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'We Don't Eat Scones': Magic Johnson Proves He Has the Acumen for More than Hoops
Published: April 14, 2010 in Knowledge@Wharton
Earvin "Magic" Johnson's basketball career included five national championships with the Los Angeles Lakers and a gold medal with the "Dream Team" at the 1992 Olympics. But domination on the court meant little when Johnson began approaching investors to launch his first business venture. "Everybody wanted the autograph, but nobody wanted to invest with me. At the beginning, I got turned down 10 times before someone said 'yes'. You know what they said? They said I was a dumb jock," Johnson noted during a recent presentation at Wharton.
Magic the businessman wasn't the proposal's only tough sell. Investors also doubted that there was any money to be made building high-quality movie theaters and restaurants in inner city neighborhoods. Over the past 20 years, however, Johnson has proven he has the acumen for more than hoops. Beverly Hills, Calif.-based Magic Johnson Enterprises now owns or operates gyms, Starbucks coffee shops, Burger Kings, movie theaters and other businesses in 85 cities across 21 states. His Canyon-Johnson Investment Fund has been behind nearly $4 billion in urban revitalization projects that resulted in the creation of 4.5 million square feet of retail and commercial space.
Johnson credits his success to having a concrete business plan that he felt passionately about -- and an ability to help partners see the potential in urban, predominantly African-American and Latino neighborhoods. "You've got to knock on the doors of corporations who have the same mindset as yours, who have the same heart as yours," Johnson noted. "If I'm in New York, I can take [investors] to Harlem, I can take them to the Bronx, I can take them to Los Angeles, and I can take them to the South Side of Chicago. You're going to have to find a way to touch their heart and spirit."
Pound Cake and Sweet Potato Pie
When Johnson was trying to broker a partnership with Starbucks in the 1990s, he told CEO Howard Schultz that "the growth of his business would be in urban America. He already had [coffee shops] on every street and across the street from each other." But a boardroom pitch wasn't enough to close the deal. Johnson invited Schultz to spend a Friday night at one of the 6-foot-9 former point guard's movie theaters. The visit coincided with the opening night of the Whitney Houston vehicle Waiting to Exhale, and the theater's lobby and screening rooms were packed. "Our biggest screen had 500 women inside. All of a sudden every woman thought she knew Whitney Houston personally and started talking to the screen," Johnson recalled. "So Howard grabs me about 20 minutes in and says, 'Earvin, I never had a movie-going experience quite like this.' Guess what happened? That got me the deal."
Frappuccinos, lattes and Pike Place Roast are on the menu at a Magic Johnson-owned Starbucks, but there are subtle differences between the former basketball star's coffee shops and the chain's other locations. Instead of jazz standards and easy listening, R&B music plays on the stereo. There is extra space for meetings of community and church groups, and bulletin boards where local residents can post neighborhood news and events. "People said there's no way Latinos and African-Americans will pay $3 for a cup of coffee. Yes, we will pay $3, but we don't eat scones," Johnson stated. "I had to take scones out of my Starbucks and put in pound cake, Sock It to Me cake and sweet potato pie -- things that resonate with the urban consumer. You have to know your customer and you have to speak to that customer every day."
The strategy to focus on inner city communities was developed by Johnson when he was still playing basketball. Riding high after winning back-to-back championships as a stand-out college, and then NBA, player in 1979 and 1980, Johnson recalled returning home to neighborhoods of crumbling storefronts, where residents had to travel long distances to shop or eat at chains that were plentiful in the suburbs. "Most of the people who own the businesses in urban America don't live in urban America, so they take the money to their communities and spend disposable income in their communities. We have trouble in our communities because we do not own the businesses," Johnson noted. "Now that we put Starbucks there, those same people that live in the community, they spend money there and Mom and Pop stores have more traffic. Now they don't have to close their doors because people have money to spend at those stores."
