Johnson & Johnson Pioneers New Marketing Rules

Upfront Holdout Rapidly Rewrites Standards Across Media Landscape

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CINCINNATI ( -- Johnson & Johnson, that quiet New Jersey family of companies with less than half a billion in marketing budget seems an unlikely candidate to turn the media world upside down. But that's exactly what it's doing.
J&J surprised the industry with its move to pull $400 million off the upfront bargining table. The company is making a series of changes in its marketing practices.
J&J surprised the industry with its move to pull $400 million off the upfront bargining table. The company is making a series of changes in its marketing practices.

Shaking up marketing
As if its history-making move to pull $400 million off the upfront table wasn't enough, the once-sleepy company, often thought of as a follower-less trendsetting than, say, P&G or Unilever -- is turning into a leader and shaking up the media and marketing world in other ways.

It's pushing to add engagement metrics to its TV buys, adopting integrated communications planning, adding new agencies, looking to divert a big chunk of its spending to nontraditional media, and pitting media companies against one another to create cross-platform approaches to win its $1.3 billion business. "We will evolve as necessary," said Kim Kadlec, J&J VP-worldwide media. "It's such a rapid evolution of technology and consumer behavior that it's never been more important for an advertiser to be ready to navigate."

Ms. Kadlec is part of a new, activist corporate-marketing group that includes VP-Worldwide Advertising Joe McCarthy, a former agency executive who joined late last year prior to the February retirement of Andrea Alstrup, former corporate VP-worldwide advertising.

A suddenly higher profile is a big change for a historically quiet J&J, perhaps best known in marketing circles for deft handling of the Tylenol poisoning crisis of the 1980s and support for family-friendly programming in the 1990s.

But CEO William Weldon last year broke ranks with other pharmaceutical companies to call for reform of direct-to-consumer drug advertising. And now, J&J's new team is challenging the very foundations of the broader media marketplace, beginning-but by no means ending-with sitting out the upfront.

Another first
"It's a turning point, and we're energized by it," said Ms. Kadlec. "We've also made some decisions to start including some engagement measurement as part of our buys ... working closely with the networks to see how we can make that work and go beyond just the Nielsen ratings."

Its move to add engagement metrics to TV buys this year may be another first for major marketers. Engagement has been a hot, but up-to-now largely academic, topic in media and research circles. J&J is pushing to put engagement into contracts at a time when the industry has yet to develop a generally recognized way to measure it. The company has tapped research firm IAG to "look at what models can work, and then we will work really hand in hand with the networks to determine what works best for everybody," Ms. Kadlec said.

Besides clashing with the company's business-planning cycle, the upfront's high-pressure pace didn't jibe with the increasingly complex deals J&J wants to strike, said Ms. Kadlec, a former VP-branded entertainment at NBC Universal and account executive at Interpublic Group of Cos.' Universal McCann. She sees the move away from the May ritual as permanent.

She'd also like to see more deals like one last year in which Time Warner got a bigger slice of the action by besting other media companies in a review to produce long-form ads and magazine creative in what she terms "a very collaborative process" for the company's "Having a Baby Changes Everything" campaign from Interpublic Group of Cos.' Lowe.

Moreover, for the first time this year J&J is adopting integrated communications planning for its brands, with creative, media and marketing-services agencies all participating, Ms. Kadlec said.

Other big players, such as Unilever and Procter & Gamble Co., previously have adopted communications planning, a "media-neutral" process that's supposed to direct budgets to channels where research shows consumers are most receptive to a brand's message.

In the other cases, the shift prompted agency reviews. J&J declined to comment on whether it's planning a review for the U.S., where Universal McCann and Omnicom Group's OMD handle the account.

But it's clear J&J is willing to listen to new ideas from new sources. "We're open to innovation and big ideas wherever they are," said Brian Perkins, corporate VP-corporate affairs, to whom Ms. Kadlec and Mr. McCarthy report. "We are happy with our agencies today. We're getting a lot of good work from our existing agency list. But we're going to keep an open eye and ear to other agencies."

J&J added independent Mother, New York, last year for newly acquired Rembrandt oral-care and earlier this year assigned WPP Group's Ogilvy & Mather Worldwide to handle global marketing behind its 2008 sponsorship of the 2008 Olympics in Beijing.

J&J's overall goal "is not to take a higher-profile role in the marketing world," Mr. Perkins said. "Our mission is to build really strong brands with great brand equities. To do that, our best feeling is that we need new people, both internally here at J&J and the best agency partners."

J&J spending dropped 1% to just under $1.3 billion as brands shifted funds to magazines. Now, according to executives familiar with the company's plans, J&J is in the midst of a major shift to nontraditional media.

MSN hosted a conference for more than 300 J&J marketers in Redmond, Wash., last year, and J&J is looking to forge closer bonds with media companies across the board, Mr. Perkins said. "Absolutely we're looking for more engagement with all our media partners."

Historically J&J has been highly decentralized, and the new activism doesn't change that, Mr. Perkins said. "What we are trying to do at this global marketing group, however, is raise the creative bar, helping our operating units and helping our brands do things more creatively than we've ever done before in a rapidly changing marketing, advertising, media, communications environment."
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