Big Brand Panel for Social-Loco Conference

I had the honor of moderating the Big Brand Panel at Social-Loco Conference in San Francisco June 18, 2012 featuring: Michael Hammer, Director of Venture Capital Strategy for PepsiCo; Jon Paluga, Vice President Marketing for Armored AutoGroup; Fred Neil, Vice President of CRM for The Home Depot. The panel covered a range of topics from: SoLoMo and regional brand engagements that sit under big brand programs; Big Brand Hackathons; Acquisitions for big brands of tech companies and more. Transcript via transcribeme.com follows the video:

Transcript:

Thank you for joining us for the Big Brand Panel. We’ll get right in and actually have everyone introduce themselves, starting from Michael over to our right. Go ahead and introduce yourself and your role at PepsiCo.

Michael Hammer: Sure. My name is Michael Hammer – I’m actually the Director of Venture Capital Strategy at PepsiCo and what that means is I sit inside the venture capital fund and advise the fund on what PepsiCo’s looking for from a long strategy – whether it’s ingredient technologies, emerging brands or emerging media that we should participate in. I get a good chance to see a lot of early stuff and decide not only whether it’s an investable proposition, or whether or not it’s a potential for partnership for PepsiCo to play with.

Mark Silva: Thanks. John?

John Palugan: I’m John Palugan, the VP Marketing for the Armor All STP brands. The brands were owned by Clorox for over 10 years, and about a year and a half ago were purchased by a private equity investor. I’m responsible for ramping up growth dramatically for these brands and we’ve always been big proponents of using digital for a number of years, and we’re just starting to really scratch the surface in terms of the social, local component of it. STP I think is a natural because of its connection to racing and NASCAR, car shows and things like that, so we’re actively pushing for opportunities to grow in that space.

Mark Silva: Great. And Fred, could you give us a little bit more background on you?

Fred Neil: Sure. My name is Fred Neil, I’m Vice President of CRM for Home Depot. I’m responsible for all customer facing communications and all the one-on-one activities across channels that we do.

Mark Silva: Thanks for being here guys. And Fred, tell us a little bit about a program that had a social-local component to it – mobile perhaps, so we get the whole syllabus spectrum and reaching the popular culture. As we know when things become part of popular culture it can become a Super Bowl thing, it’s kind of a happening moment for brands. Any thoughts on that for Home Depot?

Fred Neil: Yeah, I’ll just keep it more germane to what’s been going on over the course of the last couple of days and our participation in the Big Brand Hack-a-thon. And one of the projects we did on Ryobi Nation. And this is a fairly new community that we’ve created – and at the Home Depot it’s really about awakening the doer in all of us. And Ryobi nation is about customers who have purchased Ryobi product, and they’re very

passionate about the work that they do, and how they can share across the community the projects that they’ve done, get people to vote on the projects, and really get a lot more from an engagement perspective. That’s one real quick.

Two is on the Garden Club that Mark had mentioned earlier, and that’s really where you think about both social and local because what happens here in San Francisco, from a growing perspective relative to Atlanta and Chicago, is that the weather’s different. People want to engage with people that understand what’s going on right around their local community. So those are two things that we’ve done, and it’s very important.

Mark Silva: So you’re saying that the locality couldn’t be more relevant to your community with the folks that come into the Home Depot.

Fred Neil: Absolutely.

Mark Silva: Makes sense. If you were to plant something here in San Francisco in the fog belt, it wouldn’t be the same as what I would do down on the peninsula. So you really have hyper-climates and you have some hyper-relevance from locality. And you were talking about the NASCAR fans, does that have a locality to it as well – the automotive enthusiast?

John Palugan: Absolutely. Unlike some of the other consumer products you have at Clorox, Armor All and STP are related to hobbies. Cars are a passion or a hobby for people, so there are a number of events where people get together and share that passion. Car shows is certainly one of them. NASCAR and drag races and all kinds of other races are another. So being able to leverage Facebook and Twitter – particularly over mobile devices at these events, is a great way for fans to kind of share that experience beyond just the people they came with – they can share with a broader group of people.

Mark Silva: Cool. And speaking of fans and passion points, you were just at the US Open. How did you survive 6 hours without your mobile phone?

