Campbell Dives Deeper Into Digital with Major Spending Hike

Company Will Dedicate 40% of Budget To Digital, Up From 20%

By Published on .

Campbell's new Soup Lineup includes Star Wars cans for kids.
Campbell's new Soup Lineup includes Star Wars cans for kids.

Campbell Soup Co.'s playbook for overcoming sluggish sales trends includes a lot more digital spending and less traditional advertising, including pulling some brands from TV altogether, executives said Wednesday. The soup, meals and beverage marketer has also launched a transparency program aimed at overcoming the mounting consumer distrust of big food companies.

Campbell -- whose brands include Campbell's, Prego, V8 and Pepperidge Farm -- will hike digital spending to 40% of its media budget in 2016, which is up from about 20% today. TV spending will decline to 50%. Campbell spent $320 million on U.S. advertising last year, according to the Ad Age DataCenter.

"We are moving away from brand marketing to brand experience, where we earn consumer's trust instead of buying it," CEO Denise Morrison said Wednesday at the company's annual institutional investor analyst day.

Even when traditional advertising is used, it will be complemented by "dynamic, real-time, personalized" communications driven by data, she said. And "some brands will completely eliminate broadcast from marketing plans," she added. The company declined to reveal which brands would go dark on TV.

The company is following other big consumer packaged goods companies that have rushed to pour more money into digital. But Campbell's 40% goal would put it at the upper end of what its peers are spending. General Mills, for instance, recently outlined plans to spend 25% of its media budget on digital in its U.S retail division, which includes its major brands sold at grocery stores.

CPG executives have grown fond of touting the effectiveness of digital spending, which trends to be cheaper than TV advertising. But given the many factors that shape sales, it's nearly impossible to draw a straight line between digital spending and results, as Ad Age detailed in February.

At Wednesday's event, Campbell executives were quizzed by one analyst about their confidence in generating a return on investment from their new digital push.

Mark Alexander, president of the company's Americas simple meals and beverages division, cited the company's experience with some of its brands that are already 100% digital, such as Plum Organics. "We have a level confidence now of what is working," he said. And "we are ready to really advance that." Ms. Morrison added that digital allows for better consumer targeting.

The digital hike comes as Campbell, like most big food companies, is struggling to grow sales as more consumers favor fresher, less-processed goods.

On Wednesday, Campbell lowered its long-term sales growth target to 1% to 3%, down from 3% to 4%, citing "current conditions in the food industry." Like other companies, Campbell has embarked on an aggressive cost-cutting program, including headcount reductions. The company on Wednesday raised its annual savings target from $200 million to $250 million, which it expects to reach by the end of fiscal 2018.

Ms. Morrison, who has spoken about Big Food's challenges in blunt terms in recent months, on Wednesday described the situation as a "new normal." Consumers, she said, "are holding manufacturers more accountable and they are rightly demanding greater transparency about how and where their food is made," she said.

In response, Campbell has launched a website called that seeks to lift the curtain on how its foods are made, from its classic soups to its exanding lineup of dinner sauces. "We believe this candid discussion with consumers will lead to a new dialogue, and new relationships between Campbell and consumers," Ms. Morrison said.

The company's new strategy, which Ms. Morrison described as an "extreme makeover," includes a previously disclosed plan to put faster-growing brands such as Bolthouse Farms into a new division called "Campbell Fresh." The $1 billion division includes fresh products sold in store perimeters, such as the recently acquired Garden Fresh Gourmet brand of refrigerated salsa and hummus.

Executives also pledged to remove artificial colors and flavors from nearly all Campbell's North American products by the end of fiscal 2018. The company is removing MSG from its line of kid-targeted condensed soups and expanding its lineup of organic soups that debuted in January with a new lineup targeting kids. The kids revamp will include soon-to-be launched Star Wars themed cans.

Other new products include Pace and Prego branded "Ready Meals" that are sold in pouches and come in varieties such as cheesy chicken quesadilla. Campbell is expanding its dinner sauce lineup to include new "grill sauces" mean to be poured over grilled meat or vegetables.

The marketer is also changing its soup advertising strategy, taking a master-brand approach, rather than rolling out individual campaigns for each Campbell's line, executives said.

The last time Campbell tried an umbrella advertising approach for soup on a large-scale was with the "It's Amazing What Soup Can Do" campaign that debuted in 2010. The campaign, which was pulled in 2013, was by BBDO, New York and Y&R, New York. Executives declined to share specifics on the new campaign. But Mr. Alexander said the campaign will not consist of a "bunch of anthem ads." Rather, spots would talk about "specific consumer needs," he said.

Most Popular
In this article: