Tuesday, October 13, 2009

Subway Strives to Keep Strategy Fresh

Oct 8, 2009

From Domino’s sandwich launch and in-your-face ad campaign to Quiznos attacking at every price point, Subway has had more than its share of competition this year. However, the chain continues to see gains on top of the double-digit growth it experienced last year. Sales may be coming in $5 at a time, but that’s the way Subway wants it. The $5 footlong has given the chain a weapon to battle the recession—one that competitors continue to search for an answer to combat. CEO of the Subway Franchisee Advertising Fund Trust Jeff Moody sat down with Brandweek to discuss the competition, the economy and the chain’s plans for future growth.

Brandweek: Business is strong. What’s your secret?
Jeff Moody:
Subway continues to do well despite the economy being down and the fast-food business being down as well. The secret is value, health and a great product. The $5 footlong product is doing very well for us. Since we launched it in March of 2008, it has become a multibillion dollar brand in and of itself. Now the challenge is how do you keep it relevant. The answer is with new advertising, new things like the $5 buffalo footlong sandwich. There’s a constant stream of new ads [from MMB, Boston]. We tend to rotate in new programs every couple of months. Pretty much every month there will be something new coming from us on television. Buffalo chicken just started last week. We did the Tuscan chicken sandwich earlier in the year. We did a Scrabble promotion recently that lasted about seven weeks. We have health messages that continue on an ongoing basis. We use Jared in different ways. We just launched a new partnership with NBC. We’ve branded Sunday night as being Subway night in addition to being football night. There is POP in the stores that promotes NBC and Subway. We’ll have ads during other major sporting events including the President’s Cup, figure skating and hockey.

BW: Can you ever abandon the $5 footlong now?
There are a lot of things we can do. It depends on the economy and what happens with commodity costs and so forth. We can definitely do $6 and $7 versions keeping a baseline of $5 offerings. If things get too expensive, you ultimately have to come off. One of things I look at is the dollar menu. It’s changed, but it’s still there. When it first came out over a decade ago, people said this will never last. They found a way to keep things fresh. We will look to keep things fresh at $5, but there won’t be the same items on the menu forever, obviously.

BW: What about going lower like Quiznos' $4 and $3 sandwiches?
Other people are struggling to find their answer to it. That’s why they’re trying on thing and it doesn’t work. They try something else and all of a sudden it becomes confusing to consumers. I’m not saying we wouldn’t do something like that. We’re not compelled to do it. We will do thing under our terms that make sense to our brand.

BW: What are your feelings about Domino’s after your legal spat?
Dominos introduced sandwiches and named us in some advertising that wasn’t completely factual. They didn’t do particularly well. The pizza category itself has been struggling this year with as much as double-digit declines. It’s not one brand it’s a category phenomenon. They’ve come back recently and they’ve got more sandwiches they are introducing. What they did before didn’t hurt us, so I wouldn’t expect that what they’re doing now would hurt us either. They have the challenge of trying to grow in their non-core daypart [lunch], while trying to focus on their core daypart [dinner]. We’re watching them. We’re not overly concerned that it will take directly from us, because it didn’t last time. Everybody in this down economy is trying to find ways to move into other dayparts and segments they are not competing in. It’s tough to do it if doesn’t stick with you core proposition. 

BW: Speaking of…Subway has pizza and breakfast.
The stores that have pizza are happy with it. Not something that we look at as a national opportunity right now. At the stores that have it, it sells well. It’s customizable, so it fits with the brand personality. But it’s not something right now that’s a big incremental driver for expansion. Breakfast; again, stores that have it do well with it. It’s less than half [of the system], but more than most people would expect have breakfast. It’s an opportunity on paper to get into a new segment, but we have to make sure it is profitable for the franchisees before we do a national program.