Michael Hammer: It was frightening – very, very frightening. It was actually great because the idea of this social atmosphere that was actually happening at the US Open but it was happening inside. The minute you walked out of the gate, people just immediately got onto their phones and started Tweeting and calling and everything else. You certainly wanted to be a part of that community.

Mark Silva: From the personal to the more professional on the PepsiCo side – you guys have massive, massive programs like the X Factor and others – any ability to talk about some social-local activations within the portfolio?

Michael Hammer: Yeah. There’s a lot of different things that we do – and you’re absolutely right – from Gatorade, to Mountain Dew, to Pepsi, to Doritos. Those kinds of things. We’ve integrated social-local into so much of what we do. One of the things that I can talk about is that with us and Gatorade it’s all about a kind of map-my-fitness look. If I’m travelling, or I want to try out a new ride then I can go out and find out the social aspect of “Hey, share with me a new ride, help me know where I can go”, or I can talk to my friends about what my performance was on that.

On the other side of it, the Mountain Dew – let’s talk about green label art. Mountain Dew has its own label and people can suggest for the brand what great bands that they’ve seen locally. People can start to push those bands and create a ground swell of popularity for a local band, just on the social atmosphere of what they’ve seen in their local community.

Mark Silva: I heard Shiv (the head of bottling digital) and Frank Cooper from PepsiCo talking recently about how some of these interactions you may have thought of as an advertising program, but you’re actually interested in the back end analytics. So on X Factor, when people provide or text a code to unlock more X Factor platform content that’s unique and original to them, you guys were actually seeing where they were checking in and what they were doing. You were finding out if it is a strong market. Why did everything die in Atlanta for some reason? What’s going on there?

Michael Hammer: Well, not going to talk about that!

Mark Silva: Fair enough.

Michael Hammer: But at the same time, you’re absolutely right. We actually use that data from a real time perspective to discover the conversations and what’s happening within a specific retail location. We need to make sure that when we are getting ready to do an event, or getting ready to follow one of our promotional activities, that we are fully loaded within the market and making sure that we have enough product on the floor or on the shelf.

We also use that data to discover how fast that product may be going, or at least how the sentiment of the consumer in that market may be changing. When we have the Dew Games here in August in San Francisco, are we able to take advantage of the social experience, and the digital experience that everybody in the market is actually participating in, and are we able to then turn that into incremental sales from just making sure that we are turning the town green, so to speak.

Mark Silva: I’m going to actually reach a little bit back into your career, all the way back to Dell, not so long ago, when you were head of CRM. You guys had – like Pepsi did – an amazing war room and you guys were using that to actually change business, weren’t you?

Michael Hammer: Yes, very much so.

Mark Silva: I’m not asking you to give me any specifics, but could you just describe the program a little bit?

Fred Neil: From a social perspective, when you think about what’s going on locally, obviously Dell is a national brand with many different categories. What’s going on out in the market place is that they had a pretty robust listening lab where they’re keeping a good pulse on what’s going on. But then how do you drive activation around that and create community around the globe, around particular product categories, how do you then activate that back through social CRM and through a lot of text mining of the data, bring that back to customer database…then be able to activate across all of your marketing campaigns and messaging platforms?

Mark Silva: You guys were actually able to get a visibility to incremental sales as a benefit of actually having been deploying very locally and using social platforms.

Fred Neil: Absolutely. That came from Michael on down – that was something that he’s very passionate about, and he’s very active in social, and very active across all types of communities and he’s brought that across the entire organization.

Mark Silva: That’s actually a good place to take the conversation. When you think about how things get funded, – and with the joke I was making before – sometimes these emerging platforms sit just beneath the contempt of every great strategist or CMO or c-suite. You’ve got someone who’s actually really dialed in there and driving that. How do things get funded in your culture – does it bubble up or is it top down?

Fred Neil: It’s both – I think there’s convergence where you have good ideas that come from the bottom up, and they’re always vetted and approved from the top down. You look at capital allocation and what those big ideas are and make that in line with the strategic road map of the organization. You make sure that it’s on point with where you’re trying to take the brand.

Mark Silva: And at the same time you’re participating in big brand hack-a-thons where you’ve got CMO’s and brand level people participating as well.

