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Papa John's CMO Tries to Move Past NFL and Neo-Nazi Woes

By Published on .

Credit: Papa John's

After getting sacked in the media for blaming its weak sales on the NFL, Papa John's is trying out a new defensive strategy.

The No. 4 pizza chain is looking to recover after comments a week ago by founder, chairman and CEO John Schnatter criticizing the league's response to player protests.

"The NFL has hurt us, and more importantly by not resolving the current debacle to the player and owners' satisfaction, NFL leadership has hurt Papa John's shareholders," Schnatter said on the chain's Nov. 1 conference call. As Schnatter, whose ties to the NFL include an on-field bro hug embrace with Peyton Manning after Super Bowl 50, referred to the league as a "long and valued partner," he suggested the league should do more to help the sport and its sponsors. "This should have been nipped in the bud a year and a half ago," he said.

Soon enough, American neo-Nazi site The Daily Stormer weighed in including a pizza with pepperoni in the shape of a swastika and the line "Papa John: Official pizza of the alt-right?"

Papa John's says Schnatter's comments have been taken out of context. It responded to The Daily Stormer with a brief statement saying: "We condemn racism in all forms and any and all hate groups that support it. We do not want these individuals or groups to buy our pizza."

For now, there aren't plans to tackle the matter with a bigger push. "We're talking about what next steps look like," says Chief Marketing Officer Brandon Rhoten, who joined Papa John's nine months after it most recently renewed its NFL sponsorship. "I would argue our biggest Achilles' heel as a brand is our inability to react quickly to real-time happenings in the world."

As far as the NFL goes, however, Papa John's has been distancing itself by removing NFL imagery and "official sponsor" wording from ads. It's airing more 15-second spots focused on the chain than 30-second ones about football. And it's evaluating whether to continue as the official pizza sponsor of the NFL and the Super Bowl overall.

Rhoten says he'd like to see Papa John's rely less on external partners like the NFL.

"We can't be beholden to their success," he says of partners in general. "We'll take advantage of it, and when they win, we'll win. But when they're not doing as well we don't want to suffer."

While other sponsors aren't publicly reprimanding the NFL, Papa John's clearly blames its handling of the player protests during the national anthem and ratings declines for a large chunk of its weakness.

"Our brand tracking indicates that purchase intent has decreased, especially among certain party affiliations, since the start of the NFL season," the company tells Ad Age. "No other variables -- product quality, media mix, offers, etc. have changed significantly. The tracking does not show the same declines for our competitors."

Papa John's spent $39.2 million on advertising during pre-game, game, and post-game NFL programming during the 2016-17 season according to Kantar Media, and planned to spend more this season. Even with its official sponsor status, it spent less than larger rivals Domino's and Pizza Hut (see chart). With all of Papa John's talk of the NFL pressuring its results, its ads accounted for just 0.6 percent of all advertising, excluding public service announcements, during NFL game programming.

Top three NFL pizza advertisers
By measured TV spending
Total NFL ad spending by three largest pizza advertisers: $135.7 million
National pizza restaurant advertising accounted for just 2% of NFL advertising
Total NFL ad spending: $6.8 billion
SOURCE: Kantar Media. Spending includes network TV, cable TV networks and spot TV for pre-game, game and post-game advertising from Sept. 8, 2016, to Feb. 5, 2017 (Super Bowl). Public service announcements are excluded. More info: kantarmedia.com.
Charts by Chen Wu/Ad Age.

"It's still a gargantuan source of reach and benefit for brands," Rhoten says of the NFL. "So I can't imagine we would walk away from the NFL, ever. We really can't. No advertiser who is in the space we're in should or can. The question is: How do we allocate the funds to the NFL and fundamentally how do we broaden our media approach so we're less beholden to whether ratings are up or down slightly?"

Papa John's is "questioning a lot of the relationships we've had," he says.

So what does that mean for the NFL sponsorship?

"Ultimately we're evaluating it now to see what the future looks like but we do have flexibility there," says Rhoten. "I think it could be our last year for a lot of things we're investing in right now."

For now, Papa John's is favoring ads such as one focused on the guy who tested pans for its pan pizza. Schnatter, the face of the company, appears as he has for years.

When NFL ratings declined last season, Papa John's and others blamed, in part, the distraction of the election. This year, Schnatter says, it's the controversy that's "polarizing the customer." So far, NFL TV ratings are down about 5 percent through week 9, averaging 14.8 million viewers and an 8.6 household rating, versus the year-ago 15.5 million/9.1 household rating.

Some ads playing up the chain's NFL ties are still airing, including one featuring Papa John's endorser and (injured) Texans player J.J. Watt. But other NFL-focused ads that were set to debut now may not air at all, says Rhoten.

TV spots set to run focus on the preparation of Papa John's tomato sauce and dough. There's also an upcoming Veteran's Day push, not on TV, offering a discount over the weekend. And the chain will do something around the Super Bowl, but doesn't have a spot intended for the game, Rhoten says.

PR continues to be handled by Edelman, and the bulk of the media buying goes through Initiative. But other marketing changes are starting to take hold. Last week, Papa John's named Laundry Service creative agency of record after about three years of working with WPP's Grey. "We understand why the remarks made last week generated such a powerful response," Laundry Service said in a statement. "Our scope begins in January and we are confident that, working together, we can make a positive impact."

And it hired Marketing Evolution to work on a multi-touch attribution system so it can track which investments are working. Its digital spending is increasing, including recent work on Twitter and Instagram and plans with Snapchat to help it find customers who clearly aren't watching too many NFL games.

Papa John's North American comparable sales grew just 1 percent in the third quarter and it now expects such sales to increase up to 1.5 percent for the whole year, down from a prior forecast of 2 percent to 4 percent growth.

All the noise has pressured the company's shares, which are down about $10 in the last week to $58. The investor taking the biggest hit? That would be Schnatter, Papa John's largest shareholder.

-- Additional reporting by Kevin Brown, Anthony Crupi and Lindsay Stein

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