Cassies 2008 Cases. Brand/Case: SpongeTowels Paper Towels (E) Winner: Packaged Goods Other Silver

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1 Cassies 2008 Cases Brand/Case: SpongeTowels Paper Towels (E) Winner: Packaged Goods Other Silver Client Credits: Kruger Products (formerly Scott Paper) Division VP, Consumer Marketing: Nancy Marcus Category Director, Paper Towels: Stephen Blythe Marketing Manager: Joann Fitzgerald/Fiona O Brien Director, Marketing Research: Alex Amon Agency Credits: john st. Account Director: Heather Crawley Account Managers: Susan Simpson / Sandra Moretti Creative Directors: Stephen Jurisic / Angus Tucker Art Directors: Stuart Campbell / Rob Trickey Copywriters: Mia Thomsett / Neil Shapiro Crossover Notes: All winning cases contain lessons that cross over from one case to another. David Rutherford has been identifying these as Crossover Notes since Cassies The full set for Cassies 2008 can be downloaded from the Case Library section at Crossover Note 1. What a Brand Stands For. Crossover Note 2. Brand Truths. Crossover Note 7. Fighting for the Same High Ground. Crossover Note 9. Turnarounds. Crossover Note 11. The Eureka Insight. Crossover Note 16. When a campaign stumbles. Crossover Note 20. Emotional versus Rational. To see creative, go to the Case Library Index and click on the additional links beside the case.

2 2 EXECUTIVE SUMMARY Business Results Period (Consecutive Months): 52 weeks ending Dec 22, 2007 Start of Advertising/Communication Effort: September 2006 Base Period for Comparison: 52 weeks ending Dec 24, 2007 a) Introduction: Despite consumer research showing that consumers preferred using SpongeTowels on a number of functional measures, Bounty the market leader continued to dominate consumer perceptions for quality and efficacy year after year. 1 Following completion of the transition from the ScotTowels name (discussed later) SpongeTowels had disappointing market share because of aggressive category activity. It was evident that SpongeTowels would have to target Bounty s category superiority once and for all. This would not be easy given the brand equity, support and resources that Bounty had at its disposal. The SpongeTowels team was charged with finding a way to break through Bounty s hold on quality/efficacy perceptions and the #1 share. Crossover Note 7. b) The Essential Challenge: SpongeTowels had to find a unique and ownable position in the paper towel category that would make the brand s consumer perception as strong as its actual product performance, and hence drive volume and share. c) Summary of Business Results (English Canada): This case will demonstrate how SpongeTowels was able to turn consumer insight and learning into a unique, ownable and entertaining campaign. It shows how excellent branding and communication can deliver results even in the face of a titan brand. The advertising drove volume and dollar sales, outpacing the category during the 12 month Business Results Period. 2 Crossover Note 9. The campaign also delivered significant improvements in product quality perceptions, strongly differentiating SpongeTowels from Bounty. SITUATION ANALYSIS a) Overall Assessment In Spring 2006, Kruger completed the transition of ScotTowels to SpongeTowels. This was because the licence from Kimberly-Clark to use the ScotTowels name in Canada would expire in June Also, Kruger wanted to minimize residual ScotTowel awareness and equity, because they expected Kimberly-Clark to re-launch ScotTowels under the K-C name in Various Authors, Paper Towel Consumer Use Research, 2003, 2004, 2005, ACNielsen Markettrack, Sales Tonnage Equiv Case, English Canada, 52 wks ending Dec. 22, 2007

3 3 By the end of the transition, the branded paper towel category was primarily made up of Bounty and SpongeTowels. The strength of the Bounty brand was indisputable. Repeated unbranded consumer use testing by Kruger between 2003 and 2006 showed that consumers preferred SpongeTowels Ultra on a number of key measures, including overall performance. However, when branded, Bounty always outperformed SpongeTowels on key product attributes. Bounty also dominated top of mind awareness with 55%, versus 19% for SpongeTowels. Claimed usage also netted out in Bounty s favour with 61% of consumers claiming to have used Bounty in the past 6 months and only 47% saying the same for SpongeTowels. 3 This dominance was the result of a few factors. Bounty had always had product efficacy as a basis of their advertising and was perceived to be the leader for innovation. Side-byside TV demonstrations were par for the course and strength, thickness and absorbency had been supported year after year, with constant reinforcement of technical superiority delivered through new product variants offering simple product changes. A consistent commitment to product superiority communicated via speed of absorbency became the calling card of the brand with the Quicker, Picker, Upper tagline becoming an oftmentioned component of the brand s communication. Crossover Note 2. Finally, Bounty had overwhelming share of voice. It had been very heavily supported in the U.S. even prior to launch in Canada in the 1990s, leading to significant awareness here before the product was available. Additionally, its North American marketing strategy made the border irrelevant, so any US spillover supported the Canadian message. It is estimated that the $75MM - $85MM US ad budget translated into $1.5MM - $2MM in value in the Canadian market. When added to a healthy 52-week media presence originating in Canada, Bounty would have a 60-65% share of voice. 4 3 Burak Jacobson, Paper Towel Tracking Research English Canada, Spring Nielsen Company USA, Paper Towel Category Media Spending, 2005, 2006