In addition to the Starbucks partnership launched in 1998, Magic Johnson Enterprises has also entered into agreements to develop T.G.I Friday's restaurants and 24 Hour Fitness locations in targeted markets. The company in 2008 entered into an alliance with Best Buy to help the electronics chain expand into urban areas and strengthen its appeal with multicultural customers. A deal with food service giant Sodexo includes contracts to feed employees of Toyota, John Deere and Disneyland, meaning "Mickey Mouse and all of them eat my food," Johnson said with a chuckle.
Johnson's investments are run through a partnership with Bobby Turner, managing partner of Los Angeles-based asset management company Canyon Capital. Over two years beginning in 1998, the Canyon-Johnson Investment fund raised an initial $300 million. But Johnson noted that he achieved a 30% return on the initial fund and that it took a shorter period to raise $600 million for a subsequent endeavor. "The returns are everything, and when we returned them 30% on money spent on urban America, when they did not want to invest it initially, it raised a lot of eyebrows," Johnson stated. "We just closed about a year ago on a billion in cash. It [required] a year because the economy is so bad.... There's a lot of deal flow out there, but a lot of bad deals."
Earning His Nickname
Johnson retired from the NBA in 1991 after announcing that he had HIV. His company's interests also include a partnership with Abbott Labs to hold educational events and offer free testing in cities with high HIV infection rates. The business's nonprofit arm, the Magic Johnson Foundation, organizes job fairs, operates community "empowerment" centers and offers college scholarships to minority high school students. "There have already been people who have made millions, so you're not doing anything that anyone else hasn't done before," stated Johnson, whose net worth was estimated at nearly $500 million in a 2008 Los Angeles Times story. "But can you save and touch somebody's life? Can you help a community get back on its feet? That hasn't been done before. You can set yourself apart from everybody else if you can do something like that. That's why I love what I do."
As one of 10 children who "grew up poor" in Lansing, Mich., Johnson often arrived home from late basketball practices to find that his siblings had eaten all the food his mother had prepared for dinner. A high school standout, the athlete was given his nickname by a local newspaper columnist and went on to lead Michigan State to victory in the 1979 NCAA championship. As point guard for the Lakers, Johnson earned three Most Valuable Player awards, made nine appearances in the NBA finals, played in 12 All-Star games and still holds the league record for highest average assists per game. Johnson is the only basketball player to win championships at the high school, college, professional and Olympic levels. Those successes come with a responsibility to give back, Johnson said.
"Going down the street growing up, I knew if I turned left that trouble was there. Every time I would come to that street, everybody would say, 'You've got to go that way, young man. You've got to go right.' So I kept going right," Johnson noted. "Just think of all the ballplayers and entertainers of color -- somebody told them to go right, too. So why don't you come back?... You've got to go back and you've got to help out. If you can touch and bring 10 people with you, then they bring 10 and then they bring 10 and now the community changes."
Additional Reading
Very interesting. Would like to know how much involvement those inner city neighborhoods have in these high-quality movie theaters and restaurants. Are they just consumers and minimum wage labor? Is it the rich coming to plunder easy pickings and "Giving Back" by donating a small fraction of their profits to make up for the economic rape? Or do they have any equity and/or managerial power? How much of the dollars made by those ventures remain in their local economy?Comments by IntenseDebate
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Saturday, April 17, 2010
Great piece on #32's Second Act. Magic Johnson Proves He Has the Acumen for More than Hoops
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Wednesday, April 14, 2010
Looks like redemption is now at hand! From Nielsen: The Coupon Comeback
April 13, 2010end get author -->
Todd Hale, Senior Vice President, Consumer & Shopper Insights, The Nielsen Company
SUMMARY: Once on their way to extinction, coupons made a strong resurgence in 2009. While they offer consumers a chance to stretch their dollars further, they also offer real growth opportunities for retailers and manufacturers—if they know exactly who to target and how to leverage established and emerging coupon delivery vehicles.
