edge work, the ‘‘Welcome to Hollywood’’ campaign consisted of nine television spots and eight radio ads. The radio ads followed the theme ‘‘Sixty Second Theater’’ and provided humorous synopses of popular movie plots. The television ads were set in Hollywood Video stores and featured store employees in amusing behind-the-scenes situations. Wattles discussed the purpose of the campaign—estimated to have cost anywhere from $11 million to $20 million—at the company shareholders’ meeting in May 1998. ‘‘We want to be a brand so powerful that when you think of movies you think of Hollywood [Video],’’ he said. President and COO Jeff Yapp agreed. ‘‘We want our customers to think of Hollywood Video as their inside connection to Hollywood and the world of entertainment,’’ Yapp said in a prepared statement. ‘‘As our mission statement says, ‘We are Hollywood. We are entertainment.’ ’’

OUTCOME OF THE IT HAPPENS AT THE HILTON CAMPAIGN

Hilton was delighted with the results of ‘‘It Happens at the Hilton.’’ Consumer surveys indicated that the campaign had performed well above expectations in reaching its target audience. Moreover, research revealed that Hilton had successfully negotiated the risks of incorporating famous personalities, according to Hilton’s vice president of marketing. Despite the company’s concerns, the campaign had remained rooted to the product it touted. Consumers understood that the celebrity photos were used to underscore the unique qualities of the hotel—that things ‘‘happened there’’—and did not feel put off by them. Hilton continued the campaign into 1999.
The company was so impressed with the effectiveness of ‘‘It Happens at the Hilton’’ that it extended the campaign for internal use. Just as ‘‘It Happens at the Hilton’’ signaled to consumers a new identity for the venerable old hotel, the company inaugurated ‘‘Hilton Pride Makes It Happen’’ to bring this same message to its staff. These posters strove to remind employees that the ‘‘new’’ Hilton was their creation and responsibility and that they should take pride in the hotels where they worked.

MARKETING STRATEGY OF THE IT HAPPENS AT THE HILTON CAMPAIGN

Hilton’s challenge was to distinguish its brand from the numerous competing upscale hotel chains. It’s first objective was, therefore, to make ‘‘It Happens at the Hilton’’ stand out from other hotel advertising. ‘‘There is a lot of hotel advertising out there, but if you take the logo off, they are almost interchangeable,’’ a Bozell executive told Advertising Age on October 5, 1998. Using celebrities to represent the brand was essential to this agenda. But this approach was not without its danger. While ‘‘celebritydriven ad campaigns [were] immediate attention-getters’’ that could break ‘‘through the clutter,’’ of other advertising, the Chicago Tribune noted, Hilton’s effort ran the risk of having consumers confuse its brand with those of other companies the celebrities had endorsed in the past. Alternately, consumers might assume that Hilton was too exclusive, if the likes of Naomi Campbell lodged there. ‘‘We had been concerned that the creative concept featuring personalities might not be relevant to everyday guests,’’ Dirks said to Advertising Age International. To alleviate this risk, Hilton and Bozell conducted extensive pre-launch testing in key Hilton markets, such as Los Angeles, New York, and London, to ensure that ‘‘It Happens at the Hilton’’ was accessible to its target audience.
Having cleared this hurdle, Hilton’s next task was to bring the message of the campaign—that guests should expect a memorable experience when staying at the Hilton—to its chosen audience of elite business and leisure travelers. Print was the predominant medium used because of its ability to hone in on select niches. For instance, since frequent business travelers were a key market, Hilton erected poster versions of the spots at international airports and ran them in in-flight magazines such as American Way and Delta Sky. To address business people even when they were not on the road, Hilton also advertised in publications including the Financial Times, Business Week, Time, Newsweek, U.S. News & World Report, as well as major market newspapers, such as the Wall Street Journal, USA Today, and the New York Times. Moreover, Hilton utilized travel magazines so that it could connect with consumers planning leisure travel. Hilton placed ads in Travel & Leisure and Conde Nast Traveler as well as in family-focused magazines such as Family Fun and Travel & Leisure Family. Finally, Hilton pitched ‘‘It Happens at the Hilton’’ to meeting planners at large corporations by printing the pieces in meeting planner magazines. There was also a small portion of the campaign devoted to television. For the most part, Hilton would trade rooms for airtime on programs such as Entertainment Weekly and broadcasts of the Oscars and Grammys. These short 15-second spots employed the ‘‘It Happens at the Hilton’’ tag line.
The campaign was global in its scope, running on four continents. The first two print pieces broke not only in the United States and Canada, but also in Australia, the United Kingdom, Germany, and various Asian nations. Publications in each country were used, such as the Frankfurter Allgemeine Zeitung in Germany. The international focus was imperative if Hilton was to reach the growing market of American business people who traveled frequently, as well as international business travelers around the world. According to a company press release, Hilton wanted the campaign to be seen by more than three-quarters of international business travelers.