According to Mark Ritson of Marketing Week, “Kraft Heinz is in 57 varieties of trouble” – which is a real pity.
The American food company formed four years ago by the merger of Kraft Foods and H. J. Heinz is the fifth-largest food and beverage company in the world with 2018 net sales of approximately $26 billion.
Ritson, an award-winning marketing columnist, professor, and consultant in the U.K., thinks Kraft Heinz is suffering from a number of self-inflicted wounds, from underinvestment in its brands to a failure to adapt its portfolio to modern tastes.
However, no company aims to inflict wounds on itself, so that explanation is too clever by half.
It reminds me of the scene in “Blazing Saddles” when Sheriff Bart takes himself hostage by pressing his gun against his own head, prompting Harriet Johnson to cry out, “Isn’t anyone going to help that poor man?”
YouTube & Kraft Heinz: A Strategic Threat & Opportunity
Even though it may be too late, I’m going to help that poor brand. Again.
Yes, I’ve tried to help before.
Back in March 2015, I took a look at the combined Kraft Heinz Company’s YouTube channels for Tubular Insights and was surprised to see “an archipelago of small, isolated islands. Considering the high percentage of Millennials who eat up YouTube food videos, this represented both a strategic threat AND a strategic opportunity for the food giant.”
So, did they heed my advice? Judge for yourself.
Back in Q1 2015, YouTube videos uploaded by Kraft Heinz Company brands got a total of 8.4 million views, according to data from Tubular Labs.
But, that was a minuscule percentage of the 2.7 billion views amassed by all of the brands in the food and beverage during industry that quarter.
In Q1 2019, the Kraft Heinz Company’s brands got a total of 57.2 million views on YouTube. At first glance, that appears to be significant progress.
But, all of the brands in the food and beverage industry got 10.2 billion views during this quarter, so any gains seem like round-off error.
So, four years later, YouTube remains both a strategic threat and a strategic opportunity for Kraft Heinz.
Recently, I’ve been a subject matter expert for a bespoke, online digital training program for a Fortune 500 company in the Fast-Moving Consumer Goods (FMCG) and Consumer Packaged Goods (CPG) industries.
And I can say without violating my non-disclosure agreement that big companies in these sectors on both sides of the pond have struggled to make a smooth transition from the old world of television advertising in the 20th century to the new world of digital marketing in the 21st century.
What Went Wrong?
So, why did Kraft Heinz and other FMCG and CPG companies continue to struggle longer and later than many other companies in most other industries?
Well, they were probably using the wrong metrics as KPIs. In other words, they were measuring the wrong things.
And when you measure the wrong things, you mistakenly think you’re reaching your business goals and marketing objectives. But, more often than not, you’re getting into 57 varieties of trouble.
Let me share my scientific wild-ass guess on exactly which metric got Kraft Heinz and far too many other FMCG and CPG companies into 57 varieties of trouble.
They have continued to measure success using a metric that was created in the 1950s during the TV era: Gross rating points (GRPs).
Now, GRPs measure the size of an advertising campaign by potential impressions using a problematic formula that multiplies estimated reach by frequency.
For example, if you run a commercial 5 times on a TV show that reaches 7% of your target audience, then you get 35 GRPs.
That appears to be a metric that matters because it’s been used for decades. But in real life, most of the people in this small segment of your target audience probably ignored your TV spot the fourth and fifth time that it appeared.
Some may have even been annoyed that the same damn commercial kept popping up so many times during the same bloody show. And this assumes that seeing your advertising the first three times increased your sales to some degree.
Maybe it did.
But, maybe it didn’t.
As David Ogilvy wrote in his classic book, “Ogilvy on Advertising”:
“The wrong advertising can actually reduce the sales of a product.” He then cited two studies to support his provocative conclusion. In the first, Ford marketing research found that “people who had not been exposed to (their) advertising had bought more Fords than those who had.” In the second, consumption of an unnamed brand of beer “was lower among people who remembered its advertising than those who did not. The brewer had spent millions of dollars on advertising which un-sold his beer.”
So, GRPs measure how many impressions you’ve purchased, not how your target audience responds to your advertising.
In other words, GRPs measure inputs, not outcomes.
That’s why, despite the fact that they’ve been used since the 1950s as metrics for TV advertising, GRPs shouldn’t be used today as your key performance indicators (KPIs) for digital marketing.
Which Metrics Should Kraft Heinz Use as KPIs?
This begs the question: Which metrics should Kraft Heinz use as KPIs?
According to eMarketer, global ecommerce will rise 20.7% in 2019 to $3.5 trillion. But that’s just 14% of the global retail market, which is estimated to reach $25 trillion this year.
