CMO Roundtable

Executive Summary

Abbey Klaassen, editor, Advertising Age, facilitated a discussion with Tony Pace, chief marketing officer, Subway Franchisee Advertising Fund Trust, Barry Judge, chief marketing officer, Best Buy Co., Inc., Scott Remy, chief communications officer, Nestlé S.A., and John Felice, general manager, Ford Lincoln Marketing, about the state of television advertising today, as well as the key threats and opportunities in leveraging television for growth.


Nearly half of all U.S. consumers are watching video online today, and the viewing of video on mobile devices is also increasing rapidly. Traditional TV saw almost three hours of growth in the past year as well, demonstrating that TV is truly a medium for growth. While many are exaggerating the "death of TV," twice as many advertisers have increased their ad budgets versus those who have decreased theirs. Many threats, opportunities, strengths, and weaknesses exist across all of the viewing opportunities available.

Advertising Age: Does this notion of TV being dead surprise any of you-considering that so many advertisers are increasing their ad budgets for TV?

Ford: It doesn't surprise me. There is a shift in the ways in which we reach consumers and we have grown new media. One-third of our media budget is now digital/social, which feels right for us in terms of media mix. It's more about how the ingredients work together now.

Best Buy: What surprises me is that advertising is up so much, and not just for TV. TV is still the one place where you can bring sound, movement, and excitement to your brand for a mass audience. Over time it will be increasingly pressured by that same opportunity digitally, as well as by better measurement. Presently we can measure any of the other vehicles much easier.

Nestlé: Once something is announced "dead," that's the best opportunity to get in there and be strategic. I have thousands of SKUs that I need to scale, thus I have a need to work across a medium to reach a large audience-TV still does this for me.

Subway: We look at TV differently than most people, because we do a lot of other media quite well. However, you can very much make the case that our success is owed to television. I was excited when the death knell sounded for TV because we were able to push more money into it. Subway is decentralized as a business and we spend a lot of our resources locally. We have recently pushed for national scale which has proven to drive the business. The challenge is paying more for less, and ratings are low. In the QSR category, TV has been central to the growth of brands since the 1970's, but now the levels that we have to break through are higher than ever.

Advertising Age: Have TV networks done well in using digital as a feeder device, or do they view it as a detractor?

Ford: There is a huge opportunity in being able to deeply integrate, but we have to look at how to make our assets work harder.

Best Buy: There are interesting opportunities as far as how digital media can get involved, and tablets are especially interesting as a challenge to traditional TV. I don't see set-top boxes existing outside of five years, they will all be IP enabled. We'll be looking at digital, social and Internet, and how they will have a huge impact on advertising and how we watch TV.

Nestlé: It's always going to be about telling stories and consumer insights. TV has a tremendous advantage, as it will forever be able to tell great stories and we will make those emotional connections with people via that medium. Engaging around the brand through a medium that tells stories and then tying it all together outside with the other platforms will be the way to go.

Best Buy: TV is a mechanism for delivering video, and we should be thinking about all of those mechanisms.

Advertising Age: What does that look like in a buy?

Best Buy: When you go to market and talk to those that you are delivering content to, it helps you think about the consumers you want to reach and the story you want to tell. The stations are becoming less relevant as video grows, so we have to think about the best way to get that content out.

Nestlé: We have an equalizer on points, and TV is just one of those places. Video is going to explode.

Advertising Age: Can you share the way you go to market?

Nestlé: While we're social by design, we've had a traditional way of approaching it. We have experimented with social in order to encourage consumers to share. We have put products in their hands before a launch and had them tell the stories for us via social.

Advertising Age: How are different channels and devices changing how you tell stories now?

Subway: It's easier as long as you understand what you're trying to communicate. We think the historic notion of product placement is a bad notion. We need more sensitivity for the creative community in this way.

Nestlé: It depends where we are with the audience of the product. It's a challenge to find scale and a common way inside of company of our size. We can't add a hundred people to manage a platform, but execution is when we are at our best. One off's after one off's won't work, so you need a cohesive strategic approach. If you build a platform, then the brands can aggregate and bend scale for efficiency when you approach the marketplace.