Back to the Future
People of a certain age may nostalgically recall the sight of mom flipping through the Sunday newspaper to clip coupons from the numerous inserts stuffed in the paper. She may have even had a little envelope or “coupon caddy” organized by product category. This kind of memory tends to be among those of us who are baby boomers or Gen Xers—a quaint recollection from the previous century. Indeed, coupon redemption hit a peak in 1999: 4.6 billion, as reported by Inmar.Since then, it’s been downhill for the humble coupon. During the three-year period ending 2008, annual manufacturer coupon redemptions leveled off at just 2.6 billion per year.
The “Great Recession” of 2009 changed all of that and marked a sort of renaissance for the coupon. Inmar reports that coupon redemptions grew by 27% as Americans searched for ways to cut household costs and get more for their money. NCH Marketing Services claimed 2009 coupon redemption levels “achieved the second highest year-over-year growth ever recorded.”
Paperless Progress
While newspaper inserts are still the primary method of coupon distribution (89%) and redemption (53%), Internet redemption growth has skyrocketed, rising 263% in 2009.And while clipping continues to be a primary means of distribution, manufacturers and retailers launched new ways to get coupons into consumers’ hands such as printable coupons on the Internet, in-store kiosks and discounts linked to frequent shopper cards via smartphones and computers, negating the need for a paper coupon at all. In short, it is easier than ever to distribute and use coupons, and this convenience is also a key driver of redemption growth.
Inmar reports that the majority of coupons were redeemed at conventional grocery stores (65%), but all classes of trade—dollar stores, mass merchandisers, convenience stores, military commissaries and drug stores—posted double-digit redemption growth:
Category Redemption Growth Share of Redemption Dollar/Discount/Variety 71% 20% Mass Merchandiser 26% 20% Conventional Supermarket 20% 65% Pharmacy 16% 6% Convenience 12% 4% Military Commissary 12% 4% Source: The Nielsen Company Redemption growth outside of traditional food channels is a reflection of a coupon movement that started with food, but quickly turned to non-food in the second half of 2009. Non-food coupon redemption growth escalated from a rate of 9% in the first quarter to 46% in second quarter and continued growing throughout the year—rising 45% in third quarter and 37% in fourth quarter. A total of 1.2 billion non-food coupons were redeemed in 2009, representing one-third all coupons.
80/20 Rule in Play
While the recession drove heavier coupon usage across low to heavy coupon users from 2008 into 2009, all but the heaviest coupon user group experienced negative total unit growth (with and without a coupon). All told, 83% of units purchased with manufacturer coupons in 2009 were done so by just 22% of households. Coupon enthusiasts—the heaviest users—accounted for 65% of manufacturer coupon unit purchases and 18% of all unit purchases in 2009. They drove a disproportionate amount of sales and sales growth—shopping more frequently, making 1.7 more trips than non-users and buying more (a rate 1.8 times greater annually). While some might think that “crazed coupon clippers” are only interested in a good deal, these findings suggests real benefits to manufacturers and retailers deploying coupons in their marketing mix.More Money = More Coupons
With the value offered by coupons, one might think that the lowest income households would be among the heaviest users. In fact, more affluent households dominate coupon usage: 38% of “super heavy” users and 41% of “enthusiasts” come from households with incomes greater than $70,000. Households with income of $100,000 and up were the primary drivers of coupon growth in 2009. The enthusiast category also attracts a disporportionate number of households with incomes between $50,000 and $69,900.
Trends relating to newspaper readership provide some explanation for this imbalance. According to Scarborough Research, better educated and higher income households buy and read the newspaper more than others and newspapers remain a key vehicle for delivering coupons. Additionally, promotions are generally targeted in areas with more affluent consumers. In essence, the better educated and more affluent consumers are much better at looking for deals as they recognize the value of money.
Beyond income levels, more than half (51%) of larger households (3+ members) are “enthusiasts”, while roughly one-third of non- and lighter coupon users are single person households. Younger female households use coupons more, while male-only households use them less. Older users (65+) are also important “heavier” and “super” coupon users.
