Pizza Hut kicked off a review of its estimated $200 million account in October, quickly assembling a list of five finalists: Omnicom's Merkley & Partners; MDC Partners' Kirshenbaum Bond Senecal & Partners; Publicis Groupe's Saatchi & Saatchi; and Interpublic's Martin and Gotham, New York.
Incumbent BBDO, New York, exited the review at the outset, and three of the contenders -- Kirshenbaum, Saatchi and Merkley -- bowed out of the review in November. That narrowed the field to a shootout between the two Interpublic siblings just before Thanksgiving.
Kirshenbaum, Saatchi and Merkley all had strong fast-food credentials. Kirshenbaum and Saatchi are both former Wendy's agencies, and Merkley is Arby's current agency of record. Martin, which has Walmart, UPS and Microsoft Store on its roster, boasts past fast-food experience, with Quiznos, Checkers and Ruby Tuesdays. Gotham has worked for Newman's Own, Fresh Direct and Lindt.
Pizza Hut, which hired Lee Anne Morgan & Partners for the search, held final presentation meetings with the two agencies today. Gotham, New York presented first, followed by Martin. To arrive at the decision, Pizza Hut built a panel, including chief marketer Brian Niccol, key franchisees and Yum Brands Chairman-CEO David Novak.
Battered by the recession, Pizza Hut is lagging behind other fast-food and even casual-dining chains, with same-store sales down 13% in the U.S. last quarter, on top of an 8% drop during the previous quarter. Earlier this week, the chain confirmed that Bob Kraut, VP-marketing communications had left the company "to pursue other opportunities."
Pizza Hut has admitted that it's time to make changes to its marketing strategy. The chain is now a dragging performer in Yum Brands' portfolio, which also includes Taco Bell and the once-ailing KFC. During the last earnings call, Mr. Novak acknowledged Pizza Hut hadn't "been value competitive, and we're paying the price for it." He added that the chain needed to push for more innovation, and improve the value perception of its namesake pies.
Mr. Novak also listed the chain's agency search as one of its proactive measures to improve sales. "We're in the process of hiring a new advertising agency to give the brand a fresh, more differentiated positioning because we think we need to do a much better job of getting credit for the fact that we have pizza, pasta and chicken," he said during earnings. Pizza Hut has launched pasta and wings in the last two years, and its pasta business alone is already a $1 billion business.
In traditional marketing efforts, Pizza Hut has recently focused on hidden-camera executions to launch pasta and wings. (Burger King is now parodying those efforts.) But to its credit, the chain has been aggressive online and in social media, offering an ordering platform on Facebook, building a Twitter following and launching an iPhone app that boasts more than 1 million downloads and $1 million in sales since it launched in July.