BW: How do the new FTC guidelines affect the Jared campaign?
We’re digesting those results right now. Most recently we haven’t done a lot with him losing the weight. We’ve been coupling him with athletes talking about low-fat sandwiches. He’s the fit, eat healthy side of the equation. Those ads really don’t make claims. We want to make sure we understand the rules and that if we come back to those sorts of things that we are in compliance. For any advertisement we have to look at through this new screen. We don’t have anything on air or on the horizon that would be problematic.

BW: What kind of stuff are you doing on the Web?
We have a Twitter account with Subway Fresh Buzz. We’re on Facebook. We did roadblocks for our Scrabble game to get the word out. It worked. We signed up a million new people who wanted to have us market and communicate with them.  They want to be a part of the brand if you will. We’re always looking at different ways to get the message out. We’re looking at apps. We don’t have any in place currently because there are a bunch of different options we are evaluating. When we do it, we do it over 20,000 restaurants strong, so we want too make sure we’ve got it right.

BW: Are you putting more money online?
TV remains the big driver because we’ve got such a wide audience to reach. The mix is changing. We won’t take it all out of TV to put into digital, but we will put more into digital because that’s where consumers are going to consume media.

BW: Will you increase your marketing budget in 2010?
Our marketing spend is tied to sales; it’s a percentage as are most in the restaurant business. As our sales go up and we are able to open more stores, the budget will continue to grow. As opposed to some concepts that are closing stores, we haven’t grown explosively, but we’ve still been adding an our sales are growing, so I expect our budget will be up next year. [In 2008, Subway spent $421 million on media, per The Nielsen Company. For the first seven months of this year, it spent $259 million.]

BW: Will your strategy stay the same in the coming year?
While the competition hasn’t hurt us, we still have to compete with the economy itself. So doing nothing and not providing news is not going to change things. We have to keep coming up with news. 

Pepsi Brand App Comes With NC-17 Rating

Oct 9, 2009
- Brian Morrissey

PepsiCo's Amp Energy drink is looking to connect with young men by providing what might be the ultimate utility for the target audience: ways to score with women.

The "Amp Up Before You Score" iPhone application gives dudes various pickup lines and background info through digital flip cards for 24 different types of women, ranging from "rebound girl" to "treehugger" to the now ubiquitous "cougar." The app even suggests strategies for seducing married women. It includes a "brag list" for users to keep "a name, date and whatever details you remember" and encourages guys to "flaunt it" by broadcasting their scores via Twitter and Facebook updates.

The app, built by Interpublic Group digital agency R/GA and available for free, is risqué enough that it's only available to users 17 and older. The app description page on iTunes warns of (promises?) profanity, crude humor and suggestive themes. Amp Energy targets men 18-24.

The 17-and-over rating is high by iPhone standards, at least for brand apps.

The Puma Index, an app that shows models stripping to their underwear when the stock market is down, only warrants a 9+ rating. Apple screens all applications on its platform, though some of its decisions have raised eyebrows. TechCrunch yesterday noted an app that allows users to blow into the microphone to lift the skirts of Japanese women

Apple placed the mature rating on the app, according to Jay Zasa, ecd at R/GA, despite the fact it has only a "slight edge."

"The process is mysterious from our angle," he said. "If you look at it as a movie that would get a NC-17 rating, it's nowhere near that. Apple takes a pretty conservative line."

Amp is not the first brand to marry mobile marketing with helping boys attract girls. Lynx in early 2008 introduced "Weapons of Mass Seduction" mobile apps for picking up women.

The Amp app suggests nearby motels, displayed on a Google Map, for rendezvous with married women. For "indie girls," the app pulls in content from Under the Radar magazine and plots out nearby thrift stores.

The Amp app uses several sources to give tongue-tied would-be Lotharios something to say when they spot gals. For instance, if the girl appears to be a punk rocker, the app pulls in feeds on the punk movement from Wikipedia and gives a listing of suitable clubs nearby. It also taps into Twitter and Google Maps.

The effort is an attempt to meld real utility with entertainment, according to Zasa. While some might literally use it as a pickup tool, most will probably find more success sharing it with members of the opposite sex as a conversation item, Zasa said.