All ethnic groups use coupons, but three-fourths of the average coupon “clipper” is white. Households residing in comfortable country and affluent suburban spreads are more likely to be heavier coupon users, while non-users are more apt to be those households living in rural areas and struggling urban core areas.
Manufacturers and retailers have real opportunities to reach different groups with coupons and promotions, particularly African-American and Hispanic households. While this may require adjustments to existing tactics, the potential pay-off—in terms of volume growth and winning new customer loyalty—can be significant.
Future Look
As the economy improves, will consumers continue to use coupons? With the economic recovery taking hold slowly and without significant employment growth, expect coupon use to continue. As long as Americans feel unsure about their personal finances or confident about their jobs, they are going to continue to look at ways to save and get the most for their money. In addition to expanding the appeal of coupons in general, manufacturers and retailers would do well to target enthusiasts: their shopping behaviors and demographics make them extremely appealing. With advancements in coupon delivery vehicles that enable both better targeted coupon distribution and redemption, manufacturers and retailers will continue to have real opportunities to use coupons to drive sales for the next few years and beyond.For more: Contact The Nielsen Company or read about our global consumer & media expertise.Related Posts
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Tuesday, April 13, 2010
Monday, April 12, 2010
From the NGO Foundation for Communication Initiatives (FOCI) - Voter Education Video - Please Pass!
The May 10, 2010 Election will be quite different. The more familiar voters are with how it will work, will help in keeping it honest, orderly and peaceful. This video was produced by the non-government organization FOCI, in consultation with the Parish Pastoral Council for Responsible Voting (PPCRV), the Commission on Elections (COMELEC) and other NGO's. Let's help spread the video. Thanks!
Watch out studios - the stars are now in the biz! The Guardian: Want Teri Hatcher's life? Just read her site
Teri Hatcher, left, with other cast members of Desperate Housewives. Photograph: ABC
It used to be that being a successful actor was about starring in an award-winning film or a hit TV show, but not any more. These days, as everyone from Oprah to Brangelina could tell you, it's all about the brand. It's no longer enough to smoulder successfully on the red carpet or to have a reputation for being a professional, you have to expand your interests, show your human side and, most importantly, build on your "connection to your fans".
That, at least, is the thinking behind Teri Hatcher's latest project. The Desperate Housewives star is to launch a website in May called Get Hatched: A Chick's Guide to Life, which she claims will offer "solutions to the needs and obligations of today's modern woman".
As an idea it sounds suspiciously similar to Gwyneth Paltrow's lifestyle site, Goop, in which the Oscar-winning actress shares tips on everything from where she shops to which names she drops, while posting videos in which she effortlessly makes roast chicken for the family.
Not that Hatcher will welcome the comparisons. Since its launch in 2008, Goop has been much mocked in the media. The Daily Beast and Esquire both sent writers to "live their lives like Gwyneth" and videos mocking Paltrow appeared on YouTube.
By contrast, Hatcher has stressed that she wants Get Hatched to offer relatable, practical advice. "I'm just open and talk about anything, usually with humour, because that's what gets me through the day," she told the Hollywood Reporter. "I don't self-edit."
In addition to Hatcher's own (unedited) musings, the site will also include expert advice, personal blogs and, according to a report in Media Week, an original web series called In The House - "a casual talk show that will be shot in Hatcher's home" featuring guests from "celebrity friends to average women".
"I want to carry on an intimate conversation with people," Hatcher said when the site was announced. "There will be no audience, no publicists. This is not about promoting your next movie. It's about having natural conversations."
And if those conversations mean that Hatcher becomes the Oprah to Paltrow's Martha Stewart, then so much the better for all brands concerned.