4 4 Just prior to the new SpongeTowels campaign in English Canada, Bounty had captured 23.8% share of volume to SpongeTowels 12.7% share. 5 This was particularly concerning given that only a few years earlier SpongeTowels (then ScotTowels) had been the volume share leader, only to have lost a tremendous amount of volume due to some significant distribution losses and extremely aggressive pricing by Bounty. Despite the fact that this category seemed dominated by a strong, branded premium competitor, price was also a key driver. This was evidenced by Private Label s 48% share of volume. 6 While product attributes were commented on in research and in evaluating brands, it seemed that for many consumers price trumped all else. This was supported by in- store research in March It showed that Private Label was much better at converting sales at point of purchase than any of the branded competitors. 7 SpongeTowels (as ScotTowels) had historically tried to differentiate itself by being the real life problem solver. Where Bounty was the clinical, scientific, demonstration brand, we were the take on real life messes brand using lighter, more entertaining ways to communicate efficacy. Consumers genuinely liked the brand and its messaging, but this was not on par with Bounty when it came to perceptions of quality. Crossover Notes 1 and 16. Further, getting credit for our advertising was half the battle. Because of Bounty s dominance, and the lack of differentiation in the benefits being communicated, consumers would too often attribute our messages to Bounty. The time was ripe, in this period after the name transition, to revisit our creative strategy and take a more aggressive tack, while lightening up a bland and boring category. 5 ACNielsen Markettrack, Sales Tonnage Equiv Case, English Canada, 52 wks ending December 24, ACNielsen Markettrack, Sales Tonnage Equiv Case, English Canada, 52 wks ending December 24, Envirosell, Bathroom Tissue and Paper Towel Shopping Behaviour Highlights, March 2006

5 5 b) Resulting Business Objectives Drive volume and share through more aggressive, differentiated communication targeted at Bounty. Reinforce the new brand name through a demonstration of its uniqueness relative to the rest of the category. (This was also important given the expected return of the Scott Paper Towel brand at the hands of Kimberly-Clark.) c) Budget Range/Share of Voice Spending in the category was approximately $4.5MM in English Canada in 2006, with Bounty contributing 54% of spending and SpongeTowels delivering the remaining 46%. This would change in 2007, making the task at hand more difficult. Not only did Bounty increase their Canadian spending by close to 20%, but the return of Scott Paper Towels amplified the communication challenge. As indicated earlier, U.S. spill also plays a significant role in Bounty share of voice with the estimated impact being approximately $2MM annually. When the effect of U.S. spill is taken into account in 2007, this reduced the impact of the SpongeTowels brand spend. STRATEGY & INSIGHT a) Analysis and Insight Back in 2004, consumer research helped us learn that a significant part of our target (women 25-54) was not necessarily motivated by the Bounty story. They were much too busy enjoying their lives to be too concerned with whether a soaking wet paper towel could hold eight billiard balls or stand up long enough to scrub a crusty pan.