"Most of the time it's just a funny thing to look at and share with friends," he said.

Amp is still working on the distribution strategy for the app, Zasa said.

Many apps languish in the Apple App Store. Distribution strategies typically include links on brand Web pages and ad campaigns with mobile networks. R/GA hopes the application will have viral appeal thanks to the built-in hooks with social networking platforms Facebook and Twitter. When messages are pushed at those venues by users, they come with a link back to the app.

The app is one of a handful R/GA has created for clients like Nike Training Club. The agency created a video showing off the app in the style of an Apple TV commercial. to see their underwear. That app also got a 17+ rating.

Pepsi's Apology for Amp IPhone App Heightens Furor

Social-Media Debate Over Energy Drink's Allegedly Sexist Marketing Spurs Criticism of Entire Company

NEW YORK (AdAge.com) -- PepsiCo has inserted itself and several of its brands into a heated debate surrounding an iPhone app launched by its Amp Energy brand. By introducing a Twitter tag #pepsifail, the company has spread the news further and associated its flagship brand with the sexist app. So is it a savvy, transparent social-media move or is it simply exacerbating the damage already done? 

Two dozen stereotypes and the fact that the app encourages users to brag about their conquests have raised the ire of consumers.
Two dozen stereotypes and the fact that the app encourages users to brag about their conquests have raised the ire of consumers.
The app, "Amp Up Before You Score," offers guys pickup lines and background info for 24 different types of women, ranging from "military chick" and "political girl" to "married" and "sorority girl." The app pulls in information from Wikipedia on the punk movement for a girl who's into punk rock, and offers suggestions and directions to vegan restaurants if you've got a "treehugger" on your hands. The free app was built by Interpublic Group of Cos. digital agency R/GA.

PepsiCo executives did not immediately return requests for comment.
Amp isn't the first brand to take this approach. Unilever's Axe deodorant has long targeted a similar male demographic by extolling its ability to attract women. Earlier this year the brand launched the "Dirty Night Determinator" mobile game, which helped users calculate how dirty their night was going to get by asking about a woman's age, moral standing, body type and occupation. While that game created significantly less, if any, backlash, reaction to the Amp app has been swift and damning.

The two dozen stereotypes and the fact that the app encourages users to brag about their conquests have raised the ire of consumers and blogs. Jezebel lambasted "bro culture" and Mashable posted a piece with the headline "Alienate your female customers? Pepsi has an app for that." But the discussion didn't appear to have really gained steam until Amp posted an apology to its Twitter feed, @Ampwhatsnext, with the tag #pepsifail. Since the tag was posted, consumers have voiced their displeasure with the app, and several blogs, including Huffington Post and Mashable, have posted the tag.
Spreading mea culpa
Further spreading the news, sibling brands @Pepsi and @Mtn_dew, as well as the corporate Twitter feed @pepsico, re-tweeted the apology. The Amp brand Twitter feed has only 1,000 followers, compared to about 15,000 for Pepsi, almost 18,000 for Mtn Dew and nearly 5,000 for PepsiCo.

The tag, along with the re-tweets, seem to unnecessarily associate Pepsi and Mtn Dew, two of the company's largest brands, with a heated and potentially damaging debate. Ostensibly, those who have a problem with the app are not Amp's core customers, after all. But now that Pepsi, Mtn Dew and Pepsi corporate have attached themselves to the debacle, the problem appears much larger, as those brands and, indeed, the entire company may appear insensitive to women. For example, many of the tweets commenting on the app have bypassed the Amp brand entirely and are instead assigning the apology, the app and their distaste to Pepsi.

The other shortcoming in the PR strategy is that despite making an apology, Pepsi hasn't yet given any word on whether it will pull the app, making the mea culpa look a bit hollow.

Still, introducing a tag that associates your brand with a fail is a bold move and one that ensures the brand is a part of the conversation. PepsiCo has quickly addressed the issue, before it got too far out of hand. And it has ensured the conversation is easy to monitor, which will certainly make it easier to plot its next moves.