Score 1 More Point for OOH! From The NYT: Video Screens Outside the Home Draw More Eyes
The report, called the “Fourth Screen Network Audience Report” (Nielsen is calling it the “fourth screen” after television, the computer and mobile), is expected to be released on Monday. It researched 10 screen networks, from companies like NCM Media Networks and Screenvision, which run ads in movie theaters, to Gas Station TV, which places screens on gas pumps.
“If you took the 10 networks that we measured and put a spot on each of the 10” for a month, “you’d draw more exposures than having a spot on every one of the top 20 programs in prime time” in a given week, said Paul Lindstrom, senior vice president of the Nielsen Company.
The screens are part of a phenomenon of place-based advertising that has gained popularity as consumers move away from traditional media. The networks try to capture people as they are about to buy something, or when they are bored and undistracted — waiting for a movie to start, for instance.
The networks have been pushing Nielsen to create a standard measurement so that they can better sell their ad time to agencies.
“The agencies ask, ‘Why are you better, why should I take some money and not run it on traditional television or somewhere else, and run it with you?’ ” said David Leider, chief executive of Gas Station TV. “If there’s no legitimate measurement behind it, there’s no point for an agency or client to look at it.”
“They were measured all differently by each of the venues, so there was no consistency in the marketplace and no third-party, independent view of it,” said Terrie Brennan, senior vice president for new business development at Nielsen.
To get the ratings, Nielsen looked at variables like how long people spent in front of the screens, and the proximity to the screen — “so in the health clubs, it’s not going to be everybody who swipes in, it’s going to be people in that cardio room that can see those televisions,” Mr. Lindstrom said.
It then interviewed viewers to get demographic information. The number of people interviewed per screen network was as low as 298, for the bar/restaurant TV network Zoom Media & Marketing’s Social Network, and as high as 26,052 for NCM and Screenvision.
Nielsen found that the screen networks reached a broad audience. For example, ads on Screenvision and NCM’s networks in October had 61.7 million exposures. That compared with an average of three million viewers 18 years and older for a typical prime-time commercial on broadcast TV in the same period. So an advertiser could either buy a monthlong series of ads on the theater networks, or about 20 prime-time commercials, to reach the same audience size.
However, some agencies and networks raised questions about Nielsen’s approach. Jack Sullivan, senior vice president and out-of-home activation director at Starcom USA, part of the Starcom MediaVest Group division of the Publicis Groupe, said he was not certain that Nielsen took into account all the differences in these networks.
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“A doctor’s office is different than a grocery store is different than an airport is different than an elevator,” he said. “So the consumer is different in every one of those categories, and the screens are different sizes.”
“There’s really no common denominator,” he said.
By measuring out-of-home screens with the same tools it uses to measure television, Nielsen lets these networks try to be included among the big broadcast ad purchases.
“More and more, now that we have these results, at least in 2010, we’re starting to get looked at from a broadcast budget,” said Scott Marden, research director for Captivate Network, which runs video screens in elevators. “The budgets, and the dollars, are really in the TV world.”
Friday, April 09, 2010
Now, this is Branded Entertainment! From WSJ: Black Eyed Peas: The Most Corporate Band in America
By JOHN JURGENSEN
About 30 minutes into every concert on the Black Eyed Peas' current tour, band leader will.i.am performs a freestyle rap, riffing on text messages sent by audience members. It's a flashy solo turn for the musician who has steered the group since 1995. It's also a moment in the spotlight for the tour's primary sponsor, BlackBerry, which delivers the messages scrolling up two huge screens on the stage.
On its path from rootsy L.A. hip-hop troupe to pop juggernaut, the Black Eyed Peas have been escorted by a parade of corporate backers. From Coors to Levi's, Honda to Apple, Verizon to Pepsi, brands have padded the group's video budgets, underwritten its tours and billboarded band members in prominent places. When Apple was preparing the 2003 launch of the iTunes store, The Peas' "Hey Mama" became the first song associated with the iconic campaign's dancing silhouettes, a point of pride for will.i.am, the band's frontman.
