How to Get Great Work from Your Ad Agency

We all know its more important than ever to get the most out of your marketing dollars, and to do so you must get great creative from your agency. But in today’s frenetic world, many have lost the art of making it happen. Here are some important tips:

1. Get the “A Team” on your business. In my experience, every agency has their “A” talent, and their B/C talent. Its important to get their strongest performers on your account- even if you have to go to a smaller agency to do so. The A team at a regional agency typically is more creative, experienced, and talented than the C team at a national player.
2. Take the time upfront to brief the Agency on your business situation, objectives, and most importantly, your target consumer. A holistic understanding of the situation will lead to better creative and more insight.
3. While its worthwhile to work collaboratively on the creative process, it is critical to have a single clear decisionmaker. This is important for a couple reasons. First, having multiple decisionmakers tends to lead to the work getting “dumbed down” to the least common denominator. Second, agency creatives don’t make advertising for companies, they make it for people- that’s why its important for the client to get to know both the account team and the creatives.
4. Do consumer research up front with the brand team, the account team, and the creatives. This allows you to understand consumers together, gain consumer insights together, bounce ideas off each other, and build a relationship with the key players. 
5. You’ll get better work if you treat the agency like a partner on your business, rather than as a supplier.
6. Be media agnostic. Work with the agency to determine what specific media vehicles will best accomplish the objectives of the project.
7. Write a clear, concise creative brief. The most important elements of this document are the target consumer, the brand benefit, key consumer insight(s), and the brand personality.
8. Ask to see a range of work. This allows you to get some “safe” work that is comfortable and on point, but likely not “breakthrough”, as well as some options which scare you because they are higher risk, but potentially higher reward.  If it’s a major project, you may want to have multiple creative teams providing work.
9. Give the agency enough time to do great work. Most of us are linear thinkers, and are by nature, impatient.  But the creative process works best when the creative have enough time to consider a broad range of directions.
10. Listen. When the agency presents their work, listen and ask questions to be sure you clearly understand the inspiration behind the work.
11. When commenting on work, speak in terms of objectives, not tactics. Nothing drives a creative crazy more than a client saying, “can we use this font, or this specific color”. A more appropriate comment would be, “I’m finding the current font difficult to read, can you consider other options which pop better?”
12. Throw them a bone. If the agency feels very strongly about work that you are lukewarm on, go ahead and include it in testing. You may be surprised how consumers react to it, and at the least, it shows you respect the agency’s expertise and are willing to work together. (Important note: this does not mean you should produce subpar work, it does mean that if the agency feels particularly strongly about a particular direction, you should get some consumer feedback on it.)
13. Celebrate success! Once you have worked together to develop powerful work that builds your brand, show genuine appreciation to your agency partners by celebrating success together.

Thanks for stopping by, and as always, I welcome your thoughts and insights.
Mike

5 Ways for Market Leading Brands to Drive Profitable Growth

If you have ever had the opportunity to work on a market-leading brand, you know from experience it is both a privilege and a challenge.  On the positive side, market leaders typically have strong brand equity, excellent profitability, and score well on key measures such as awareness, trial, and loyalty.

Bounty - How Do You Grow a Market Leading Brand?On the challenging side, companies expect strong, consistent profitable growth from their market leading brands, and in many categories this can be exceptionally difficult to deliver.  Trying to continue growing share when you are already the market leader often results in heavy price competition which has the unintended result of driving profit out of the category for everyone.

In many ways, it can be even harder to stay on top, than it is to get there, as the low-hanging fruit has already been picked.  With that in mind, here are five suggestions to help market leaders continue driving profitable growth:

1. Rather than focusing on stealing share from competition, focus on growing the category.

Years ago when I was working on the Bounty paper towel business, the brand was market leader with a share nearly triple its closest competitor.  Rather than seeking to simply grow share, our team recognized that the paper towel category had expandable consumption, and as market leader it was our responsibility to drive category growth.  Read on for more detail on how this worked for Bounty.

2. Get in bed with your heavy users.

Really understanding what makes your heavy users tick has multiple advantages.  First, it helps ensure you don’t do anything which will alienate them, which can have catastrophic consequences.  Coca Cola would have avoided the whole New Coke fiasco had they shared their plans to change the formula of Coke with their heavy users.

In addition, studying your heavy users allows you to understand what differentiates them from your typical user, and can lead to strategies to get more users to adopt the heavy user behavior.  In the Bounty example, the brand’s heavy users tended to use paper towels for tougher cleaning tasks than typical users, and tended to keep larger quantities of Bounty on hand.