Best Buy: Storytelling becomes easier when you have additional avenues to get your story out there. Brands are their own creators of content much of the time now. In our business, it's almost as if we are a media company now because we have this huge audience visiting our stores and that enables us to launch a network of content that runs in our locations as well as online. The content is designed to be engaging and we support it with advertising just like a network would and we then measure the engagement with our audience. This is a vehicle for demonstrating our personality as a brand, but we also hope it becomes a revenue generating opportunity.

Advertising Age: The idea of an equalizer was mentioned, what do you mean by that?

Nestlé: Our media company looks at visual assets on screens wherever they may be found. If consumers are engaging with digital assets, then we want to measure them. The equalization is on the pricing, the more expensive things should have evidence of greater engagement.

Advertising Age: How do you feel about owned media assets versus using someone else's?

Subway: We create some of our own stuff but we want to deploy in multiple places. We take individual segments and then make webisodes, and we additionally work with student filmmakers who show at festivals. That allows us to be our own media machine via social media.

Ford: We leverage existing assets on TV and then also do some of our own. We have to be relevant and we have to connect with consumers on something they really care about. Being able to customize and bring it to life online is very important to consumers. They want to come in and interact, and then it's amplified through social sharing.

Nestlé: We have work to do in establishing the master brand before I would go that route, such as changing the impression in the U.S. of us just being a chocolate company. We want to find our own way to scale operationally on a global scale, and then we can utilize more of the assets that we already own from the brands we have acquired.

Advertising Age: What is the relationship between paid and earned media?

Subway: We are fortunate that we have so many famous fans of Subway who are media savvy. Their messages are continually re-tweeted and pushed out all over the place due to the popularity of social media. We have someone run the New York City Marathon yearly, and this year it will be a big social and PR event because someone from Twitter is teaming up with our runner for the updates.

Nestlé: We love it when people talk about us, and we have strong communities for our current brands. We bring those communities together via any social media interaction that we can because we feel that having those interactions outside of commerce helps them relate to the brands.

Advertising Age: What will TV sets look like in the future?

Best Buy: The Internet is coming to the TV in a very real way and it's going to upset the cable and satellite businesses because there will no longer be satellite or set-top boxes. I don't think things look good for cable operators five years from now. TV will be everywhere, as well as the cloud, mobile, 4G, and fast access. In ten years our wireless capabilities are likely to be caught up and streaming will be very prevalent. YouTube will be a force to reckon with.

Advertising Age: Will anyone watch TV live in five years?

Subway: They'll watch sports. People will also want to be part of "water cooler" discussions regarding interesting shows and new programs being released.

Best Buy: They will be, but young people will want different options. DVR-like embedded tweets and Facebook posts will allow watching and commenting "together" at different times.

Nestlé: We shouldn't be afraid of the ability for processing and engaging with so many things at once. We should chase technology and hold onto the emotional connections. The spoke and hub model is done.

Advertising Age: How are you buying and planning for today, and how has the scope changed?

Subway: Buys are still in the upfront. We'll be happy to be at the front of the line when it opens. We have a commitment to build reach and frequency to reach our audience. Things are definitely different than they were fifteen years ago; you have to move things around to make them work-and I am always asking why.

Advertising Age: Are you buying more broadly or narrowly?

Subway: More broadly. If you have a mouth and a wallet, you are a potential customer.

Nestlé: More narrowly.

Ford: We have critical assets and deep integration, and it's good for reaching audiences. We buy quality and upfront. Ratings are good and we're working towards measuring the level of engagement more closely.

Best Buy: Our focus is on quality, and we want that which can be leveraged on digital platforms such as sports or award shows. Bigger and higher quality is key.

Advertising Age: What kind of metrics would you like that you haven't gotten before?

Ford: Engagement-in terms of measuring how we touch our audience. We want to know if we are in the right program at the right place and we need a tool to fine-tune the creative.

Nestlé: We would like to measure persistence. Such as, how long are they staying with the programming? We don't want big, we wouldn't get that volume. We have to be steady and persistent on how they engage with us.

Subway: We get more from qualitative than quantitative. Engagement is the secret ingredient. If a consumer is counted as in your audience, but isn't engaging-that's not as powerful. It doesn't communicate a message.

Best Buy: We have plenty of metrics, but the issue is that we don't believe them half the time. Justifying TV is not that easy.