For the musician, wooing potential corporate partners has become as integral to his job as the DJ sets he does on tour at after-parties sponsored by Bacardi. Often will.i.am pitches the concepts himself using "decks" that sum up the Peas' package, frequently in PowerPoint form.
"I consider us a brand. A brand always has stylized decks, from colors to fonts. Here's our demographic. Here's the reach. Here's the potential. Here's how the consumer will benefit from the collaboration."
If will.i.am wasn't in music, "He'd be the best ad executive on Madison Avenue," says Randy Phillips, president and CEO of the concert promoter AEG Live. "I've never seen anyone more astute at dealing with sponsors' and companies' needs and understanding their brands." He says he's planning to have the rapper deliver a seminar to AEG's global marketing team.
'I'm With the Brand'
In pop music, where the cool factor is paramount, corporate sponsorships and product endorsements were once taboo. Now, in a music industry turned upside down, it's tough to name a big artist who hasn't hitched up with a brand.
Associated Press
The Rolling Stones
One-time bad-boy rockers the Rolling Stones went corporate as the first major rock act to sign on a concert-tour sponsor. That scent in the air during the band's 1981 "Tattoo You" tour? Jovan Musk cologne.
A funky spot for Volkswagen in 1997, featuring a few slackers and a stinky lounge chair, catapulted the song "Da Da Da" by obscure German band Trio into a hit. It's a formula that baby bands have been aiming for ever since.
Redferns/Getty Images
Tony Bennett
Music veterans are no strangers to endorsements. Tony Bennett, who broke out when TV shows were sponsored by soap flakes, has appeared in campaigns such as a 1999 blitz for Visa.
Getty Images
U2's Bono and The Edge with Steve Jobs
After a relationship with Apple that included ads featuring the U2 song "Vertigo," the band took up with Research In Motion for BlackBerry commercials and a sponsored tour. The fact that U2 singer Bono is a major investor in a competing smartphone company, Palm, had marketing experts scratching their heads.
Contour/Getty Images
Sting
When Sting's single "Desert Rose" looked like a stiff at radio, Sting made the surprising move of giving it to Jaguar gratis in the form of a music video. He was rewarded with an eye-opening sales spike.
In 2004, the patriarch of countercultural folk, Bob Dylan, appeared with his song "Love Sick" and a lingerie babe from Victoria's Secret. As usual, no one could tell whether the enigmatic Mr. Dylan was putting us on, making a few bucks, or both.
Strange bedfellows, part two. Iggy Pop's banging ode to decadence and drugs, "Lust for Life," was repurposed for a sun-and-fun ad promoting Royal Caribbean Cruise Lines.
The fiscal realities facing music acts hit home when anti-establishment alt-rockers Pearl Jam struck a retailing deal with Target that included a TV commercial. Josh Rabinowitz, a senior vice president at ad agency Grey Group, calls it an "über shocker. They had sworn off that stuff with a venom. Then they gave in. They had to." It was strictly business.
Marketers love the Black Eyed Peas for the rainbow ethnicity of the band's four members. They like its global fan base, and its fetching party anthems like "Boom Boom Pow" and "Imma Be." They like that the band achieves the near-impossible in these post-Michael Jackson times—making both kids and their parents feel cool. All this has turned the Peas into what seems like the only pop ensemble that a fragmented America can agree on. Though the members rhyme, it's not a rap group. Its chugging dance beats, spacey effects, and repetitive hooks have been engineered as party mixes.
Selling records used to be the secret to success. The trajectory of the Black Eyed Peas has been about corporate connections. Last month, a Peas concert in Times Square to promote Samsung's new line of 3-D televisions led to a link-up with "Avatar" director James Cameron, who was also on hand to endorse the sets. The meeting sparked a conversation about whether Mr. Cameron would direct a feature film the Peas plan to start shooting next month. The 3-D film will incorporate concerts, travel footage and narrative themes about technology, dreams and the brain. Will.i.am says of his potential collaborator, "He's a tomorrow person, too. He's part of the TP crew." Mr. Cameron couldn't be reached.