3. Don’t define your competitive set too narrowly.

Step back and see how the consumer views your category, and what alternative products they consider when selecting your product.  In the Bounty example, while heavy users were using paper towels for tough cleaning tasks like washing dishes, cleaning large spills, or scrubbing carpets, typical users were using sponges and rags for these tasks.  By understanding that Bounty was competing with sponges and rags, we were able to show the benefits of using a disposable paper towel versus a durable product like a sponge, which can be a breeding-ground for germs.

Campbell Soup - Building the Business by Broadening the Category DefinitionA second example here would be Campbell Red & White condensed soup.  If you define the category as condensed soup, Campbell has an 85 share, with little room to take additional share.  Defining the category as all shelf stable soups and broths helps some, but doesn’t reflect how the consumer really views the category.  By studying consumer behavior, the Campbell team was able to understand that the consumer is considering condensed soup along with other quick “minimeals” like a sandwich, frozen microwave entrees, etc.  This insight led to sharper consumer communication on when and why to choose Campbell condensed rather than some of the other alternative foods.

4. Stretch your brand equity by launching innovative line extensions…

...but be sure not to launch new products which are inconsistent with your current brand equity. Continuing with the Bounty example, we launched Bounty Quilted Napkins, bringing Bounty’s strong and absorbent equity to the napkin category.  A second positive example would be Crest, which figured out they could extend their brand equity beyond simply cavity protection to total mouth care.  This led to a stream of new products including tooth brushes, oral rinses, and of course, Crest White Strip

Crest WhiteStrips - Extending the Brand's Equity with Successful Line ExtensionsOn the other end of the spectrum, Jif Peanut Butter, whose equity has consistently focused on “more peanutty taste”, attempted to launch a line of flavored spreads called Jif Smooth Sensations which came in flavors like Chocolate Silk, Apple Cinnamon, and Berry Blend.  Jif’s brand equity could not be logically extended to nonpeanut flavors, and the line failed.

5. Optimize your product lineup to maximize productivity from every sku.

Finally, in the current world where retailers are closely watching sku count, it is critically important to take a hard look at your product lineup to make sure the every sku plays a meaningful role, and the whole maximizes productivity.  On Bounty, for example, we found that productivity went up when we concentrated our lineup on larger sizes.  Driving consumers to large count packs resulted in consumers’ increasing their in home consumption, and resulted in higher loyalty as measured by share of requirements.

A second example here would be Ensure nutritional shakes, which typically retail for $7.99 or higher per six pack.  Consumers were often hesitant to spend eight bucks to try a product they might not like.  By launching single bottle trial size, that barrier was overcome and overall brand volume went up.

In Summary

Certainly there are many more ways to drive leading brands to profitable growth than those we briefly reviewed here, but I have been fortunate enough to have a positive personal experience with each of these five.  By the way, I hope you’re enjoying these posts and, as always, I welcome your comments. One last thing, don’t forget to read Randall’s Beard’s guest post on the surprising increase in television viewership.

Private Label Advice for Retailers from a CPG Leader

Private Label products are one of the few beneficiaries of today’s tough economic conditions.  Recent Nielsen data indicates private label is up on average +7.4% versus year ago, with an average share of 16.9%.  Retailers- from Wal Mart, to Safeway, to Kroger, to Super Valu- are wisely turning to private label to drive growth and profitability at this time.

However, many retailers are not yet taking a long term, holistic approach to the role that private label products should play in their business.  Here are eight suggestions for retailers to consider as they seek to profitably grow their private label businesses:

