Steve Stoute in talks with IPG on sale of majority stake in his agency, Translation

From BusinessWeek.com
(March 19, 2007) Several months into his new job as vice-president of U.S. marketing and advertising for General Motors, Mike Jackson came to the conclusion that the automaker was just not cool enough. Young, urban trendsetters on the East and West Coasts were not paying attention to GM's cars. The message being sent to consumers, Jackson says, was all wrong. "We worried far too much about the sheet metal, color, etc.," he explains. "What we really needed to worry about was connecting emotionally with our consumers." So Jackson picked up the phone last spring and called Steve Stoute.

More executives overseeing brands that have gone stale are turning to the 36-year-old consultant and former music executive for help. Stoute's agency, Translation Consultation & Brand Imaging, offers to imbue brands with a combination of hip-hop ethos and practicality to help reposition products, from Chevy Impalas to Crest Whitestrips to Reese's peanut butter cups. The end result is for brands to resonate with a younger, more trendy audience. Other successful entrepreneurs have emerged from the hip-hop scene, such as Russell Simmons and Sean "P. Diddy" Combs, to help put urban fashion and lifestyle into the mainstream.

But Stoute is more closely aligned with a new guard of innovation consultants providing strategies that go beyond tricked-out sneakers and jeans. His message: Companies have not embraced the changes in the culture to be able to talk to a new generation of consumers. "So many executives," says Stoute, "are lost in the confines of their own building." Besides GM, Stoute has successfully taken his mantra to clients that include McDonald's, Procter & Gamble, Hershey, Microsoft, and Estée Lauder.

Now Stoute seems to be gaining respect on Madison Avenue. Interpublic Group of Companies Inc., the $6.2 billion-a-year global advertising conglomerate, is in talks with Stoute to buy a majority stake in Translation, say sources close to those talks. If the deal is closed, IPG would get schooled on Stoute's approach to brands and access to celebrities, while Translation would gain entrée to IPG's large client base and deeper pockets.

As an African American with strong relationships to hip-hop artists (music icon Jay-Z is a good friend and business partner), Stoute knows how easy it is to pigeonhole Translation as a black ad agency. He immodestly characterizes his firm as "a McKinsey of pop culture." By that he means that Translation is called upon by companies facing strategic challenges. "These are companies who know they have to take advantage of global trends, but at the same time are afraid of jeopardizing core businesses," says Stoute. "We show them how to walk that thin line. It often comes down to showing them the language and tonality needed to reach consumers."

But Stoute also says he's helping executives understand a phenomenon that he refers to as the "tanning of America." It's a generation of black, Latino, and white consumers who have the same "mental complexion," he says, based on "shared experiences and values." Rap and hip-hop, starting in the late 1980s when white suburban kids began snapping up music by mostly inner-city artists, provided the first glimpse into this shift. "Rap was a litmus test for where the culture was headed," he says.

To connect McDonald's to this world, Stoute helped create its "I'm lovin' it" ad campaign featuring pop star Justin Timberlake. That was relatively easy. To top executives, it was all about coming up with a new ad. Stoute has encouraged them to go much further and told them they could be blowing a big opportunity for reaching young adults. They have a million-plus young people working for them who come to the job every day ashamed of what they were wearing. "The uniforms are ugly," says Stoute. "If the workers were actually proud of what they were wearing, it could be a huge opportunity to promote the brand. Those kids wouldn't want to change after work and stuff it in a knapsack."

Stoute suggested McDonald's hire top designers to redo the uniforms under urban-centric brands such as Sean John, Rocawear, FUBU, American Apparel, and Tommy Hilfiger. The chain is considering the move. "We know the cutting edge comes from the African American and Hispanic communities," says Bill Lamar, McDonald's senior vice-president of marketing, "but then crosses all people."

Stoute knows those communities well. Raised in Queens, N.Y., he was barely out of his teens when he became a road manager for rap act Kid 'n Play. He would go on to become a manager for rapper Nas and a young female hip-hop soul singer named Mary J. Blige, now one of the music industry's biggest successes, who won three Grammy Awards this year. From there, Stoute was recruited by Sony Music and later Interscope Records of the Universal Music Group. But he was becoming fascinated with the broader playing field of brands. He left music to join veteran ad man Peter Arnell as a partner in his business, the Arnell Group.

At Arnell in 2003, Stoute worked with Reebok, at the time a stagnant brand that needed to revamp its image. He brokered Reebok's ad campaign with Jay-Z, whose S. Carter Collection by Rbk (Jay-Z's real name is Shawn Carter) made Reebok a big hit on city streets. "Steve was very good at getting our whole organization to buy in on this new direction," says former Reebok CEO Paul Fireman, who worked closely with Stoute to revive the brand. There was resistance from the organization. "Sometimes the fear factor rose quickly," says Fireman. "But he made a very strong case for why we needed to be more cosmopolitan." The breakthrough for Stoute was convincing Reebok's executives that you couldn't position the sneakers on performance capabilities. "Nike had that locked up," says Stoute. "Instead, they needed to align the brand to the sound and rhythm of sports, with fashion."