The Peas are poised to be one of music's top earners this year. Released last June, their album "The E.N.D." has sold 2.3 million copies and spawned three No. 1 singles. A rough estimate of the band's income from U.S. music sales, not including licensing, publishing and other revenues, came to $10.1 million in the last year.
Will.i.am says corporate partnerships are equally important. Not long ago, the band was lending its music for relatively paltry fees in exchange for exposure—a common strategy for emerging acts. In the ramp-up to their 2003 breakout album "Elephunk," the Peas made deals with Best Buy, Apple and the NBA, slingshotting their way into households on multimillion-dollar ad campaigns. "It wasn't about the check," says former manager Seth Friedman.
The promotional blitz continues. Within the last year, the Peas' TV performances have included an NFL season-kickoff show, New Year's Eve in Times Square, the Grammys (they've won six), a Victoria's Secret fashion show and the season opener for "The Oprah Winfrey Show," for which they summoned a flash mob of synchronized dancers to downtown Chicago. The group's current tour, for which AEG Live has booked 100 international dates, is a test of whether the band can consistently fill big arenas. It's off to a good start: In 22 U.S. concerts, the band has grossed about $18 million.
Once, when pop music was synonymous with rebellion, a band getting into bed with a large corporation was as improbable as a Brooks Brothers suit at Woodstock. For companies, too risky; for fans, a betrayal.
This changed when advertisers began to leverage elements of the counterculture, which was no longer threatening. First they targeted baby boomers, from the Rolling Stones' "Start Me Up" for Microsoft to John Mellencamp's Chevy commercial. Cries of "sellout" diminished. As CD sales and the marketing surrounding it began to fall into a bottomless pit, younger bands rushed to find other sources of income and publicity. The Peas were among the fastest learners of the industry's new math.
The band still hears muttering that they are shills. "You have to take the criticism, and sometimes it hurts a lot," says Fergie, also known as Stacy Ferguson, whose joining the group in 2002 coincided with its first mainstream hits and a steady string of brand deals.
Pepsi/Getty ImagesFrom left to right: Taboo, Fergie, will.i.am and apl.de.ap in May 2007, after PepsiCo announced a partnership with the band.
Will.i.am shrugs it off. "I get the credit from the brands. They know. I used to work with the marketing people and the agencies, now I work with the CEOs of these companies."
Last Friday night, sitting in his dressing room before a Peas concert at the HP Pavilion in San Jose, Calif., will.i.am gulped a fistful of vitamins. A gadget aficionado who that night would drop "Google" into a song and send a shout-out to the fellow geeks in the audience–"All the technology lovers make some noise!"—he had just come off a run of about 20 meetings, many of them with tech companies based in Silicon Valley.
They included a sit-down with the heads of Twitter and a speech to employees about music and social media. At the St. Francis Yacht Club in San Francisco, he hosted a fundraiser for his i.am scholarship fund that was attended by about 50 tech leaders. Among them was Symantec President and Chief Executive Enrique Salem, who came to the concert the next night with a gaggle of kids lining up for a photo op with band members.
Samsung/Getty ImagesThe Peas performing at the Samsung Times Square Concert last month in New York.
Will.i.am, born William Adams Jr., was raised in the projects of East Los Angeles. Now 35 years old, he cites Run-DMC's 1986 song "My Adidas" as an influential blend of art and commerce. "When I moved my mom out of the projects," he recalls, "I did that with a 30-second song for a product," Dr Pepper.
At the time, the group had a different sound and image, working in the street-wise but literate vein of rap groups like A Tribe Called Quest and De La Soul. In addition to will.i.am, the group included Allen Pineda, a Philippines-born rapper who goes by apl.de.ap, and Jaime Gomez, whose stage name is Taboo.
