Tony Pace Leaving Subway

CMO Starts Marketing Consultancy Called Cerebral Graffiti

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Tony Pace
Tony Pace

Tony Pace is leaving his chief marketing officer post at Subway, Ad Age has learned.

Mr. Pace is departing the sandwich chain and will be forming a marketing consultancy called Cerebral Graffiti. According to a bare-bones website, Cerebral Graffiti "will focus on creating enduring brand differentiation and maximizing the cross platform deployment of marketing assets."

In a quote on the consultancy's website, Mr. Pace said: "Audience fragmentation and the unbundling of marketing services have made it difficult for marketers to have a cohesive and sustained business impact," said Pace. "Cerebral Graffiti will address that important issue."

Subway was not immediately able to comment.

The move comes two weeks after the chain found itself in a situation no marketer wants to find itself in: Subway suspended its relationship with longtime spokesman Jared Fogle after federal authorities investigated his home on the morning of July 7. Authorities did not say why they investigated the home, and Mr. Fogle was not charged with a crime.

The search of Mr. Fogle's Indiana home came two months after Russell Taylor, executive director of the Fogle Foundation, a group that is dedicated to helping teach kids healthy lifestyle habits, was arrested on child pornography charges. Following those charges, Subway and Mr. Fogle said they had severed all ties with Mr. Taylor.

Mr. Pace, a well-known exec and frequent speaker on the marketing circuit, first joined Subway as the CMO of its advertising fund in 2006. He became global CMO in 2012. Much of the chain's marketing has included Jared and Subway's Famous Fans, many of them athletes. The chain, a major sports sponsor, also has long promoted its $5 footlong sandwiches. Under Mr. Pace, Subway has branched out on other ways, launching a branded video content series on Hulu called "4 to 9ers," about teenage employees at Subway.

Subway last year had its first decline in U.S. systemwide sales in years, 3%, according to Technomic. Store count was up almost 3% in the U.S. in 2014, though, to 27,205.

Subway in 2014 spent about $533.2 million on U.S. measured media, according to Kantar Media, up 3.5% from $515.2 million.

There are several factors behind Subway's slide, which was documented in rich detail by Bloomberg. Among Subway's woes are increased competition from rivals encroaching on the customization trend Subway once had largely to itself; a move toward higher-margin products that de-emphasized its mega-popular $5 footlong; and a relative dearth of product innovation.

Subway's innovation game has also become increaseingly competitive as rivals like Taco Bell roll out waffle tacos and Doritos Locos Tacos. "In the fast-food world you can't sit on your laurels and continue to do the same things and expect the same good results. Subway needs to be a push toward something new and big," restaurant marketing consultant Denise Lee Yohn recently told Ad Age.

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