Fred Neil: Like you said earlier, for us, this is the first time we’ve done this, and it’s really focusing on the art of the possible. If you look at what we do inside of a $70 billion dollar organization – there’s a lot of bureaucracy and a lot of structure to be as successful as we are as a brand, and this gives us an opportunity to work with people outside of our 4 walls who are unconstrained in their way of thinking, and are being very creative in bringing new, different ideas, and being able to look at things you could potentially commercialize. And at the same time, we have a value back to them, because what we’re doing is teaching them something from a marketing perspective of the importance of brand and how they need to think about it, and what they’re doing from a hacking perspective.

It was interesting, the runner-up for the contest that we did, he talked about something new for him. He had to think about color palettes, he had to think about logos, some of the things that you have to do to be on point with brands because there are brand standards that you have to work with. That gave him a different way of thinking about this, but also for us it pushed us and gave us a different perspective of how we need to be thinking differently and more broadly, and bring more people into our eco-system, and doing a lot more out here in the valley in leveraging the talent that’s here.

Mark Silva: That’s the entire Geekosystem here…

Fred Neil: Absolutely.

Mark Silva: What we’ve got here is, in some cases, a failure to communicate. Because as we saw, coders talk in code, and guess what, marketers also have their own code. And really what we’re trying to do in these kinds of conversations is to help bridge that gap so that the money, talent and ideas starts flowing in both directions. You were in a big corporate holding company. How did things get funded then versus now? If any of

these guys say “Hey, I’ve got an idea that I’d like to bring to you”, is it different now that it’s a private equity versus the big Clorox infrastructure?

John Palugan: Yes and no – I think we’ve got a set marketing budget for the year, and some of that is going to go to set programs, but we always leave a little bit aside to invest in new, emerging technologies. For people targeting brands, one thing to remember is that there are a lot of different people out there trying to get in the door. I get probably 5 to 10 messages a day about race sponsorships and things like that. You need to think about ways to find an in. One possible way is through agencies – if something was recommended by my PR firm as a great way to engage people at the NASCAR race track, as a way to engage fans, I’m a lot more likely to listen to that than if I get just an e-mail.

I think the other piece is to start small. The book everyone is reading now is The Lean Startup. You start out with a small program where you can test and learn, and get a lot of information in a short amount of time without a huge amount of resources and investment. It is a much better way to get your foot in the door, than to propose some big program that takes a lot of time and resources.

If the program works, the extra money is going to flow very quickly because everyone’s trying to get growth and drive more sales, but there’s a proving ground that you need first.

Mark Silva: That’s cool. The Hack-a-thon provided us a very short time and lower investment way of doing exactly that kind of experimentation. And would that kind of experimentation fly at big PepsiCo or are you kind of a representation of a commitment to doing things business-not-as-usual?

Michael Hammer: We have. I would actually agree with John. It’s about trying something you’ve never tried before. Most of our brand managers are holding back. It’s almost play money to a certain extent to be able to say “hey, there’s something that I’d like to try, that is still relevant to the brand, still fits my core target audience, but at the same time I’ve got to stand out, I’ve got to be disruptive because it can’t be the same old media, the same old social interaction. It’s got to be a way that makes somebody step up and change their behavior.

So most of what we do is looking for something that says “change that behavior to get me to buy one more can of Mountain Dew, or Pepsi”, or “change that behavior to get my friend to be able to come into the franchise because of an event, or a sponsorship” or those kinds of things.

So it’s a lot of small things that start to bubble-up from the bottom, and our brand managers are the ones who are actually trying to do that. It’s for a couple of reasons: One – in their minds, they’ll get some airtime with certain senior-leaders because they’ve done something that’s never been done before, and you get the momentum to do something bigger the next year, and the next year.

Mark Silva: All right, let’s talk about the bigger events that you guys actually have then. I’m going to get to you in a minute with Red Beacon. Why don’t we talk about how something like a Yummly happens? It’s such a creative, innovative way, – I’m sure there’s something cooked up deep within the halls of Unilever and PepsiCo as well with the nutrition push -it wasn’t obvious that they would buy versus build or invest versus build. How does something like this take hold and get momentum?