1. Remember to keep things simple for the shopper. Don’t proliferate sku’s just to fill shelf space.  Safeway is guilty of this in the pasta sauce category.  Besides carrying all of the national brands, Safeway has no less than three complete private label lines of spaghetti sauce- Safeway Select line, the Eating Right line, and O Organics line. (insert safeway spaghetti sauce pictures here).  Why would consumers need so many lines of pasta sauce, with little or no differentiation?
2. Don’t  launch private label into categories which aren’t big enough to merit it.  Wal Mart, for example, has tested a private label diabetic shake product to compete with Glucerna.  This is a relatively small category in absolute, and launching private label into it pulls down the velocity of all the sku’s in it- both branded and private label.
3. Play fair with the national brands.  Let’s face it, in times like these it is tempting to focus all growth on private label by unfairly disadvantaging the national brands in shelving, merchandising, etc.  But its important to take the long view here, and recognize that national brands have driven traffic to the category for years behind investing in building a relationship with consumers, product innovation, etc.  Its important to balance growth opportunities between both private label and national brands for the long haul.
4. Don’t leave money on the table.  It can be tempting to get VERY aggressive with private label pricing.  After all private label products frequently have less expensive ingredients, cheaper packaging materials, no marketing costs, and limited R&D expenses.  But its important to consider whether you are leaving money on the table by pricing the product lower than the consumer expects.  In this situation, you are hurting category $$ sales, and category profitability.  To effectively price private label products, its important to consider national brand prices, consumer expectations, and what other retailers you are truly competing with.
5. Take the time to develop attractive packaging.  Most retailers don’t spend enough time ensuring their private label products are attractively packaged, which often sells what’s inside the package short.  If it’s a food product, the graphics better produce appetite appeal.  Using bland packaging with lots of white space and a purely descriptive name like “Frozen Toaster Waffles” or “Dry Dog Food” conjures up images of the horrible generic products of the 80’s.  You may laugh, but many retailers still have packaging that’s not far away from that.
6. Choose a reputable supplier.  Its more important to select a supplier who will provide high quality product, on time, in the quantity and variety ordered, than it is to choose the cheapest supplier.  Remember you get what you pay for.  Squeezing too hard on price will result in substandard product or inconsistent supply.
7. Understand your target and what he/she is looking for.  Wal Mart’s Great Value line, works for the Wal Mart shopper, who will typically sacrifice bells and whistles to spend less.  But that wouldn’t fly at Safeway or Harris Teater.  On the other hand, a few years ago, Wal Mart tried to lead the market by launching private label organic baby formula before any branded organic formulas were out.  Predictably, it flopped.  Talk about not being in touch with your shopper.
8. Understand that over 60% of households have only one or two people in them.  It can be tempting to offer private label in large sizes to drive transaction size. That’s an acceptable strategy, but it is also important to keep in mind the growing number of smaller households, and be sure you are offering products which meet their needs.

Private label is an important part of most retailer’s product portfolios and following these tips can help to optimize its performance.  As always, I welcome your thoughts and comments.

What are the barriers to CMO’s leading the Corporate Growth Agenda?

Today’s guest post is by Randall Beard, a leading and award winning Chief Marketing Officer and General Management executive with 25+ years global experience across consumer packaged goods, financial services and high-touch service brands, including Nielsen, Procter & Gamble, American Express, and UBS. He is currently Global EVP & General Manager at Nielsen IAG, responsible for Consumer Packaged Goods. To read more about his thinking, visit Randall Beard’s Blog.

The CMO’s job is simple—to drive growth, right? As Lou Gerstner ex-IBM and American Express CEO once put it: the role of Marketing is to build the brand and deliver a great customer experience. But is it really that simple?

At the recent CMO Club Summit in San Francisco, I was part of a panel discussion with Joe Ennen, SVP Consumer Brands at Safeway and Scott Thurm, Management Bureau Chief of The Wall Street Journal, titled "CMO's as Leaders of the Corporate Growth Agenda."

Scott led off the discussion by reframing the topic, asking, “What are the barriers to CMO’s leading the corporate growth agenda?” Joe, Scott and I spent the session discussing and debating this important question. 

Barriers to CMO’s Leading the Corporate Growth Agenda

CEO/CMO Alignment - I told the group that "the best CMO is a CEO who believes in Marketing." The CMO's ability to lead the corporate growth agenda starts with alignment with and support from the CEO. Not all business models and CMO’s are created equal. The role of Marketing in an organization can vary widely. And the CMO role can range from a narrow Marcom role all the way to something like a Chief Growth Officer. The CEO and CMO must be aligned on the role of Marketing in the organization for the CMO to effectively lead the growth agenda.

Growth Means More Than Marketing - The CMO has to think more broadly than Marketing. What are all of the potential growth drivers - Marketing or otherwise ? Companies such as Zappos.com have actually gone so far as to define a non-Marketing function like customer service as Marketing. A critical part of the CMO's job is to understand the business model and all potential drivers-whether inside Marketing or not. This is becoming even more important as digital and social media blur the lines between Marketing, Public Affairs and Customer Service.

• At UBS, we learned from Corporate Reputation research that being “open and transparent” was a key driver of reputation, and that reputation scores correlated  with “willingness to refer others” and other business growth metrics. This led the Marketing function to explore programs to communicate to stakeholders in more open and transparent ways.
• At American Express, we learned that offering free “Special Merchant Offers” to consumers using their Gift Card drove significantly higher purchase intent. This led Marketing to spearhead the development of partnerships with key consumer preferred merchants—and to market these offers as a key benefit.

Voice of the Customer – In Joe’s view, another key barrier to the CMO driving the corporate growth agenda is customer neglect. The CMO needs to continually advocate for keeping the customer front and center. All CMO’s could learn from A.G. Lafley, ex CEO of Procter & Gamble, who continually reminded employees that “the consumer is boss.” 