Groceries are one of the most underpenetrated categories in ecommerce. eMarketer says only 2.8% of food and beverage sales occurred online last year.
So, the vast majority of most fast-moving consumer goods and consumer packaged goods will continue to be sold through brick-and-mortar stores for the foreseeable future.
This kind of explains why it took longer for Kraft Heinz and other companies that still rely on retail channels of distribution to embrace digital marketing.
But, it only sort of explains why they didn’t question some of the assumptions that their college professors, marketing predecessors, and advertising agencies had made in an analog era when it came time for them to decide which metrics to use as KPIs in the digital age.
For example, more marketers at FMCG and CPG companies should have noticed a speech in February 2013 by Susan Wojcicki, who was the SVP of Advertising at Google back then.
In her speech, she announced that Google was launching Brand Lift surveys.
These enabled marketers to measure the impact of their YouTube ads on metrics like:
- Brand awareness.
- Ad recall.
- Purchase intent.
This is possible by using surveys of a randomized control group that was not shown your ad and an exposed group that did see your ad.
In addition, Google’s Brand Lift solution also measured the impact your campaign had on creating interest in your brand by using organic searches on both Google and YouTube.
And you’d think that some of the marketers at Kraft Foods would have spotted the Mondelēz International case study published in Think with Google in October 2014.
Because the snack brands of Mondelēz were once part of Kraft Foods until they were spun off in October 2012.
And the case study explained how Mondelēz used Google’s Brand Lift solution to measure the marketing effectiveness of the launches of its belVita and Trident Unlimited brands in Brazil.
And here’s the story behind the success story: Brand Lift revealed valuable insights into the campaigns’ viewer retention rates, target audiences, and frequency caps.
Based on these findings, the marketers at Mondelez quickly adjusted its targeting and its creatives within days and saw their YouTube campaigns lift brand awareness of their apple-and-cinnamon breakfast biscuit by 26% and their gum brand by 36%.
Now, Brand Lift is an infinitely better KPI than some random number of GRPs.
If you have any doubt about this assertion, then ask your college professor, marketing predecessor, or ad agency, “How many GRPs to we need to lift our brand awareness by 26% or 36%?”
As you’ve already figured out, this is a trick question – because there are no known correlations between GRPs and lifts in brand awareness.
Brand Lift + Sales Lift
But wait, there’s more!
In January 2019, YouTube and Nielsen Catalina Solutions announced a new way to measure sales lift. So, marketers at Kraft Heinz can now measure, in aggregate, how effective their YouTube campaigns are at moving products off of store shelves in the U.S.
Now, that’s both a strategic opportunity AND a strategic threat.
With nearly 2 billion logged-in users visiting YouTube each month, the strategic opportunity is obvious.
But, the strategic threat is obvious, too.
Marketers at other FMCG and CPG companies are already using the combination of brand lift and sales lift studies to measure their online advertising campaigns.
They’re also using tools like YouTube Director Mix to create customized video ads and serve them to suit the interests and intent of different audience segments.
This means marketers can customize a base video asset with relevant creative elements:
- And more.
Then, the video and these elements are stitched together, produced quickly and at scale, reducing the need for endless edits.
This results in hundreds of video variations in relatively little time with relatively little effort.
For example, the marketers at Kellogg’s used these metrics as KPIs for a campaign that re-introduced Rice Krispies Treats to parents across the U.S. during the busy and emotional back-to-school season.
They used YouTube Director Mix to bring their new packaging to life online with over 100 customized videos.
As you can see in the video below, their campaign drove best-in-class brand lift and sales lift, despite having fewer retail displays.
Selecting the Right KPIs Is the Key
Now, being able to measure brand lift and sales lift doesn’t mean that those marketers at Kraft Heinz will be able to create the perfect advertising campaign their first time out.
However, if they’ve selected the right metrics as KPIs and are finally measuring the right things, then they will learn what they need to do to improve their results in days, not years.
Or, as Avinash Kaushik, who is an author, a blogger, and the Digital Marketing Evangelist for Google, wrote on LinkedIn in May 2018:
“Companies set inspiring goals. They tend to want to constantly exceed the (often less-than-optimally informed) expectations of Wall Street Analysts. They tend to invite motivational speakers to get the employees to think differently, push through to new frontiers, CHANGE THE WORLD!!!!”
“I completely understand this pattern. Who does not want to shoot for the moon or massively exceed their mom’s expectations? (But,) I’ve come to learn that this desire to overachieve also comes at a very heavy cost—it drives sub-optimal behavior. Instead, I recommend this as the #1 goal for your company: Suck less, every day. Whatever you do today, consciously suck less at it.”
Although I gasped when I first read his article, I wish that I had written it myself. It’s the perfect advice for a poor brand that’s in 57 varieties of trouble.