6 6 Those weren t real scenarios, and they simply wanted a product that they could trust to get the job done so they could get back to the things they enjoyed. Since Bounty was all but defining the category on functional benefits, we felt there was an opportunity to own the hearts of women by entertaining them and showing them that we re more connected to their lives. Crossover Note 20. But we also had to own their minds by demonstrating our product quality and efficacy in a more aggressive way. The new name of the brand seemed a good place to start. The name SpongeTowels was in part born from a little-communicated descriptor for ScotTowels: sponge pocket embossing. Crossover Note 11. As the most important attribute in the category, absorbency was an opportunity for focus. Additionally, we knew this was an area of strength for the brand in the unbranded research referred to earlier SpongeTowels had been preferred over Bounty by 46% of respondents to 30%. 8 The challenge was to bring absorbency to life in a memorable and distinctive way, and elevate perceptions of the brand. It was in answer to this challenge that the Sponge Pockets were born. b) Business Strategy Trial was the path to increased volume and loyalty. We also knew that while Bounty had been pricing more aggressively, they still tended to be at a day-to-day premium to SpongeTowels. So, if we could break through the ad clutter and bring Bounty s superiority into question, we believed we would be in an excellent position to increase conversion to sales at store level. c) Communication Strategy The short-hand was Product Superiority through Sponge Pockets (though we could not make overt product superiority claims). So, we brought the sponge pockets to life literally creating an army whose only purpose was to suck up spills and clean up messes. We also used the distinctiveness of the embossing pattern (and hence the way the product functioned) to elevate the competitiveness of our message, because With thousands of super absorbent sponge pockets in every pack, nothing absorbs like it. 8 Research Dimensions, Paper Towel Consumer Use Test, March 2005

7 7 CREATIVE EXECUTION a) Television The campaign launched in September 2006 with a 30 second spot called Jug. It introduced the Sponge Pockets and featured a little girl struggling with a full pitcher of orange juice. Alas, the pitcher crashes to the floor, but the Sponge Pockets pounce on the mess and save the day. The spot resolves by connecting the Sponge Pocket characters with the embossing pattern and hence the performance of the product. When planning for 2007 we raised the bar. Not only did we want to continue to build equity in the Sponge Pockets and their performance story, we also saw an opportunity to be more aggressive. We would more strongly address the Bounty threat, and defend against the impending return of Scott Paper Towels. To that end, we produced four new 15 second commercials to air in rotation with Jug. Water Cooler and Tub launched at the start of the year with simple, entertaining demonstrations of SpongeTowels absorbency. Water Cooler featured a single Sponge Pocket emptying a water cooler in one gulp. Tub had a different Sponge Pocket trying to take a bath but having difficulty filling the tub because he absorbed the water as quickly as it came in. Grape debuted in the fall and demonstrated absorbency by showing a Sponge Pocket turning a grape into a raisin in the palm of his hand. Also in the fall Water Gun featured a little boy stealthily sneaking up on a Sponge Pocket to douse him with water, only to be find that the SpongePocket absorbed the water as quickly as he could spray it. All four 15 second spots ended with the same animated sequence as Jug, connecting the Sponge Pockets with the embossing pattern and tying the functional benefit to the product. They also closed with a more aggressive tagline, Nothing Absorbs Like It, which connected the absorbency of the SpongeTowels product with the uniqueness of the embossing pattern, thereby creating a much more competitive efficacy message.

8 8 Water Cooler: 15 Tub: 15 Grape: 15 Water Gun: 15 b) Online/Promotion/In-store Another significant part of the 2007 campaign was an online promotion focused on the Sponge Pocket characters; designed to increase awareness of them and their association with absorbency and product performance. The Spot the Sponge Pocket promotion invited consumers to collect Sponge Pockets running rampant online. It involved a state-of-the-art micro site incorporating streaming video to bring the characters to life. Sponge Pockets could also be found and collected in other locations in cyberspace including Facebook, MySpace, SpongeTowels.ca, and our online display advertising.

9 9 In addition to the online display advertising support, we used media partnerships negotiated via public relations efforts, blasts to the existing Kruger database, and in-store advertising. Each time participants collected three Sponge Pockets in a virtual jar, they got an entry into a contest with a grand prize of $100,000 and other prizes. Microsite Online Ads In-Store

10 10 MEDIA EXECUTION Based on a limited budget, television we used exclusively until October 2007, when we launched the Spot the Sponge Pocket promotion. Television was critical in bringing the characters to life. Planning 15 second creative in conjunction with the existing 30 second ad enabled us to increase GRPs and frequency. In addition, by pulsing conventional and specialty weight, we were able to extend our effort and deliver a 16 consecutive week campaign in the spring. In the second half of the year, we moved to 15 second creative exclusively, further improving our efficiencies and enabling us to increase GRP levels by 23% during September through December. The Spot the Sponge Pockets promotion was supported with in-store cart handle advertising, online display and media partnership activity. Additionally, we sent out e- blasts to the Kruger database of 170,000. All in, the program delivered 40 million brand impressions and 176,000 unique visitors to the micro site, and they spent an average of 4 minutes interacting with the brand. BUSINESS RESULTS To be deemed a success, the advertising would need to positively impact the following: 1. Sales and Share 2. Product Quality Perceptions versus Bounty 3. Brand Name Awareness and Differentiation 1. Sales and Share During 2007, SpongeTowels volumes were +17% versus the same period the prior year while the category was flat. 9 9 ACNielsen Markettrack, Sales Tonnage Equiv Case, English Canada, 52 wks ending December 24, 2006 and December 22, 2007

