How Ashton Kutcher is pioneering a new kind of media business, bridging Hollywood, technology, and Madison Avenue. Really? Who would have thought I would be grabbing pearls of wisdom fro m the star of Punk’d but I found some interesting insights.
His new company Katalyst HQ is a Web-based video serial that puts the staff of Kutcher’s production company, Katalyst, through a loosely scripted, hopefully funny parody of its workday. The current 16-week “season” is sponsored by Hot Pockets, the savory pastry item whose creators want us to “eat freely,” unencumbered by a knife and fork.
The program is a collaboration between Katalyst; Slide, a Web company founded by Max Levchin of PayPal fame; advertising titan Publicis Groupe; and Nestlé, which owns Hot Pockets. It has been a huge hit, with millions of reposts of the videos on Facebook, each one reaching an average of 65 friends. What a diverse group.
“There is nothing really like this out there,” says Mike Niethammer, Nestlé’s group marketing manager.
The Katalyst HQ series illuminates what Kutcher’s production company wants to become: not just a home for his television and movie projects but also a go-to source for brands looking to deploy what’s called “influencer marketing,” a squishy hybrid of entertainment content, advertising, and online conversation that finds its audience via video, animation, Twitter, blogs, texts, and mobile. “Entertainment, really, is a dying industry,” says Kutcher. “We’re a balanced social-media studio, with revenue streams from multiple sources” — film, TV, and now digital. “For the brand stuff, we’re not replacing ad agencies but working with everyone to provide content and the monetization strategies to succeed on the Web.”
Kutcher, 31, is not exactly the image of a business visionary. He’s still best known for his eight seasons as Michael Kelso, the pretty-boy lunkhead from That ’70s Show, and as the executor of cringe-worthy celebrity pranks on the hit MTV show Punk’d. (Not to mention his marriage to Demi Moore.)
But his future, Kutcher insists, will be all about business. He intends to become the first next-generation media mogul, using his own brand as a springboard. “Punk’d is part of who he is,” says Sarah Ross, Katalyst’s director of new media. “We’re using his brand as a syndication system.”
If this all seems far-fetched, hang in there. Mask off, Kutcher holds forth nonstop on his multi-platform plans. He talks of Web trending, content pirating, and the fact that Twitter has yet to make any money. “If we in this industry don’t figure something out, we’re going to go the way of the music industry and be cannibalized by the Web,” says Kutcher. “It’s really a war to make money.”
It’s not just talk. Some 3.9 million people follow Kutcher on Twitter (@aplusk), and he has nearly 3.3 million Facebook fans. Those numbers have helped attract corporate clients beyond Nestlé — including Pepsi and Kellogg — and supporters such as Oprah, Larry King, and former News Corp. No. 2 Peter Chernin.
Kutcher and his partner, Jason Goldberg, spent the better part of two years courting the wizards of Silicon Valley, converting them from teachers and skeptics to friends and allies. For all their pranks, Katalyst’s digital division can claim one thing most other social-media businesses can’t: profitability.
Even if Kutcher turns out to be more style than substance and Katalyst doesn’t become the Next Big Thing, Kutcher’s experiment points toward a new model for the evolving media business that connects Hollywood, tech, and Madison Avenue. No kidding.
Kutcher in making the case for his business takes jabs at the companies that have fueled him in the social space, specifically Twitter and Facebook. And he’s pretty funny about it, even if he’s also sorta serious.
“When I have a conversation with someone and they say, ‘I’m not worried about monetization yet,’ that scares the shit out of me,” he says poking fun at social Web companies that run up their user base without regard for how they’re going to make money. “I’m part of an industry that is struggling daily. Daily. And I’m always worried about the numbers.”
“You cannibalize this business…a profit-positive business that trades at a decent multiple, and you’re just going to put people out of work. And these folks are counting on just figuring it out. And if they don’t, we’re fucked! That’s not okay.”
“I can sell a more-targeted individual based on the content that you want — blah blah,” referring to Facebook, “Fucking awesome, dude. Go do it. And make a ton of money off of that, and I’ll make programming for that all day. But nobody is actually doing that.”
Kutcher on ad agencies.
“For years, the ad business has been happy to have a completely ambiguous accounting system that they’ve been monetizing off,” he says, referring to Nielsen ratings. “Now that the Web offers a slightly more granular dollars-and-cents audience-acquisition metric — now they’re going to get completely granular about how they’re getting money?”
What the Katalyst team is planning, he says, is simple: Make entertaining stuff, give it to people where they already are, let them have some fun with it, and mix in brand messaging. And because of the viral nature of the Web, each new consumer is cheaper to win than the last one. “The algorithm is awesome,” Kutcher says. “Katalyst is a merger of three industries.”
“A piece of us is connected to ad agencies. Because we get the complex overlay of the social Web, we know how to engage an audience and how to make entertainment for the social Web. And we know how to gain and activate and retain an audience. So we create social networks for brands.”
This is the way things are going, says Netscape founder Marc Andreessen. “Katalyst is way out on the leading edge in terms of thinking this stuff through.” Katalyst steps into the gap left by ad agencies that gave up on the Web after the dotcom bust. “Banner ads aren’t going to cut it,” he says. “And media companies have not been creative or aggressive about making products designed for engagement marketing. Now that’s changing, giving brand advertisers a new way and reason to buy.”
Garrit Schmidt, who leads the experience design and client-strategy practice for digital marketing firm Razorfish, agrees. “People are discovering that experience matters more than traditional advertising now,” he notes. “Using celebrity as a personal sphere of influence is an interesting [distribution] model.” Of course it’s risky, Schmidt adds, because the more commercialized personalities become, the less influence they have. Kutcher acknowledges this: “I am consciously risking my career on the edge of what’s too much information. Eventually, we’ll open up this platform to others, just like Facebook and developers. For this to work, it has to be open.”