‘Retail Theater’
Following the sale of the Arnell Group to ad giant Omnicom, Stoute in 2004 launched Translation with a 10% investment from his old employer, Interscope Records. Now housed in the penthouse of a 12-story Midtown Manhattan building, Translation employs nearly 50 people. Stoute has his own method for keeping in touch with contemporary culture. He frequently invites his cohorts to join him for what he calls "retail theater." He loves going to department stores and malls to watch people. "I like to see how they touch fabric, or view a display," he says. "Or listen to what they say to their husbands. For me, it is more fun than going to the movies."

Stoute works most closely with two top deputies. Charles Wright, Translation's chief strategy officer, spent seven years in marketing and product management at major record labels including Motown and Virgin. Stoute's other deputy is Vice-President for Strategy John McBride, an industrial designer by training who last worked as a research scientist and project director in Eastman Kodak's innovation hub.

Once a client hires them, Stoute, Wright, and McBride often brainstorm ideas early on with sketches, music, and video clips. When Hewlett-Packard Co. came calling three years ago, the challenge was to create HP brand awareness in the home entertainment area. Compared with slick products from Apple and Sony, says McBride, HP wasn't regarded as a real player, making it hard for the pc maker to claim "we're cool, too." So Translation started by signing Gwen Stefani to sing her hit Hollaback Girl to help promote digital cameras. Most recently, during HP's "The Computer Is Personal Again" campaign, Stoute once again called on Jay-Z, who helped launch ads in which the rapper is heard but his face is never seen. That helped give HP celebrity appeal, says McBride.

Still, not all of Stoute's ideas fly. Some companies view them as just too far out. When he tried to help Coors overhaul its brand, he suggested less emphasis on the brand's "rugged" image or its brewing processes and more effort to create a new high-end aura. Says Stoute: "We were attempting to make Coors an arbiter in the renaissance of sophisticated beer drinking." The pitch make it.

But Stoute's most important test will be changing perceptions about GM. The assignment is to help the carmaker increase awareness for its models among a growing and influential buyer group, 18- to 34-year-olds who live in clustered metro areas on the coasts and along the perimeter of the southern U.S. The task is to get them to think about GM the way they were already thinking about Toyota and other Japanese models. The mandate, says Stoute, was "to think of ways to spark contagious consumer behavior."

So far, Translation has helped GM to redeploy Tiger Woods from the Buick brand to what Stoute believes is a more convincing role, as a spokesman for all of GM. "Tiger and GM share similar values of integrity and, most importantly, diversity," he says. Stoute also connected GM with Jay-Z on Jay-Z Blue, a branded, lavender-tinted, electric blue that will be available on the GMC Yukon. Translation is also creating a campaign for the reissue of the Camaro, the iconic 1970s muscle car. Stoute is talking with the advertising agencies responsible for all GM models about marketing alternatives, such as social media, that go beyond traditional TV and print outlets.

It's still too early to tell if GM is reaching new consumers. Unsurprisingly, Stoute believes the results so far are positive. Look no further, he says, than the January debut of Jay-Z Blue. From Detroit to Beijing, the news was featured on the front pages of 26 national and international Sunday papers.

On the night of the premiere of Jay-Z Blue, Stoute was in Detroit backstage in a green room. He had flown in from New York with Jay-Z to introduce the color and help kick off a GM-sponsored fashion show of cars and celebrities, the first of its kind for the automaker. As Stoute sipped a Budweiser in a large, heated tent erected for the event not far from GM's headquarters, he mingled with supermodel Petra Nemcova, actor Christian Slater, and Oscar winner Jennifer Hudson. Not far from the spread of catered food were surfing star Laird Hamilton and model and actress Carmen Electra. GM's marketing chief Jackson gushed that the glamorous scene had just the kind of glitzy excitement he had hoped would envelop GM when he hired Stoute.

Feeling Chevy
Since that big night, Stoute has focused most intently on the stodgy Chevrolet brand. The challenge was to make Chevys more appealing to those with "a metro mindset, that 34-year-old independent-thinking person," says Ed Peper, general manager of Chevrolet. "One of the first things Steve asked us was: Do you know that there have been 700 songs written about Chevy? Why aren't you leveraging that?'" It became abundantly clear to Peper that Chevy hadn't done enough to marry its brand with music.

So Stoute suggested bringing in Grammy-winning hip-hopper T.I. to help sell the Impala. An ad campaign featuring T.I.'s song Top Back first aired on MTV and Black Entertainment Television in early February. Chevy, in turn, sponsored T.I.'s latest music video. T.I. appears in another spot that GM is calling "Ain't We Got Love," which launched during the Super Bowl. The spot also features Mary J. Blige, Dale Earnhardt Jr., and a group of regular folks fawning over their cars. "It's damn near an emotion driving a Chevy," says Stoute. "We want people to feel that."

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