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Coachella Is Next In Brand Frenzy For Music Festival Fans

The Wall Street Journal, April 07, 2015

By Elizabeth Holmes

For two weekends this month, the Empire Polo Club in the southern California desert will be filled with a marketer's dream: throngs of influential, open-minded and ready-to-spend millennials with plenty of time to kill.

Brands are following these desirable consumers to the Coachella Valley Music and Arts Festival. Sponsors lure attendees into amenity-laden tents, with air-conditioning to provide a respite from the hot sun and a place to charge a cellphone. Then they try to wow these would-be shoppers with flashy displays, elaborate new product pitches and plenty of freebies.

Fashion retailer H&M has a 360-degree mirrored “selfie station" and will give attendees chances to try Oculus virtual-reality headsets. Sephora is offering a do-it-yourself makeup bar with its private-label beauty brand and a vending machine that dispenses free products to people who post a photo to Instagram with a designated hashtag. And Absolut Vodka will be serving up specialty draft cocktails as it unveils its new illuminated limited-edition bottle.

“We want to be part of the moment," says Joao Rozario, vice president of marketing for Pernod Ricard U.S.A., which includes Absolut.

To reach the hundreds of thousands of sought-after consumers found at Coachella and other music festivals such as South by Southwest, Bonnaroo Music and Arts Festival and Lollapalooza, brands are paying a pretty penny. Official sponsorship fees can range from tens of thousands of dollars to well over a million dollars, says Jim Andrews, a senior vice president at IEG, a sponsorship consulting firm. The price of producing the festival activities can be two or three times the cost of the fees.

Beyond the usual beverage and snack sponsors that have long played in this space, festivals are now attracting fashion, beauty and technology companies. And there is a push for all corporate involvement to be much more experiential, rather than hanging a few banners around festival grounds.

The “activations," as the on-site offerings are known in marketer parlance, are often clever. Garnier, the beauty brand owned by L'Oréal, offers complimentary hair washing and styling at Bonnaroo, held in June on a farm in Manchester, Tenn. It stocks festival campgrounds with free samples of hair products and gives away dry shampoo and wet towelettes to attendees.

The big draw, many brands say, is the festival schedule that leaves ample of downtime for roaming the grounds. Unlike a sporting event, where spectators sit in a seat for a few hours and then leave, festivalgoers come for a weekend. Almost two-thirds stay overnight for the festival, according to Live Nation's Festival Report, based on a survey of festival attendees conducted in October 2014.

“Music festivals are the perfect place to have extended exposure with a captive audience," says Ali Goldstein, senior vice president of marketing at Garnier U.S.

Festivalgoers are ready to spend, and not just the hundreds of dollars most multiday festival passes cost. About eight in 10 attendees purchased something in preparation for the event, according to the Live Nation report. Two thirds bought clothes, while half bought shoes.

The timing of these festivals fills what was once a blank space in marketers' calendars. There are now dozens held at key times like spring break and continuing into summer.

Brands say there is no shortage of attendees looking to be entertained. “Your base point is these people with very open minds. They are there to have fun," says Elizabeth Hayes, vice president of merchandising for Sephora Collection, the private label beauty brand from Sephora. This year, its second as the official beauty sponsor of Coachella, Sephora is pushing more out-there beauty looks, like ombre lipstick, for the fashion-forward attendees.

Heavily invested companies are also looking for ways to extend the experience beyond the handful of days of the festival itself. Last year, H&M threw a star-studded party at Coachella to announce its collaboration with designer Alexander Wang. This year it designed a capsule collection, dubbed H&M Loves Coachella, that began selling at 350 stores in North America in mid-March, three weeks before the festival begins. “You can prolong the whole activity," says Daniel Kulle, president of H&M North America.

Festival organizers are quick to point out that the most effective sponsors fulfill a need. Courtney Trucksess, director of sponsorships for C3 Presents, which produces Lollapalooza and Austin City Limits Music Festival, among other events, urges marketers to think: “What things can you add that enhance their experience and make it easy for them?" She also reminds them that attendees' top priority is “to listen to music with their friends."

Fulfilling needs makes the sponsorship useful rather than intrusive, says Jane Prior, executive vice president of global brand strategy and development for Vita Coco. The beverage company has a presence at many festivals around the country, including as the official coconut water of Lollapalooza.

“You have these guys dancing their lives away in the heat and humidity," says Ms. Prior. “They discover the brands during this point of need." That is different than, say, an insurance company looking to “piggyback on the trendiness of festivals," Ms. Prior added. “I really think consumers see through that."

It is also important to tweak the experience based on the crowd, festival organizers says. Take the Heineken House, the structure the beer maker erects at a variety of live events each year. “It's tailored to where it is and who the consumer is," says Pattie Falch, director of sponsorships and events for Heineken U.S.A.

At Ultra Music Festival in Miami last month, Heineken catered to the electronic dance music crowd with a two-story structure and activities meant to make guests feel like they were DJs, including control of the fluorescent lighting. But when the Heineken House opens at Coachella this weekend, it will take on a more house-party feel, with a hedge-lined outdoor space.

New festivals are cropping up and looking to differentiate from the pack. Rock in Rio U.S.A. in May is the first U.S. staging for the recurring global festival. Vice President Roberta Medina says the event, taking place on a paved area on Las Vegas Boulevard over two weekends, is “a little bit more sophisticated," making note of the full-service bathrooms offered instead of the usual portable toilets. “I joke our camping area is MGM Resort and Hotels," she says. The MGM Resorts International Grand Hotel and Casino is one of 18 sponsors that have signed on so far, to the tune of $15 million.

Mercedes-Benz is Rock in Rio's official automotive sponsor, marking the first time the luxury automaker has sponsored as U.S. festival. “It is a more refined experience," Stephanie Zimmer, the head of brand experience marketing for Mercedes-Benz U.S.A., says of Rock in Rio. “Not that there's anything wrong with festivals where you camp in a field."

Along with the naming rights for a stage—called the “Mercedes-Benz Evolution Stage"—the car company will construct a series of ramps for attendees to ride in a chauffeured G-Class SUV to simulate going up and over a mountain.

As part of a broader push to improve its offerings for younger customers, Nordstrom is testing the waters at a handful of festivals this spring, including South by Southwest, in Texas and McDowell Mountain Music Festival in Arizona last month and the upcoming Stagecoach festival in California.

One of its three pods offers screen-printing of T-shirts and tote bags, another allows for beauty touch-ups with dry shampoo.

“Our core customer is definitely going to these festivals," says Jennifer Jackson Brown, Nordstrom's corporate merchandise manager foryoung customer. “This is a big part of her life and we felt it was important for us to be where she is."