In 1997 when a brash, upstart New York music label called Bad Boy Records was taking one of many chunks out of the Big Apple and the world, label artists Notorious B.I.G., Mase and Sean ‘P. Diddy’ Combs (then known as Puff Daddy) rapped, ‘Mo’ money, mo’ problems.’ With music, restaurants, film and TV, a marketing company and now a successful fashion line called Sean John, P. Diddy, founder and CEO of Bad Boy Worldwide Entertainment Group (BBWEG), has since improved upon the lyrical formula. It’s now ‘Mo’ money, mo’ money.’ Just the kind of song and dance Harvard-educated MBAs like to hear.

But what do Harvard MBAs have to do with the meteoric rise to industry dominance of Bad Boy, urban impresario P. Diddy’s multi-faceted empire? Nothing at all, really. Jameel Spencer, CMO of BBWEG, and president, Blue Flame Marketing + Advertising, makes a point of noting that neither he nor Diddy are MBAs or attended Harvard. But they did build and do preside over a $300-million (and counting) company, doling out the seal of youth cool to bands and brands like latter-day royalty.

Spencer (35, father of two, passionate about marketing, dresses well) isn’t coy about explaining the secret behind Bad Boy’s overwhelming success at reaching the youth market, perhaps because it isn’t something another marketer can easily recreate by gathering a focus group or crunching a metric. Bad Boy works because Bad Boy is its own target.

If that doesn’t make sense yet, be thankful Strategy snagged Spencer to explain it all himself.

Unlike many other marketers, Bad Boy already had the coveted cool factor among youth. How does Bad Boy make sure it stays on the leading edge of cool – is it research or just a heavy dose of marketing?

We stay on top because we’re in a unique situation and that’s because of two different things. First, it’s because of our chairman, Mr. Combs. We like to call him the Pied Piper of youth culture. If he does something today, millions of kids around the world tomorrow want to emulate what he’s doing because he represents what’s next.

Second, we pride ourselves in surrounding ourselves with the people who are the target. So it’s much different from most companies who have 40- and 50-year-old individuals trying to figure out what the pulse is. We are the pulse. We represent the target that we’re marketing to.

We do the research but only because those are the metrics you need to survive in corporate America. We’re going to give ourselves the tools to be able to play and win the game. However, empirically, I don’t ever go out to a different market without taking in everything about that market. Because to me, my existence is work. Me walking down the street and looking at what people are wearing – that’s work.

You have traditionally been thought of as targeting a youth market. How would you describe your target?

It’s the urban demographic. And when I say ‘urban’ it’s not what people traditionally think urban is. In people’s minds, urban used to mean black and Hispanic kids from the inner city. Now urban really represents a mindset – someone that’s ready and willing to accept what’s next. When I look at Sarah Jessica Parker on Sex and the City wearing door-knocker earrings, she’s just as urban as Lil’ Kim. Brad Pitt is just as urban as Jay-Z.

How important is it to become the brand of choice with consumers when they are young and have less income, versus when they’re older and typically have more money?

The real win-win is to be able to grow up with your customer. Obviously, you have to segment your business so that you still have an offering for the entire target. Even with Sean John what we’ve been able to do is create some incredible balance. The brand reached a $150-million valuation within five years and that’s something that’s never been seen before. But the beauty of it is the way we’ve rolled out the strategy has been very inclusive.

I really liken it to Ralph Lauren. You remember as a kid when you were able to save up for – or your parents would let you buy – that $60 polo shirt with that man on top of the horse and the matching socks? You felt like you were lying in a hammock inside GQ magazine. Because that’s the soul of that brand that they were able to sell you. They sold you on the aspirational nature of that brand. But now kids put on a $15 Sean John T-shirt with that Sean John signature on it, and you feel like you’re a dieseled-out model walking down the runway on 7th and 6th wearing an iced-out chain with a mink dragging on the floor. Because that’s the image that we’ve sold you.

What did you have to avoid from a marketing, positioning and brand perspective, as you built P. Diddy into a marketing icon?

We had to avoid commercializing ourselves – just being so into trying to make money that we ruin the brand – because you get a lot of opportunities when you’re Puff. But you haven’t really seen Puff in a commercial yet and he’s one of the biggest icons in the world. He’s not out there selling hair care products or sodas.

We have a Latin phrase that’s part of Blue Flame: Nos constructum notas. And that means, ‘We build brands.’ And if you’re building a brand you have to have a lot of faith. You have to have faith in the fact that while you may not be able to monetize it immediately, you’re going to win in the long term. And you have to invest in a brand. And with that investment comes scarcity, some tough times when people are like, ‘Oh, let’s push the button and make it a big thing immediately,’ and you have to say, ‘No, here’s some real value in maintaining the brand and being someone that your target can depend on.’ And that’s what it comes down to – that people can depend on us not to sell out, not to become something that everybody in the world has.

The way we do it is through distribution. What you see at Dr. Jay’s, which is more like a specialty store, is totally different that what you’ll see at Macy’s, which is totally different than what you’ll see at Fred Seagal. And it all makes sense because we know how to weave ourselves seamlessly into the roadmap of our target.

When you created the Sean John clothing line independent of Bad Boy’s music ventures, was it your goal to guarantee a longevity that would continue regardless of the fortunes of Bad Boy’s musical acts?

Let’s be honest. No one stays on top forever in any genre. But fashion is something that you can have some real longevity in and I think it was a natural segue. But we definitely wanted to make it separate [from the music interests] because if people don’t like Mase this week, we don’t want our sales at retail to be down.

