Eleven or twelve years ago I listened to the then newly minted P&G CEO, A.G. Lafley, at the annual ANA conference coin the phrase “The Consumer is King.” Since then, marketing has been trying to make sense of the new landscape.
Last week at the recent ANA conference in Orlando, Deanie Elsner, EVP and CMO of Kraft Foods, was describing how her company is transforming and adjusting to this consumer-centric landscape: it has established a self-sufficient ecosystem in which it harnesses and captures powerful first-party data, and mines it for insights that enables it to build compelling content. I caught up with Deanie at the conference.
“Kraft’s business is influenced primarily by three key trends”, She told me: “The increase of the income strapped consumer. Six in 10 households have been pushed into low income; Second, Millennials, who represent 27% the U.S. They are the biggest demographic in history, bigger even than the baby boomers. And Hispanics, 17% of the U.S. and 56% of total U.S. population growth in the last decade. U.S. Hispanic purchasing power exceeds $1 trillion and is expected to grow by 2017 80% faster than non-Hispanic.”
These new consumers are harder to reach. It’s not just that trips to the stores are down, and dollars spent per trip are also down, which results in less promotional lift for every dollar a manufacturer pays into the trade. It’s also challenging because television too has been diluted, with ratings plummeting in the last 10 years. A No.1 rated show today on broadcast media pulls less than 20% of the audience than a No.1 rated show pulled 10 years ago, and at a higher cost.
The consumer path to purchase has been completely redefined. What once was a very clear approach as to how you would capture a consumer by building awareness and getting a consumer to try your product has been fragmented. A marketer has to refocus and make strategic decisions about where they’re going to spend their precious advertising dollars to drive awareness or introduce new products.
“The new capabilities required to win in this new world”, says Deanie, “Are all around how to mine insights; how to, in a customized proprietary way, define your consumer targets; how to build communication content that actually engages consumers in their space; and how to get to real-time decisioning so you can optimize your ROI.”
This approach, which Kraft is calling Agile Marketing, is the ability to flex with the consumer and to manage precision by getting to the consumers with the right message and the right medium at the right moment. It means moving from buying broad-based demographic targets to buying individual consumers in a manner agnostic to the medium.
There are three pillars to Agile Marketing: Data, the Framework for harnessing and activating the data, and Content: thus, creating messaging to consumers that’s so sticky that they share and advocate.
Data is the new currency. The stronger your data, the better your intelligence; the more you know about your consumer, the more advantaged you’re going to be in the marketplace. Kraft has had a first-party trove of data history from an 18-year dialogue that they’ve engaged with consumers across 22,000 different attributes. That wealth of data was not mined and actioned until Deanie and her team realized that they are sitting on top of a gold mine of information.
They, Kraft, know what consumers like to cook. They know their dietary restrictions – gluten-free, a diabetic, low calorie, big snacks, feeding a big family, whether they are new cooks – and that knowledge is unprecedented in the industry. This is where the Kraft Foods portfolio truly plays a tremendous competitive advantage. Kraft serves up 6.6 billion ad impressions digitally. As consumers engage in that content and they find reasons to want to talk to Kraft, an impressive breadth of data is activated. As a result of that data, Kraft has already built over 500 proprietary custom target segments.
The second pillar is the infrastructure, the Framework, i.e, how are you going to action this data. For Deanie, this means anticipating where the puck is going, where the industry will be in 5 or 7 years and, with a true start-up mentality, to build the engine that would get Kraft there first.
There are three elements of the Infrastructure:
First is Kraft’s social listening lab; then, the methodology on how to harness the data; and lastly, the use of advanced analytics.
Kraft has launched a social learning lab called the Looking Glass. This enables Kraft to observe consumer trends at the speed of culture, to manage Kraft’s reputation, to launch new campaigns, to track competitors and go to consumers for inspiration. The brand teams have a place where, on six screens, they can drill down to understand the conversation, understand what it means and how to action against it in a broader context. The Kraft Foods name is used daily in social media and on blogs over 100,000 times and the lab is tremendously important in harnessing that data. Once the marketers are trained on Looking Glass, that technology moves onto their mobile phones and their iPads, so they have access to it 24/7.
Parallux is Kraft’s proprietary system used to house the data. A data management platform enables Kraft to cut and look at and build custom targets and then. A DSP sits on the back end of Parallux, enabling the company to buy media in the most efficient and effective way.
The advanced analytics function in real time to create an automated learning engine with muscled memory. So if Kraft knows you’re not a bacon user, you will never be served a bacon ad. Most importantly, the entire infrastructure enables Kraft to get to real-time decisioning to drive and optimize ROI.
The next part of Agile Marketing is creating content that is shareable:
Getting to content that is sticky and relevant is incredibly important. Kraft is both a content provider and a publisher. For example, it has developed over 27,000 professional recipes for its consumers. Consumers have submitted another 30,000 recipes to Kraft, and over 1 billion times a year those consumers tap into and engage with the recipes.
Deanie points out that, “The data strategy enables a one-on-one conversation with the consumer wherein Kraft leverages its proprietary first-party data to locate the right consumer, serve them the right message in the right medium at the right moment. That optimizes the likelihood that those consumers become loyalists, and buy a lot more premium products.”
In keeping with her out-of-the-box thinking, her relationship with her agencies is unique. She regards her media agency, Starcom, as a strategic partner that “owns” the brief and guides the creative agencies with content development and activation. And the media agency and analytics people are the first line people tasked with mining consumer insight. “In fact”, says Deanie, “I always had media dear and near to my heart, but now it is as important as creative, and potentially more important.”
Everybody has to change in this new world, and if you can adapt to that, the win opportunities are huge. This requires the balancing effectiveness with efficiency through an innovative approach to data management, the way Kraft Foods has done.