How SXSW Interactive Became a Hotbed for Brand Marketing

This piece originally appeared in the Spring 2012 issue of The Strategist, Contently’s first print magazine.

Austin can fool you. Geeks arriving for their first South by Southwest Interactive—an annual festival of speeches, startups, and debauchery—could be forgiven for thinking they’d arrived at the heart of Texas. The landscape is open and dry and crisscrossed with highways. Billboards advertise shooting ranges and barbecue, with plenty of roadside bars reminiscent of the Landing Strip in Friday Night Lights.

Of course, that’s not all of Austin, not even most of it. Home of the University of Texas and a longtime haven for great music, it’s emerged as the technological capital of the American South, a place where street vendors swipe credit cards through iPhones, cab drivers check into pickup points on Foursquare, and hungry startups battle for a piece of America’s last recession-proof industry.

And for the five days of SXSWi each March, Austin has also become the center of the marketing universe.

It hits you the moment you walk into the northeast corner of the Austin Convention Center. Attendees scribble messages on a giant, translucent wall, sponsored by Dell. On the other side, film crews shoot self-promotional videos for entrepreneurial attendees. Take five steps, and Amex reps offer you free tickets to see Jay-Z if you sync your card to Twitter. Fifty yards away, you’re mesmerized by the massive Samsung screens broadcasting the “Party Pulse” of the top events at SXSW. And, before you know it, a cartoonist has sketched your caricature on a new Samsung Galaxy Note “phablet.”

By the time you reach the massive PepsiCo Central Station at the south end of the Center, you need a bag for all your freebies.

The key word is “free.” The brands that seem to be spending the most money aren’t plastering advertisements on every pillar. They’re giving away free content and experiences.

And the geeks have no problem with that.

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SXSWi hasn’t always been such a hotbed for brand marketing. Co-founder Louis Black—who, coincidentally, also co-founded the alt-weekly newspaper The Austin Chronicle—added the Interactive portion to the popular music festival in 1994. However, Interactive remained a cultural afterthought through its first dozen years, dwarfed by big brothers Music and Film. Just five years ago, mainstream brand marketers paid it little attention.

Then something changed. SXSWi suddenly went from afterthought to the center of digital culture.

The best explanation for the popularity explosion may be that SXSWi is the place where social/local/mobile (“SoLoMo,” if you speak Twitter) became a dominant force in American culture and thus in American brand marketing. Social media didn’t start in Austin, of course, nor did the smartphone or geolocation technology. But SXSWi is the place where one SoLoMo startup after another took hold and then changed the way we live and communicate.

It started in 2007 with Twitter.

As SXSWi 2007 began, the fledgling status update startup ran an ongoing demo in the hall. “The Twitter people cleverly placed two 60-inch plasma screens in the conference hallways, exclusively streaming Twitter messages,” reported Newsweek‘s Steven Levy at the time. “Hundreds of conference-goers kept tabs on each other via constant twitters. Panelists and speakers mentioned the service, and the bloggers in attendance touted it.”

The conference appeared to be an inflection point for Twitter. Tweets tripled from 20,000 to 60,000 per day during the festival. By 2008, that number had jumped to 300,000 tweets per day. By late 2009, Twitter was seeing more than a million tweets every hour.

SXSW had been the launch site for a startup that went on to revolutionize communication. The next year, startup founders poured in to the conference.

And suddenly, brands that fancied themselves “cutting edge” wanted to be there, too.

PepsiCo was among the first to get it. Recognizing the festival’s power to define digital culture, the company decided to make the kind of “value-add” branded marketing push that’s become commonplace at the conference today.

In 2009, PepsiCo launched a content creators lounge, filled with mini-studio pods where journalists, vloggers and filmmakers could mute the outside noise. Attendees were thrilled, and plugged PepsiCo in the content they created. The lounge soon became a hub for “pop-up panels,” according to Karpf, which became the inspiration for an influencer-led “What If?” series this year.

That same year Dennis Crowley and Naveen Selvadurai launched Foursquare, a location-based check-in app that became an instant hit. Attendees reveled in the ability to track friends’ whereabouts, and the app’s addictive game mechanics—battling with friends to earn points, mayorships and badges—caused a word of mouth sensation.

Like Twitter, Foursquare spread rapidly from Austin, growing to 1 million users by April 2010, on its way to 15 million users and 1.5 billion check-ins today. The Twitter phenomenon was happening all over again. Suddenly, Austin seemed a godsend to marketers; even if they didn’t truly understand digital, they understood that SXSWi was the temporal epicenter of an emerging digital trends.

“SXSW is really a place where culture breaks,” PepsiCo Director of Digital Media Josh Karpf explains. “It makes sense for us to be here.”

And brands understood something else as well. The more startups that took off at SXSWi, the more influential the crowds would become. By finding a way to stand out at SXSWi, brands could find favor with the most innovative people on earth, the one who literally influence the way we communicate. These people would leave Austin, go back to their tech and empires, and continue to change the world. Gathering all these influencers in one place was almost a gift for brands.

Meanwhile, the influential SXSWi crowd continued to grow—to 14,251 attendees in 2010; 19,364 in 2011; and an estimated 40 percent increase this year, a whopping 27,000.

The brands, in turn, have gradually begun to master the communications tools born at the conference. Marketers who said they’d move their budget from offline to digital increased from 52 percent in 2010 to 67 percent in 2011 to 79 percent in 2012 with 28 percent now planning to market exclusively through digital channels.

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This year, American Express brought in Jay-Z.

The campaign, called “Tweet. Sync. Save.” had two primary goals: first, generate more hype than any other brand at the festival; second, get every Amex cardholder at the show to sync their card to Twitter, knowing that the rest of the world would follow the SXSWers lead.

Amex announced that those who synced a card to Twitter would receive two tickets to an intimate Jay-Z concert at Austin’s Moody Theatre, which only holds 2,750 people. Once synced, attendees had to stand in line for tickets at 7 a.m. Saturday.

Word spread rapidly. Everyone with an Amex was talking about syncing their card; everyone without an Amex was trying to find a friend who had one. Suddenly, owning an Amex was undeniably sexy.

On Saturday morning only a fraction of SXSWi’s 27,000 attendees snagged Jay-Z tickets, but all who synced benefited by tweeting the hashtag #AmexAustin10 to automatically save $10 on any charge in Austin.

And they did, in droves. Simultaneously, AmEx launched hashtags for those outside Austin: #AmexMcDonalds ($5 off), #AmexBestBuy ($10) and #AmexWholeFoods ($20), among others.

By Monday, “Are you going to Jay-Z?” seemed to replace “What do you do?” as the SXSWers’ go-to intro question; on Tuesday morning, it was “Did you see Jay-Z?” MediaBistro reported that millions synced cards throughout the world. The Twitter/Foursquare effect had taken hold.

In the age of microblogging and geolocation and digital payments, the innovation perhaps least noticed at SXSW is that of the tech-savvy brands. Taking a cue from the startups themselves, they’ve integrated themselves into a party that lasts long after the conference doors close.