11 11 This growth also delivered a 13% increase in dollar volume, the equivalent of $6.5MM in incremental sales. As previously indicated, the paper towel category is driven to a tremendous degree by price. Given the intense competitive activity over the course of 2007, driven in large part by the return of Scott Paper Towels and Bounty s continued pricing activity, this 13% increase is considered a great success. Especially when put in the context of only 4% dollar volume growth for the category as a whole Product Quality Perceptions versus Bounty Creative testing indicated that 89% of the respondents that were exposed to Jug said that it gave them a positive opinion of the brand and 80% said that their opinion of the brand improved after watching the spot. Overall, this research found that the advertising communicated that the product was a high quality, highly absorbent towel that was competitive with Bounty. 11 Research also indicated that the 15 second spots all delivered exceptionally well on product performance with unaided reference to superior absorbency coming from over 90% of respondents for all four spots. 12 Additionally, national tracking research demonstrated that SpongeTowels made significant progress in improving product quality perceptions overall and relative to Bounty. While SpongeTowels increased the average performance rating across the four key attributes by 15% versus 2005, the brand s ratings relative to Bounty improved dramatically, reducing the gap in perceived product quality from 1.2 pts to 0.6 pts ACNielsen Markettrack, Dollar Sales and Share, English Canada, 52 wks ending December 24, 2006 and December 22, Camelford Graham Research Group, SpongeTowels Adlab, February The ideas research group, SpongeTowels TV Ad Research, April Burak Jacobson, Paper Towel Tracking Research English Canada, December 2005, 2007

12 12 3. Brand Name Awareness and Differentiation Bearing in mind how hard it had been for SpongeTowels to get credit for its advertising up against the Bounty juggernaut, success in branded break-through was tantamount. Creative testing of Jug showed that the spot delivered ratings that were significantly above norms on measures relating to emotional response and uniqueness/brand impact. 14 Additionally, research indicated that the 15 second spots delivered above-norm ratings on statements used to measure engagement and emotional connection of advertising. 14 Camelford Graham Research Group, SpongeTowels Adlab, February 2006

13 13 Tracking showed that Prompted Ad Recall and Brand Link improved over previous campaigns, going from 55% to 62% and 30% to 35% respectively. The brand s association with the Sponge Pockets almost doubled, going from 25% to 48%, demonstrating our success at taking ownership of this important point of difference. Clearly, the impact of the uniqueness and emotional resonance of the advertising was contributing to strong gains in branding and differentiation. 15 Finally, household penetration and share of requirements improved by almost 2 pts. The penetration growth is particularly impressive given that it declined for the category by 1.3 points over the same period. Improving share of requirements, despite the re-entry of Scott Paper Towels, is considered a major coup for the brand Burak Jacobson, Paper Towel Tracking Research English Canada, December 2005, December ACNielsen HomeScan Latest 52 weeks to January 6, 2007, January 5, 2008.

14 14 CAUSE & EFFECT BETWEEN ADVERTISING AND RESULTS As previously indicated, the SpongeTowels brand volume and dollar growth outpaced that of the category during this campaign, despite the intense competition from Bounty and Scott Paper Towels. Further, sales data indicates that while category volume sold at regular price during the period was down by 3%, SpongeTowels baseline sales grew by 1%, indicating solid brand health. Additionally, creative research showed that the advertising delivered above-norm purchase intent with 76% of those exposed to the ads saying that they would definitely or probably buy SpongeTowels the next time they bought paper towel. 17 All of this, combined with the improvement in advertising measures, suggests a definite correlation between advertising and sales. Even though Bounty substantially increased spending and K-C s Scott Towels came on the scene, we were able to demonstrate an improvement in brand awareness and distinctiveness, quality perceptions and hence sales, while the category remained flat overall. All in all, this case demonstrates that entertaining, breakthrough advertising can make an impact in even the most commoditized of categories. It also illustrates that you can communicate quality, drive sales and entertain no side-by-side demonstrations and technical superiority claims required. Most importantly, it shows that a brand that appears disadvantaged versus the competition in almost every respect can take a powerful product-linked story and use it to change long standing perceptions. 17 Camelford Graham Research Group, SpongeTowels Adlab, February 2006