ANA Annual Meeting

Terracycle: Building a Small Empire on a Foundation of Compost

How Recycler Became the Useful Red Worm of the Marketing Ecosystem

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Backyard composters know red worms are masters of turning banana peels and coffee grounds efficiently into fertilizer. Increasingly, brands are turning to Terracycle as the "red worm" of the marketing ecosystem -- converting the effluvia of such heavy hitters as Coca-Cola Co., Kraft Foods, L'Oreal and Colgate-Palmolive Co. into new products and green-marketing initiatives.

At the Association of National Advertisers conference today, Terracycle VP-Global Media Albe Zakes recounted a story that 's now widely familiar thanks to his own PR efforts that make up the bulk of the brand's marketing.

In a nutshell, in 2001, a Princeton student visited some friends in Canada using compost and red-worm poop to grow weed in their closet. That student, Tom Szaky, was inspired to enter a business plan contest that involved taking waste from Princeton's dining halls and feeding it to red worms to make fertilizer. He lost the contest, but quit school to start Terracycle anyway.

"You can imagine that conversation," Mr. Zakes said. "'Hey mom, the Ivy League education has been great, but I think I'm going to drop out to sell worm shit.'"

A true bootstrap entrepreneur, Mr. Szaky started rounding up Coke bottles from neighbors' recycling bins to store the compost, before realizing that was illegal in Princeton, so he began sourcing them from recycling centers. Ultimately, that led to a licensing agreement from Coca-Cola allowing Terracycle to use "the iconic Coke bottle shape" and package feces directly in their product.

"It's probably the only licensing agreement on the planet to actually have the word feces in it," Mr. Zakes said.

Terracycle's first big marketing break, he said, was getting sued by Scotts in 2007 on the claim that its product in recycled soft-drink bottles infringed on Miracle-Gro's trade dress. "Our product was the one packaged in old soda bottles with the word worm poop on it," he said. That helped create a swell of publicity for the company that 's never entirely let up as Terracycle started its "" blog.

"We learned that working with major brands, or fighting against major brands, created really good brand awareness for us," Mr. Zakes said.

Terracycle has since launched the "Drink Pouch Brigade" recycling CapriSun packages into bags and paying schools as much as $20,000 annually to collect them. And the company now has 21 million people in 15 countries where it operates collecting 2.5 billion pieces of 60 different types of trash to make products.

Some brands, whose products or packages aren't recyclable, can be "upcycled" into products like Adirondack chairs and plastic paving stones, allowing them to use the Terracycle logo as an alternative green seal, Mr. Zakes said.

Though Terracycle has yet to buy a paid ad, it has generated publicity it calculates to be worth $52 million and produces a TV show, "Garbage Moguls," on the National Geographic channel. "It functions as a 44-minute commercial at no cost," Mr. Zakes said. "It actually generates revenue for us."

Community newspapers, in particular, have been valuable receptacles for pre-packaged coverage about local Terracycle recycling efforts, he said.

Terracycle also has enlisted Walmart to participate in a waste-collection program from schools that led to 40-foot displays in more than 3,400 stores for an Earth Day promotion last year. Terracycle has produced videos, such as one created for CapriSun, that the brand paid to run on such networks as Nickelodeon.

The brand, as might be expected, also has heavily used social media and plans within the next two weeks to announce Kraft Cheese as sponsor for a branded online game hosted on Facebook that already has 350,000 users.

Another of Terracycle's more successful symbiotic promotions was with Newsweek and Target where a page of the magazine can be folded into an envelope with a prepaid label to send plastic shopping bags to the company for recycling into reusable shopping bags.

Two waves of ads have generated 62,000 responses, he said, with 99.8% of the million bags received being Target bags and a coupon for the tote bag created from the recycled bags garnering a 60% redemption rate.

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