Kellogg Says ROI on Digital Trounces TV by 'Factor of 2'

Food Giant Plans to Cut Commercial Filming up to 20% in the Next Year

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CHICAGO ( -- After taking a long look at where it's getting the best return on its marketing investment, Kellogg Co. has decided to move more money online and spend less on TV.
Mark Baynes
Mark Baynes Credit: Scott Breithaupt

Kellogg Chief Marketing Officer Mark Baynes said last week that the company's online ROI for the Special K brand has surpassed that of broadcast TV in the past 18 months "by a factor of well over two." Speaking at a Lehman Brothers Back to School Consumer Conference about how Kellogg is trying to boost marketing efficiency, Mr. Baynes said: "Maybe the biggest opportunity over time is driven by what the digital environments afford, and we are working to embrace this aggressively."

$1M for every three films
Among the initiatives he laid out to cut costs was a plan to slash the company's TV-commercial filming 10% to 20% in the next year. Kellogg does 350 to 400 shoots every year, and Mr. Baynes said the company will save about $1 million for every three films he's able to excise.

Though he described the Battle Creek, Mich., company's digital efforts as "still early," he added that the "ability the medium provides for improved targeting, engagement and dialogue creates many new opportunities for our investment approach." He called the Special K results "obviously very encouraging" and predicted they would help "drive stronger adoption across the business."

Kellogg crossed the $1 billion benchmark in ad spending during 2007, and its outlay is set to increase this year, though probably at a reduced rate. The package-foods company also spends about $300 million on promotional marketing. Its primary creative agencies are Publicis Groupe's Leo Burnett and Interpublic Group of Cos.' Campbell Mithun. Publicis' Starcom USA handles the company's media and digital business out of Chicago.

While Mr. Baynes did not address specifics of the Special K digital 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, in addition to a bowl at breakfast, 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.
Kellogg Chart

Special K website
The 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. Kellogg spokeswoman Susanne Norwitz said some of the online success is due to the company's partnership with Yahoo, although the total number of group members was not immediately available. Kellogg started the Yahoo group in 2006.

Kellogg has been widely praised in the past year for sticking with its advertising spending despite the recession. The company has credited its brand-building efforts with its ability pass on some sharp commodity-cost increases to consumers. "The growth shown in our advertising spend over the last five years remains a clear indication of the commitment and belief the company has to our brands and categories," Mr. Baynes said. "And the power of advertising is an essential part of our growth model. This shows our major categories are highly responsive for strong advertising."

But that's all the more reason to be more efficient. With consumer confidence at its lowest level since the early 1980s, Mr. Mackay said, the company is forced "to be even more disciplined as we look at our innovation and our marketing programs to demonstrate the value of our brands as we go forward."
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