Michael Hammer: It’s probably the combination of two needs. One is you’ve got so many recipes that you have, – and I’m talking on behalf of Unilever because they’re a strategic investor in Physic Ventures, the fund that we invest in as well – they’ve got a ton of recipes for sauces and spreads, and so many foods in their portfolio, but at the same time you’ve got consumers who are having a challenge in finding the right kinds of recipes. They’re hearing about it from friends from some social aspect, or they’re going to a restaurant and saying “Hah, could I do that at home?” But they have certain limitations. Their limitations may be gluten free, or salt, or they like a spicier flavor profile.

You’ve got a company over here who’s got a lot of things to offer – especially from a spice and sauce standpoint – and you’ve got a technology over here in Yumly who’s got a technology that’s great. With simple sliders you can basically say “No, I like spicy, and I like creamy” and these kinds of things. You marry the two and then build on this thesis that the fund created, which was that for every meal you have to plan it, you have to procure it, you have to prepare it and then you have to participate. So the planning is that I’m on my way home and I need to pick up the stuff to make fajitas tonight.

Mark Silva: Let me stop you there – so first of all it fit with your investment thesis…it fit with the business objective, which a lot of times people lose sight of…so how did the deal come together?

Michael Hammer: The deal came together because if you…as a big brand, if you push it too hard, you’re probably going to lose credibility. So those who are only Hellman’s users might go there, but anybody else who just wants to be able to use…

Mark Silva: It’s a little bit more ham-fisted if it’s a pure-brand approach. Also, there should be recognition by agencies like ours, and even brands that you know, we’re not necessarily product people…we’re product people for the products that we have, but I’m talking about hard core development, production of assets and you know, things that people like – products…software, applications etc…partnering does feel like a better way to go. Let me throw that over to Fred then…so how did something like the Red Beacon come to fruition?

Fred Neil: So, for those who aren’t familiar with Red Beacon, it’s a reasonably new company based out here in the valley, and all the things you’re talking about from lean startup, from great talent, great IP…it really fit in with what we’re trying to do. And within the Home Depot we have two types of customers – we have our pros, and we have our consumers. And within the consumer segment, we think about it from a do-it-yourself, and a do-it-for-me. Within the pro segment, they’re always looking for more opportunities for more business…

Mark Silva: Fred, how did it happen? Break it down for us

Fred Neil: I’ll break it down for you. The…what we look at is we have an opportunity…we have consumers that are looking for business, pros that are looking…consumers who are looking to get a job done, pros looking for business. We identified a company out here in the valley – it was a great fit for what we’re trying to do strategically, got together and got the deal done.

Mark Silva: My point is though that’s just not an obvious path for a lot of companies. It must have taken someone who’s either focused on investment, corp dev, maybe a CEO who’s visionary like you were talking about earlier.

Fred Neil: It’s all through…the mix, really its corp dev fitting up to the business strategy. It’s getting our pros aligned with our consumers and helping them both…it’s meeting a latent need that they both have – more business for the pros, getting a job done for the consumer.

Mark Silva: In 30 seconds or less… two tips for the folks here in terms of how to pitch business at your shop, at your company, and I already heard from you Fred that it’s aligning with our business objectives and helping us sell more stuff, is a pretty good mantra.

John Palugan: Yeah, I would say one thing to always remember it’s not just about brand awareness. If you’re targeting a brand like Armor All, STP or Pepsi, people have heard of those brands, they know what the brand is. You need to something that’s going to encourage a behavior change – what’s going to get them to buy a product, what’s going to get them to learn about the product, what’s going to get them to recommend that product to other people. That’s really what brands are looking for – not just getting their logo out there.

Fred Neil: Thanks. Or I’d say to add on top of that…he’s exactly right…or to be able to get them to participate in the place where the brand is – to be a part of that consumer engagement. We don’t want an event to be all about just “the Pepsi event” – we want it to be an enjoyable place where people will talk about it “and oh by the way…” Pepsi happens to be there…whether it’s Super Bowl, or X Factor, or NASCAR race or something like that. That way, they assign and connect so much more with an enjoyable outcome in the brand, and now all of a sudden that brand becomes their ambassador to other enjoyable things.

Mark Silva: And you guys have been great ambassadors for brands here. Thank you very much. Give a hand for our panelists please.