But there are new inputs as well: data and technology, media vehicles that did not exist previously and emerging retail channels. And then there's the new toolset: insights, targeting and real-time decisioning. In short, all is not lost, but marketers must not shrink from data or allow its uses to become abstracted.
"Stop hiding behind the veil of 'data,'" Elsner exhorted colleagues. "It's consumers. You need to understand them behaviorally. You have to understand where they go, what they purchase, how they shop. Data strategy is the future of everything we're banking on. We don't call data 'data.' We call data 'people.'"
Here's a rundown of how Kraft approaches data in its marketing mix, including a few case studies.
Holding the data. Another thing about millennials? "They can't cook," Elsner said (jokingly), and that creates a content opportunity for Kraft. The company has more than 100 million monthly unique visits to its properties, including Kraftrecipes.com, which it says is the No. 7 most trafficked recipe site globally.
From this audience it collects more than 22,000 individual attributes, including flavor and product proclivities. And Kraft gathers data as well from the billions of ad impressions it serves. These data points are used to build custom segments that inform its campaigns.
Elsner said, "We are building a self-sufficient ecosystem where we use our data to help us develop amazing content, and putting it out there for consumers to engage it, and when they do, we capture data to make us smarter to put out better content."
Programmatic. Once the content strategy is in place, those custom segments are used to push it out to targeted audiences. Elsner says of programmatic, "It's a tactic. It's not a strategy." But whoa, what a tactic.
"The way we're defining it is all about building a data-management platform that informs the targets we build. We don't buy audience targets. We build customized audience targets. We don't let someone purchase it for us. We overlay purchase data so we can makes rule we're delivering to the consumer. We put real-time analytics behind it so we can continue to optimize the machine. For us this is about addressability. This drives effectiveness, not just efficiencies."
Praise for agencies. In some circles, agencies are treated as the official piñata of the advertising business. Not at Kraft, where Starcom is an essential partner.
"We hear a lot about the media agencies of the world going away. Our experience is to the contrary. Our biggest strategic partner on this journey is Starcom. The brilliance of that agency has enabled us to break through with resources we just cannot get our hands on," Elsner said. (Read more on Kraft's agency approach and the Starcom relationship.) But the sourcing strategy is not only about agencies. Kraft works with 20 to 30 different startups, and Elsner says that will continue. "There's tremendous openness to collaborating – get out there and take advantage of the opportunity to help shape the future with partners."
Easter Bunny Cake. To drive sales around the Easter holiday, Kraft built a custom segment of consumers who (A) celebrate Easter and (B) had visited its properties in search of dessert recipes. It then leveraged that first-party data to push its classic Bunny Cake recipe to individuals in its database when they are off site. Using the method, the company boosted sales lift 23% for the four brands featured in the recipe (Jell-O, Cool Whip, Baker's, Jet-Puffed) during the month of April and enjoyed a 4x return on ad spend. "I love that Bunny Cake," Elsner said.
Gevalia. In January 2013, Kraft launched its coffee business for K-Cup brewers exclusively in digital. The reasoning was simple: The penetration of K-Cup brewers is only about 15 to 20% nationally, so TV ads would be 80 to 85% waste. "We identified the where and who on those consumers and pushed [ads] only to them." That business has reached $200 million in less than two years. But, Elsner said, "We are not walking away from TV." Elsner said Kraft is planning for a day when TV audiences can be optimized in the same way digital can – however long it takes. "We've built a platform to transcend evolution in the media landscape."
Philadelphia. Kraft uses its first-party data to target billions of dynamic, personalized ads to some fairly narrow segments. To illustrate its method, Elsner described how Kraft dealt with a decline in spending from loyal buyers of Philadelphia cream cheese. "If you're running a business and you're losing loyals, that's a big deal." The brand revamped its formula with five ingredients and new packaging. It then built customized segments around which it communicated with consumers. "In the old world we would have blasted out standard messaging." In the new world, a light user needs a different message than a lapsed loyal. Kraft overlaid purchase data with its media buy to decide which ad to serve. Buyers of savory foods saw a chive flavor, those with a sweet tooth saw strawberry. Kraft delivered those ads in the mornings, complemented by a broad-reach TV campaign. The result: double-digit increases in sales velocity, and increases in penetration.
Velveeta. The big consumption season for this product is the Super Bowl. Consumers put their signature recipes out and eat all day. When the big game rolled around, some consumers couldn't find the product on shelves, and an investigation helped Kraft realize the unthinkable had happened: "We had a distribution problem on Velveeta." "Cheesepocalypse" is how one consumer christened the crisis, picked up by Kraft's social listening teams. In rapid-response mode, Kraft created a tool to locate stores that did have the product in stock and seeded it in social media. News media picked up the story too. The result: a 9% increase in consumption over the previous year. Not bad for a supply-chain meltdown. "They could do that because they could see consumers screaming about it and they responded immediately."
Privacy. Elsner said only this: "Before anyone throws me a tweet about privacy I am talking about anonymized nontransactional data. You buy Nielsen. The difference is theirs is aggregated [and modeled]. I've got the real thing."
Culture shift. Kraft has just started its journey. "In a typical Kraft world, I wouldn't be talking about this for three years," said Elsner. "What I'm showing you is our total infrastructure. I'm showing you our proof points along the way. For eight months, all we've been doing is testing each element. It works, it's effective and it it's how we're reinventing marketing at Kraft."
Joanna O'Connell contributed.