The Peas remember the 2001 Dr Pepper gig as a point of departure from what will.i.am calls the YPs, or "yesterday people" of the industry. The L.A. band had decamped to Bodega Bay near San Francisco to write songs for their next album, but the Dr Pepper jingle took priority in the initial sessions. "I remember thinking, this is important to the band, but it's taking up a lot of time," says Mike Fratantuno, former backup band member. "Ultimately the goal was to be a world-famous band."
While Fergie is arguably the group's biggest star, projecting a coquettish girl-power appeal, will.i.am, as the Peas' primary producer and songwriter, is "the captain of the ship" on corporate matters, she says.
Will.i.am also had help from a team of plugged-in veterans, including manager David Sonenberg, whose client roster began with Meat Loaf and grew to include acts such as the Fugees. With his partner William Derella, Mr. Sonenberg guides the California act from a limestone townhouse on Manhattan's Upper West Side. With murky German expressionist murals on the walls and ceilings—they came with the building—the office stands in contrast to the Peas' space-age image of late.
Meeno
A portrait of band leader will.i.am.
Mr. Sonenberg also used to manage producer Jimmy Iovine, who is now the chairman of Interscope Geffen A&M, home to Eminem, Dr. Dre and Lady Gaga. Interscope signed the Peas in 1997. Since then, more than 26 million albums by the Peas have been sold world-wide. "I wish I had 10 of them," Mr. Iovine says of the band. He describes will.i.am as a trusted adviser.
Under the Interscope umbrella, will.i.am has his own label imprint, which will soon release an album by the R&B star Kelis. Interscope also invested in will.i.am's online social network, Dipdive, the platform he used to launch the "Yes We Can" video that became a touchstone of Barack Obama's presidential campaign. Mr. Iovine also facilitated what would be a trend-setting licensing deal. An acquaintance of Apple CEO Steve Jobs, Mr. Iovine put the Peas forward when Apple was preparing the 2003 launch of the iTunes store.
The ad boosted "Hey Mama" into radio rotation after telephone surveys demonstrated to radio broadcasters that listeners were already familiar with the song from television.
Photo illustration by Mick Coulas illustration; photos: WireImage/New York Post/Getty Images; Getty Images
With their stage show, the Peas seem to have shot for some hybrid of "Mad Max" and "Tron." Taboo rides a glowing motorcycle out over the audience at one point. Later, Will.i.am strides out clad in metallic plating, beaming red lasers out of his face mask. Brand-wise, this is on-message, he says later. "Here's our verbiage: 'Futuristic. Electronic. Mega.' "
Such a pitch helped the musician upgrade his relationship with BlackBerry maker Research In Motion. Last fall, the company struck a marketing deal with will.i.am's Dipdive site, but was reluctant to sponsor a tour, according to Peas co-manager Mr. Derella. He says the band eventually scored the sponsorship in large part by presenting ideas such as the nightly freestyle rap, and a moment when will.i.am works variations of the company's tag line, "Love what you do," into a seemingly spontaneous monologue during one of the show's closing numbers, "Where Is the Love." Such gambits allowed the Peas to get away without putting any BlackBerry banners on the stage.
Of course few of these deals would have come about if the Peas didn't have a flow of accessible hits to support them. The recent single "I Gotta Feeling," with its refrain "tonight's gonna be a good night," has already become a staple of wedding DJs, sports stadiums and YouTube videos. "I'd pay any amount of money for that song," says Marty Bandier, chairman and CEO of music publishing company Sony/ATV. An especially nice touch, Mr. Bandier says: the line "Fill up my cup, mazel tov," which makes the song an instant anthem for bar and bat mitzvahs.
Will.i.am says the band has struck the right balance with the music in its corporate strategy. "You have to use it right. It's a hammer and a nail. Most cats are just walking around with hammers as necklaces. I'm like, did you know it could do this? Boom boom! I'm gonna make a house."
Write to John Jurgensen at john.jurgensen@wsj.com
Printed in The Wall Street Journal, page W1
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