Sean John has, for the last few years, really been the centrepiece of the Bad Boy empire. When I first came to this job Puff was about to go on trial for gun possession and that meant corporate America had a bad taste in its mouth about him. Mainstream America was like, ‘Oh my God, who is this guy? He’s a thug.’ Within our space he had lost a little lustre as well. When you become extremely successful you’re not as down with the streets any more so there was a point where I came here and they had The Source Awards and they were booing Puff. But they were booing him while wearing Sean John. They had his name on their chest and they’re booing this man!

And that’s a true testament to how we initially rolled out the brand as a celebrity-endorsed brand that was backed by Puff. But when you saw the actual clothing and the imaging that took place from that point forward, it was very consistent with the finer things in the space. You couldn’t turn your back on that, no matter what you thought about Puff.

You could have had P. Diddy endorse an existing line instead of creating his own. Why the latter strategy?

It’s about ownership. One thing that’s great about Puff and Jay-Z and all these guys is they’ve tapped into what our natural resources are as urban America. It’s one thing to wear Tom Ford’s Gucci on the American Music Awards and have people go out and let Gucci become rich. But the reason Sean John was born was to have something that we owned ourselves, something that could be historic, something that our kids could be proud of and, more importantly, something that was there that could be left to our kids’ kids. It was more about the cultural significance of who he was.

What is your greatest challenge in terms of marketing to youth?

We don’t so much have ‘challenges’ marketing to our demographic because our demographic understands who we are and they appreciate it. We have difficulty sometimes in garnering clients who are trying to reach this space because they have a misunderstanding about what it is.

Think about the Ludacris situation with Pepsi. Pepsi got a little concerned about Ludacris’ background. He went to Georgia [State University]. He’s a college graduate that went on to be a radio personality in Atlanta and now has become a multi-million dollar recording artist. He represents the mindset of most college kids today. But because Bill O’Reilly gets on television and says Pepsi shouldn’t be in business with him because he’s a ‘gangster rapper’ – which is a term I thought went out with the bump – Pepsi comes back and says, ‘We can’t be in business with this guy, he’s a gangster rapper.’

What makes him different from Ozzie Osbourne? What makes him different from Howard Stern? I think corporate America is much more willing to be in bed with the devil they know than the devil they don’t know. And the challenge for us is to create those executives that will be in those boardrooms and can protect our natural resource. We need to get the right evangelists inside corporate America that can speak up and say, ‘No, we’re not going to allow Bill O’Reilly and his small contingent of individuals to scare us off of this space.’

Urban culture is the leading trendsetter. Do you worry that, like so many other things youth are into, the popularity of urban culture will be a passing fad?

No. Everything comes from the underclass. If you look throughout history, the people on the bottom always spearhead what’s next. To me it’s interesting that people are just catching on to it. And what’s cool today won’t be cool tomorrow but the cats that know what’s cool – they always know what’s cool. And then someone else will be born who creates the next thing.

Urban culture has permeated mainstream culture and become commonplace. Is the volume and frequency of it hurting the brand and diminishing the sense of rebellious exclusivity that youth find attractive?

Mainstream people are on to what was going on two years ago. Because right now there’s a whole new undercurrent going on. There’s [an apparel trade show in August] called the Pool Show that represents that undercurrent. It’s a combination of cultures – the skateboard culture mixed with a little hip hop and a little international flavour – and that’s going on right now and it’s going to take people another 10 years to get on to that.

So you’ll always be ahead?

Always.

What is Blue Flame Marketing and why did you launch it? Why not go to an existing agency?

Blue Flame Marketing was launched in the same spirit as Sean John.

[The industry that] controls other dollars is advertising. So we wanted to create a company that could help companies speak to this space. We knew that we were speaking to them in a way that other companies could never do. The sense of urgency that I have with Sean John is totally different from what Perry Ellis could ever have. Why not create a company of young, cool, urban people who could go in and really have that communication with corporate America?

What’s new that’s coming down the pipe in terms of marketing to youth?

There was a big wave with the Internet at first, but when you infuse money into anything it ruins it. People looked at it as an opportunity to try to get rich quick and it went away. It’s definitely making a strong comeback.

If you think about the Internet, instant messaging, PDAs, cable television and TiVO – non-traditional means of reaching these individuals is what’s next. We feel like we’re on the cutting edge of that, and not so much because we saw it coming but because we had no choice. [I have] to compete with Ralph Lauren and my budget for Sean John is $7 million. Ralph Lauren’s budget is probably $70 million. But I look just as big as Ralph because I know who my target is, so I’m going to show up on their normal roadmap and when their roadmap changes I’m going to get that memo, too.

I’m walking with them as opposed to running behind trying to catch them. I’ve been to Nike headquarters and given a two-hour presentation to Phil Knight and with that same suit sat on the sidelines at a Rucker [basketball] tournament in Harlem on 155th St. and been just as comfortable. I look like and can speak like the people that we’re targeting, but I can also be myself and speak like the people we’re trying to get the money from.

That demo is growing older. How do you stay relevant?

We have signed on some new licensees. We just did a dress and fitted wear deal with Peerless. So what we’re doing is we’re tapping into the people who are the best in their individual spaces and bringing our flavour to it. We want to make sure that we grow with the culture and provide them with something that’s not going to have them looking like their son, even though looking like your son when your son is as cool as mine is not a bad thing.

How do you expect the attitudes of youth to change in the next several years and what will it mean for marketers trying to reach them?

Some things never change. And youth are revolutionary. They want to do things differently. So I could make a bold prediction that five years from now they’ll be doing the exact opposite of what we’re doing right now. And probably 10 years from now they’ll be doing the exact same thing we’re doing. Because everything changes and it also stays the same.

Bad Boy Worldwide CMO Jameel Spencer is one of the keynote speakers at Strategy’s 7th annual Understanding Youth conference taking place in Toronto on June 14 and 15. See www.understandingyouth.com for details.