Kellogg: Digital ROI Surpasses That of TV

After Success With Special K, Marketer to Shift More Spending Online

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CHICAGO (AdAge.com) -- The digital divide is narrowing for Kellogg Co., which today said its return on online investment for the Special K brand has surpassed that of broadcast TV over the past 18 months.
Kellogg crossed the $1 billion benchmark on ad spending during 2007, and its outlay is set to increase this year.
Kellogg crossed the $1 billion benchmark on ad spending during 2007, and its outlay is set to increase this year.

"It's still relatively early in our learning," Mark Baynes, chief marketing officer at the Battle Creek, Mich., company told the Lehman Bros. Back to School Consumer Conference during a discussion on how Kellogg is trying to increase advertising and marketing efficacy. "But analysis of the Special K initiative of the last 18 months showed digital media exceeding that of broadcast ROI."

Could spur more web efforts
The marketer described the company's findings as "obviously very encouraging," and predicted they would help "drive stronger adoption across the business."

Kellogg crossed the $1 billion benchmark on ad spending during 2007, and its outlay is set to increase this year. Mr. Baynes said his company spends an additional $300 million on promotional marketing.

"For the right opportunity, the [online] space offers fresh ways to commercialize new and existing brands, target specific audiences on needs more cost effectively," he said.

Over the past year, Kellogg has been praised for sticking with its advertising spending despite the recession. The company has credited its brand-building efforts with its ability pass some of the heavy commodity-cost increases onto the consumer.

Mr. Baynes did not specify how Kellogg was measuring success of the campaigns, and the company did not immediately return calls for additional comment. Kellogg's primary creative agencies are Publicis Groupe's Leo Burnett and Interpublic Group of Cos.' Campbell Mithun. Starcom USA handles the company's media and digital business, out of Chicago.
Mark Baynes
Mark Baynes


Special K challenge
While he did not address specifics of the Special K work, the company has repeatedly touted the success of its "Special K challenge," which calls for two bowls of the cereal every day for two weeks. Dieters replace a more traditional lunch or dinner with cereal, and are told they can expect to drop a full clothing size after two weeks.

CEO David Mackay has said the initiative has not only resonated with consumers, but also boosted cereal consumption outside of breakfast.

A Special K website offers customized plans for consumers, sign-ups for a Yahoo e-mail group, tips from a trainer and nutritionist and a point-of-purchase link to Amazon.com. The company has added a number of products to the Special K platform in recent years, including cereal bars, flavored waters and waffles.

The investment may continue to pay off, given the economic environment. UBS analyst David Palmer said he anticipates cereal consumption to grow during the fourth quarter, not only because of food costs, but higher rates of unemployment. More people will be eating breakfast at home because they don't have anywhere else to go, he said.

"When you lose your job, it not only determines how you feel and how much money you have, it's also determines where you are," he said. "Where are you rushing to?"
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