Advertising Age: Are you doing creative testing?

Nestlé: We test both before and after to ameliorate our risk. One multimedia measurement for all would be extremely helpful for believing in our marketing mix.

Best Buy: For us there is a lot that we need to understand upfront. Ace Metrics provide good feedback within a day or two, and it's helpful to point back to that.

Subway: We test everything, and we do tracking with weekly numbers reported on everything as well. We additionally track how many calls we get from franchisees.

Advertising Age: Should we have an upfront or not?

Best Buy: We buy across mobile and PC, and non-traditional is happy to sell to us. As a retailer we are adjusting a lot. We have increased the amount we have committed to the upfront.

Nestlé: There are always changes and we wish that we could have more flexibility. We can move things, but it is a frustration.

Subway: If we have a buy that is tilted to one demographic and we decide to change out a feature, it becomes a problem. We advertise 365 days a year, so we can work around that.

Advertising Age: A lot of people have called for the dramatic change to the upfront, what small thing would you change?

Ford: Reduce the lead time. Things change very rapidly, the shorter the time for making that decision the better.

Subway: I would say we should have a conceptual upfront in February, and then buying later in the year. If we want to be in an appropriate place, we need to talk earlier.

Advertising Age: Have any of you asked the media companies to come directly to you with big ideas?

Ford: Yes, they have been very receptive to coming to us with their ideas.

Nestlé: We are developing possible partnerships to allow for more flexibility to go outside of the schedule a bit. Timing kills us in an unpredictable world. We all need to be more concerned with where the consumers are in this because it's not ideal for them either. Things should be later, more realistic, and the money should come later as well.

Advertising Age: How much later?

Nestlé: As late as possible.

Best Buy: As late as we can in order to provide enough time to have those conversations.

Advertising Age: Are you planning on doing the Super Bowl?

Best Buy: Yes, we are coming back after last year. We're doing it because we have something interesting and new to say. If we weren't launching something then we wouldn't do it.

Subway: We are big believers in the football audience, but the issue is that the consumer expectation is to debut new creative at the Super Bowl. We don't want our marketing calendar to be dominated by trying to make that work in our marketing program.

Ford: No, but we've done it before. It's a great time to launch. The creative pressure is very real.

Advertising Age: Do you see social media as a place where you can recoup ratings points that aren't in television anymore?

Subway: You can't put an advertising message out via social media in the same way as other traditional media. Communication is about the brand with social, but it's not topical.

Best Buy: Fans will turn against your brand if you are trying to sell to them via social.

Nestlé: The media should work together in a positive and strategic way-they're better together than separate. These are uncharted waters for us, so the challenge is to figure out how they work together. It's complicated when the digital assets are shared.

Advertising Age: How would you describe the state of primetime today and are you happy with it?

Subway: I think it all goes back to storytelling and genre.

Nestlé: I do wish that TV had a greater sense of moral contribution to society, especially for young people. Media doesn't take enough responsibility for the impact of the images that they are putting out there. We want interesting programming, but we want it to have substance. As contributors to society, we could do better with the media we consume and contribute to.

Advertising Age: What changes would you make to impact the use of TV (in the traditional sense and in the broader form of video content) within your company?

Ford: Integration, bring it together. Work harder across all the platforms and help us measure it.

Nestlé: Have one unified plan, measure what is going on, and then fix what's wrong.

Best Buy: I'm intrigued with the opportunities available within our own network; however it's difficult to get the company to invest in it because it's expensive to be cutting edge with production values. I see it as a profitable business and as something we should be investing in.

Subway: Let me use the content anywhere without the hurdles that prevent a lot of good things from happening. While we don't need to go back to the early days, there are other ways to get brands involved that could be easily facilitated, and on a broader scale.


"CMO Roundtable." Abbey Klaassen, Editor, Advertising Age; Tony Pace, Chief Marketing Officer, Subway Franchisee Advertising Fund Trust; Barry Judge, Chief Marketing Officer, Best Buy Co., Inc.; Scott Remy, Chief Communications Officer, Nestlé S.A.; John Felice, General Manager, Ford Lincoln Marketing. ANA Masters of Marketing Annual Conference, 10/22/2011.

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