Have Data-Obsessed Brands Given Up on Potential Converts?

Deanie Elsner, Exec VP-CMO of Kraft Foods, Talked About the Problems Confronting Marketers at Ad Age's CMO Strategy Summit

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Kraft CMO Deanie Elsner
Kraft CMO Deanie Elsner 

The advertising world is in an advanced state of disruption.

At a time when consumers are shopping less often and changing long-held brand preferences when they do shop, marketers are no longer getting the expected results from their advertising and promotion. And with digital ads pursuing only rabid customers at the expense of creating converts, old-fashioned brand building is becoming a relic of a bygone era.

Today's marketplace is a mess of muddled misconceptions. Consumers are moving away from trusted brands for a number of reasons, whether it be for better nutrition, better prices or simply a host of new choices. As sales dry up, marketers are switching to less expensive ways to promote their wares and these methods diffuse the time and attention consumers are willing to give to individual sales pitches.

At our CMO Strategy Summit in San Francisco, Deanie Elsner, exec VP-CMO of Kraft Foods, talked about the chaos confronting marketers. "What's happening today is a transformational shift in the landscape we operate today and it's unprecedented."

Ms. Elsner noted that the U.S. labor participation rate continues to be at a 30-year low. Growth stagnation is happening in North America and around the world.

And with consumers shopping less, she noted, "our promotions are less effective, our advertising is less effective."

Kraft has its eye on three types of consumers -- the "strapped" consumer, millennials and Hispanics.

Ms. Elsner said 60% of all U.S. households bring in less than $60,000 a year. "If you're single, that doesn't sound so bad. But try doing that with a family of four, feeding them every single day," she said.

Millennials, meanwhile, are now 27% of the U.S. population, she stated. And they pose an interesting challenge for Kraft. "They want less processed foods, they're tech-savvy, they love to entertain, they have no idea how to cook because they grew up in families that were working all the time. They're launching later; they're getting married later; they're having families later. And if you want to be a brand in their portfolio, you have to be a brand they're willing to wear on their chest."

Ms. Elsner said the Hispanic consumer represents 17% of the U.S. population and Hispanics will represent 80% of all the growth in the near future. Unlike millennials, Hispanics have "big families. They eat traditionally, they're recipe-based cooks, they've got brand affinities."

So what you've got here is one group that doesn't have enough money to buy your product and two other groups pulling in opposite directions. What's a marketer to do?

Some blame the marketing. General Mills, as a matter of fact, just announced it was closing a cereal plant and a yogurt factory as sales fell 5% in the latest quarter -- including a 9% drop in cereal volume.

The company blamed its marketing and promotions strategy for much of the poor results, saying the efforts weren't very effective in increasing sales despite spending more money, The Wall Street Journal reported.

So as Ms. Elsner pointed out, "you've got CEOs and CMOs who are lost as to how to navigate this space."

Aside from demographic shifts, potential consumers these days have "two and three and four devices on their laps. And today the path to purchase is also being redefined. If you're a marketer trying to grow a new brand, where do you cut that consumer off to drive awareness?"

Ms. Elsner prescribed "agile marketing" as a way to overcome these barriers. Agile marketing, she said, is "moving from buying broad demographic targets in a medium to buying individuals at scale agnostic to the medium. It is the right message, in the right medium, at the right moment to drive purchase."

An "explosion" of data has made it possible, Ms. Elsner explained, for marketers to have the ability to make decisions in real time to adjust how they spend to talk and engage with these consumers.

Know your customers
The key, she noted, is to know who your customers are -- and aren't. Kraft has just launched an Oscar Mayer refrigerated beef jerky aimed at men. She said if you look around the room where she delivered her talk, one side loves refrigerated meat; the center of the room loves meat, but would only buy their meat in the deli; and the other side of the room doesn't eat it for health or religious reasons. Put another way, a third won't even entertain the message. Another third might if the company could get a different message to them in a different way. And one-third is the target market (assuming the messaging works).

Good data or not, does Kraft really want to basically write off two-thirds of the market?

When the company set out to promote Oscar Mayer bacon, it rolled out "The Great American Bacon Barter," in which a man drove across the country with only a trailer full of bacon to use as currency. Kraft packaged the experience into short videos, promoted it on social media and created a microsite.

I can see how the promotion attracted bacon fanatics but I can't imagine it generated much interest from consumers who eat an occasional strip.

Are Kraft and other companies ignoring potential buyers in their appeal to their best customers?
In my recent interview with Sir John Hegarty, he completely rejected John Wanamaker's quote about half of advertising being wasted. "It's the most stupid thing ever said about advertising. A brand is made not just by the people who buy it but also by the people who know about it.

"I know about Lady Gaga," he added, "but I'll never buy one of her albums. But I know about her. That's adding to her fame, it's adding to her value and that's what brands have to do."

Or do they? In their desperate efforts to make order out of marketing chaos, are marketers now narrowing their search to surefire customers who can be targeted with digital, and in the interest of effectiveness and efficiency giving up on the non-converted?

All of this, of course, overlooks digital marketing's biggest nemesis: blatant fraud. A speaker at our Digital Conference San Francisco, consultant Ted McConnell, put the digital-fraud problem in stark terms: Digital clicks from phony websites are the equivalent of 5,000 bank robberies a day, amounting to $5 billion to $15 billion a year. And some aren't taking it seriously. The problem, Mr. McConnell asserted, is that the so-called bots infestation, probably engineered by organized groups around the world, is too often viewed by marketers as "incremental waste" -- much the way off-target ad placements are seen.

And the ad world, it seems, is getting a belly full of ad placements that are turning out to be off target.

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