Candy and snacks giant Mondelez International has picked nine startups to participate in an ambitious new mobile-technology initiative aimed at driving more impulse purchases and better in-store marketing.
The program, called "Mobile Futures," began in October with an open call for new ideas that drew 126 applications. Twenty-two startups survived the first cut, with the final list narrowed to nine after a two-day pitch event.
But this is no ordinary pitch. The startups will not only get a chance to create new applications for big brands such as Oreo and Trident, but also could play a role in creating one or two new mobile-focused tech companies that Mondelez hopes to launch at the end of the process.
"It would become an actual standalone company," said Edward Kaczmarek, Mondelez's director-innovation and emerging technology. Mondelez "would not fully own the company, but we would have some type of vested interest. We're working on all the details of that ." He added: "Ultimately we are trying to create something new that solves these broader business challenges but that isn't currently in the market."
Those challenges revolve around the fact that while consumers are increasingly using mobile devices, big consumer packaged-food brands have yet to fully figure out how to use the emerging channel to their benefit. Indeed, while mobile devices account for 23% of daily media consumption, according to Mondelez, marketers have yet to dedicate a major percentage of their ad spending to the channel. In 2012, advertisers were expected to spend about 1.5% of their media budgets on mobile, with that jumping to 2.4% in 2013, according to the Ad Age Mobile Fact Pack, which cited eMarketer.
Mondelez -- which was formed last year when Kraft Foods split in two -- has what it calls a "mobile-first" strategy that includes investing 10% of its global marketing budget on mobile activations and channels. The Mobile Futures initiative is aimed at creating an entrepreneurial culture at Mondelez to accelerate the mobile learning curve.
In the first phase, the nine startups will partner with brand teams to create and launch mobile pilots within 90 days that will cover areas such as in-store marketing, location-based advertising and so-called "social TV," meaning mobile applications that work closely with a marketer's TV advertising, as viewers hop between the big and small screen. The Stride gum brand, for instance, is partnering with Palo Alto, Calif.-based Waze, a community-based road-navigation app that includes information such as traffic updates, accidents, police traps and other hazards. In a hypothetical example, a Stride icon could potentially appear when a driver passes a location where the gum is sold.
"Each brand will spend a week with the startup at their location ultimately on a cultural immersion where they are going to live and work and breathe with the startup to find out what makes that start-up so special," Mr. Kaczmarek said. "We feel it will give our brand marketers ... an opportunity to tap into that entrepreneurial spirit."
The other participating brands and startups are:
Trident: Lisnr (Cincinnati) and Roximity (Denver); Chips Ahoy!: Shelby.tv (New York); Halls: Dailybreak (Boston); belVita: inMarket (Venice, Ca.); Sour Patch Kids: Kiip (San Francisco); Oreo: Banjo (Redwood City, Ca.); other brands: Endorse (San Mateo, Ca.).
In a second phase beginning later this quarter, the brand marketers and startups will work together to create new technology from scratch. After a 90-day incubation period, the concepts will be pitched to angel investors and venture capitalists in hopes of securing seed funding for one or two new companies. "All of the [nine] startups [will be] involved with ideation, but the goal is to actually create new companies that may not necessarily even have anything to do with the startups who are helping us ideate," Mr. Kaczmarek said.
So what's in it for the startups? "They are basically developing a relationship with the brand," Mr. Kaczmarek said. "So by also participating in phase two, it furthers that relationship. But it does also give them an opportunity to see if their technology could be integrated into a potential bigger solution."
While Mondelez is expected to use whatever emerges to support its own brands, the new company would likely solicit business from other marketers as well (although it's doubtful they would be competitors of Mondelez).
Mondelez is characterizing its program as a "network" that will include other supporting organizations, such as Viacom and AT&T AdWorks; incubators Prehype, Kicklabs, Sandbox Industries and Excelerate Labs; and convenience retailers Quick Chek and Kum & Go. Participating angel and venture capital investors are: First Round Capital, New World Ventures, Commerce Ventures, OCA Ventures, Intel Capital, BlueRun Ventures and Transmedia Capital. Also involved are the marketer's media agencies -- MediaVest and Horizon Media -- as well as PR shop Ruder Finn.