Customer satisfaction surveys not only measure satisfaction. They also measure the important factors contributing to satisfaction and quantify the relationship between those factors and satisfaction. Understanding these drivers enables Marketing to define areas outside Marketing that are central to driving growth. 

• For example, at UBS we learned that client contact frequency was an important satisfaction driver—more was better up to a threshold where satisfaction leveled off. Yet, the majority of client advisers were contacting clients well below the threshold. This led to a concentrated effort to improve contact frequency—and drive growth.

Connecting Customer Needs with Enterprise Assets – I stressed the important role the CMO plays in getting the organization to think about the entirety of the enterprise’s assets and capabilities. Connecting customer needs with assets from outside a business unit is a great way to drive growth—and one that organizational structure often stymies.

• Crest: Consumers had an unmet need for whiter teeth, and paste formulations simply didn’t do the job. A smart R&D person connected this need with synthetic bleach technology from laundry and substrate technology from paper making to create—voila--Crest WhiteStrips.
• Gift Card consumers wanted to buy the cards in retail. The American Express Gift Card group had no relationships with grocery and drug store chains. So, the organization leveraged the Amex Establish Services organizations retailer relationships to facilitate introductions and help gain distribution in over 70k locations in less than two years.

Keys to CMO Success

CMO’s clearly have a tough job, with an average lifespan of just 28 months. Lou Gerstner’s formula for CMO success is a good starting point, but CMO’s need to go further. Building the  brand and delivering a great customer experience plus driving the corporate growth agenda can help CMO’s and their firms be more successful in the future.

Should Brand Companies Ever Manufacture Private Label?

You would have to have spent the last 18 months lost in the jungle not to know that the economy is in dire shape, and that times are extremely tough for CPG companies. Leaders are looking under every rock for ways to deliver profitable growth to their business. You can only cut your way to greatness for so long and most companies have already passed that precipice.  

So as you evaluate opportunities to grow your business, should you consider manufacturing private label products? Branding purists would say absolutely not. After all, private label products go completely against the core premise of a consumer brand—of investing to build an authentic, holistic relationship with your consumers—and instead catch a free ride on the backs of the national brands.

I would argue the answer is sometimes—if a core set of conditions can be met—it can make sense for branded CPG companies to manufacture private label products.  First let’s consider the potential benefits of manufacturing private label:

•  It can strengthen your company’s relationship with key strategic trade customers, thus increasing your influence with the customer. Don’t believe it? Let’s assume your brand has a 30% share of the category, and accounts for 25% of your buyer’s profits. Now assume private label accounts for 20% of the category and 30% of your buyer’s profits.  If you manufacture private label for your strategic customer, you are now responsible for 50% of his category and 55% of his profits—of course your influence is going to go up.
• It can increase your capacity utilization, thus strengthening profitability.
• It can appeal to a new set of shoppers who may not purchase your branded products.
• It can drive top and bottom line growth. Don’t forget that private label products require much less overhead- there is no marketing spend, and minimal incremental costs associated with making private label.
• It can increase your ability to control the relationship between private label and your branded product.  For example, you have greater ability to influence the timing of when new innovations on your branded products are brought to private label.

 So what are the core conditions that I believe must be met to consider manufacturing private label?

1. You must have available capacity that isn’t likely to be filled by branded product in the near future.
2. You must be able to earn a reasonable margin. Two things to keep in mind here: (1) PL products have no marketing overhead associated with them, and (2) you don’t necessarily have to offer the lowest price—more and more retailers are placing a premium on quality and reliability even on private label.
3. Don’t lead retailers into new private label categories; only agree to manufacture private label in categories they are already in or have made a definitive decision to enter.
4. Only manufacture private label for key strategic customers—these customers have the scale to make it worth the effort.
5. To keep things simple for your supply chain, create one master formula that you make available to your customers; don’t create a different formula for each of them. Make sure that formula is not the same as your national brand formula, and in fact is slightly behind your national brand in consumer appeal.
6. Agree up front with retailers that innovations on the national brand will not be brought to private label for at least 12-18 months after your national brand launches them.
7. Have a contract in place that spells out that the retailer covers incremental costs such as packaging, and ensures that the retailer must take all inventory so you don’t get stuck writing anything off.
8. Have a single point of contact who is in charge of managing the private label side of the business.  This ensures that private label does not distract from the branded portion of the business.

In my experience, when the above conditions are followed, it is possible for national brands and private label to profitably coexist in the same company. Look for one more post on private label in the near future, this time offering advice to retailers. Thanks for stopping by, enjoy the Thanksgiving Holiday and, as always, I welcome your comments.