NEW YORK (AdAge.com) -- He'll take a six-inch chicken on flatbread with half Swiss, half provolone, please; put the onions on first, then toast it. Add lettuce, tomato, banana peppers, a little bit of light mayo and black pepper.
"I'm assuming this is your favorite item on the menu?" I ask Tony Pace, Subway Franchisee Advertising Fund Trust senior VP-chief marketing officer, as we take a table in the back garden (yes, this one has a back garden) of a midtown New York Subway restaurant.
"Yeah, I have lots of favorites on the menu, but chicken and cheese is one of my favorites," he says. It's a question he's likely been asked countless times.
And why not? As CMO at one of the largest quick-service chains in the world, with 2009 U.S. ad spending of $450 million, according to Advertising Age's Datacenter, it's his job to know Subway's offerings well enough to know what he prefers -- and what his customers are eating in the chain's more than 33,000 locations globally. He's been in that position for nearly five years, and the Y&R and McCann Erickson Worldwide veteran is, in his own words, an activist within his organization. Reporting to CEO Jeff Moody, he speaks up when he wants or doesn't want something to happen, sometimes even writing ad copy, likely much to the chagrin, he says, of his agency. MMB, Boston, handles Subway advertising.
He shared some of his views on CMO tenure and agency compensation with Ad Age and explained the success behind $5 Footlongs, why endorser Jared Fogle is running in the New York Marathon, and what's keeping him up at night.
Ad Age: What's the philosophy behind your marketing efforts?
Mr. Pace: The analogy I'd use is [marketing is] like a garden. You're always trying to expand the garden. If you have certain programs, certain efforts that are working, you want to continue doing them so that they're perennials, but you also want to add to it over time so that you're building the business. When I look at our competitors, one of the big differences is that we do have multiple messages over long periods of time, even though we have promotional windows like everybody else does, because we're trying to build the brand, build sales and obviously build profits all at the same time.
Ad Age: And what is it about your campaigns that have so resonated with consumers and helped to build the brand?
Mr. Pace: The $5 Footlong was really supposed to be a four-week promotion. We launched it on March 22, 2008. Normally in the fast-food business people do the discounting in January. We really didn't want to do the discounting in January, because, frankly, we'd done some in January 2007. The work was good, but it really didn't have much of an impact on the business. So we said, let's not go up against everybody's dollar, let's find another time to do it. We also had pretty good assessment of what was going on with consumers, and we actually thought gas prices were going to go up significantly that spring. It's not traditionally when QSRs are heavy on the value push. [And] mid-March was when Bear Stearns failed, so the whole financial cataclysm started happening at that point, and we had some advertising that was incredibly distinctive and memorable. We're now 130-plus weeks later, and $5 Footlong has morphed from a four-week promotion to a $4 billion brand in terms of annual sales.
Ad Age: And you just did it based on the overwhelming response?
Mr. Pace: You've got to watch consumers and how they're responding to it. There aren't many promotions that you'll do over time that drive both guest check and traffic, and that did. That was a wonderful example of why marketing still matters in a big way.
Lots of companies, especially with all the private equity and the financial guys, they look at marketing as an expense. We look at it as, how do I build assets so that I can deploy those assets again and again to the best effect of the brand and the business? Jared's an asset, $5 Footlong's an asset, our Famous Fans are an asset. Right now in this window we're talking about the fact that we're the official training restaurant of the ING New York City Marathon. We're also the official training restaurant of the New England Patriots. We're probably going to be the official training restaurant of the Ironman Triathlon. So "official training restaurant" is a designation that we believe is only appropriate for our brand, because lots of elite athletes use Subway when they're in their training mode. That's an asset that we can deploy again and again. Everybody talks about building brand equity in a campaign; we've actually done that, and that makes the hurdle of communications a little bit lower the next time.
Ad Age: Has Jared lost all 40 pounds that he gained?
Mr. Pace: He's in the best shape I've ever seen him. ... [The marathon] was kind of a crazy idea and Jared, after figuring out how we were going to get the real training done, said, you know what? Let's go do this. It's really heartwarming to us -- I mean, obviously he's part of our brand -- to see somebody take on a goal that outrageous.
Ad Age: And was it to counteract the fact that he had gained weight again?
Mr. Pace: Not really; if you go back a couple years, we did a celebration of the 10th anniversary of Jared losing the weight and keeping it off. The thing is, weight loss is a hard thing. And keeping the weight off for an extended period of time is a real accomplishment. So we're always looking for ways to take things to the next level and we thought that was a really nice next level. It's also a way of putting messaging out both in public relations but also through social media about what's going on with Jared. It goes, again, back to my point of using an asset for the brand in new and different ways that consumers are interested in.
Ad Age: How do you pick partners and media integrations?
Mr. Pace: For a brand as big as we are, the concept that is always driving us is, what is net incremental reach? We also do branded message integrations; [they] matter a lot. I'm not really interested in product placement. What we want is to look like we belong. We try to find places where we can be appropriately embedded in the messaging. We're now in our seventh season with "The Biggest Loser." It's been a wonderful partnership.
Ad Age: How imperative is an agency background to be a successful CMO?
Mr. Pace: The CMO job has changed, so I'm more of what I'd call an activist CMO. So probably much to the agency's chagrin, I will write my own copy on occasion. As you have all of these different touch points with consumers, it's harder to integrate everything you're doing. ...You've got to have points of integration inside, and sometimes that ends up being me.
Ad Age: Are you a micromanager by nature?
Mr. Pace: I'm incredibly particular, yeah. So if I have copy that I don't like, I speak up very quickly about it. To me, you can't sit back and play gatherer in the marketing process and you can't sit back and just say, I'm going to edit all these things together. You've got to be out there.
Ad Age: Do you think CMOs are losing power within the organization?
Mr. Pace: If CMOs are really turning over inside of 24 months, they never had power in the first place. If marketing is central to the success of your organization, you'd better have a strong CMO or you're not going to succeed.
Ad Age: What keeps you up at night?
Mr. Pace: We've been growing great, so the growth imperative -- this calendar year, really since March, our traffic has been up about 8.5% per month, where the category has been flat traffic at best, so continuing that growth, that's not an easy thing to do. That does keep me awake.
1.Continue marketing efforts that are working, then add to them to build the business.
2. Watch how closely consumers are responding to campaigns.
3. Don't abandon wayward brand endorsers; their humanity makes them authentic.
4. Prioritize net incremental reach in media integrations.
5. As CMO, speak up; have a viewpoint and the courage to push it forward.
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