Kit Kat Chunky Cookies and Cream: Kit Kat Chunga: Small Budget

Executive Summary Against the backdrop of a highly competitive and cluttered chocolate bar market, effectively launching Kit Kat Chunky Cookies and Cream with $500K seemed to be a significant challenge. A series of bold strategic decisions overcame this challenge; in an Australian FMCG first, Cookies and Cream was launched as a 100% digital campaign that aimed to build consumer connection over product news, leveraging synergy between media and creative in the social media environment. A consumer connection was undoubtedly achieved, driving huge shifts in brand tracking metrics, with sales exceeding target by 150%, delivering a rigorous campaign ROI of 6.2. The Challenge This is a case study that demonstrates the power of making brave yet well considered strategic decisions. This is a case study that demonstrates how creating even short moments of engagement and conversation can be incredibly powerful and persuasive, even when the conversation contains little persuasive product news. This is a case study that demonstrates media and message synergy in the digital space can generate huge impact with little spend. This is a story about the adventure that was the launch of a new Kit Kat Chunky variant, Cookies and Cream. Kit Kat Chunky finds itself stuck between a rock and hard place. The big eat nature of the product means its natural targeting is 12-24 y/o men, who love to eat big, ‘refuelling’ chocolate bars. However, Chunky’s equity is borne from its parent brand, Kit Kat, who has always appealed to an older audience looking for a simple, light, snackable eat. Chunky has always been trying to step out from behind its master brand to make this so-needed connection with a younger audience, without damaging either Chunky’s taste and quality heritage or Kit Kat’s equity. Put simply, for 12-24 y/o men, the Kit Kat Chunky brand is not as relevant or as loved as a number of other chocolate bar brands, brands that spend a significant amount of cash… Chunky shares a broad product truth that groups it together into a category segment labelled ‘refuel’, defined by characteristics such as ‘big eat’ & ‘satisfying’. Within the refuel segment, the major brands are Mars, Snickers, Boost, Picnic, Milo and Chunky. In 2007 the bars category spent approx. $7.3M in media, and in 2008, $3.6M, with the spend dominated by Chunky’s key competitors, Mars and Snickers.1

Meanwhile Kit Kat Chunky sales were in danger of contracting with the impending deletion of 3 SKU’s. We needed to make our $500K launch work hard to ensure these deletions did not lead to a loss in sales. However, because of the cluttered and noisy market, it was going to be challenging to gain any real traction. We were going to need to make some bold strategic choices from the get-go. The task was to launch a new Cookies and Cream variant of Chunky into the highly competitive refuel chocolate bars market. Clearly, we needed this variant to appeal to our 12-24y/o men, not just to ensure sales of the variant itself, but to

ensure that the campaign and variant had the positive halo effect on perceptions of Chunky with this critical audience. Incremental sales were the ultimate goal, but given the broader brand challenge, competitive environment and small budget, realistic targets were set at a profitable launch of Cookies and Cream that had a halo effect on brand perceptions. This meant $3M in sales in the 6months post launch, essentially $3M before the end of 2008. We needed to make the $500K budget work hard in the face of a big spending category, full of well loved brands. Conservative was not going to cut it; $500K in a typical ATL campaign wasn’t going to get the cut-through. Excitement, engagement and impact were the order of the strategy… The Solution The first bold, unusual decision we made was to let media strategy lead our engagement strategy. Given the limited dollars, the tight targeting and collective feeling that typical ATL was not going to work, this approach would enable us to make the most of our investment. Kit Kat Chunky had long used humour to help our target to ‘break the boredom’ (see image 1), and it was critical that we continued to build this core equity. This positioning was based upon the truth that young men often snack during downtime for entertainment, to alleviate boredom. We recognised that this thought had relevance to their social lives as well. Preserving their status at the heart of their peer group is central to their lives; helping them break their mates’ boredom – as well as their own – became the backbone of the media strategy. Image 1: Historical ‘Break the Boredom’ Kit Kat Chunky Creative

Digital technology had allowed our target to be better networked than ever, their social affairs now extensively conducted online and to extended peer groups. Digital seemed like a prime media opportunity to help our 12-24y/o men break the ‘collective boredom’. Furthermore, given category media spending behaviour, it was very likely that there would be relatively little competitive noise online at the time of launch (even just 6 months on, digital is now cluttered).

The second bold choice of our Cookies and Cream adventure was to go where no one at Nestle had ever gone before and recommend an exclusive investment into digital. At the time of planning (12 months in the making), no other FMCG company in Australia had attempted such a move into digital. This created an enormous challenge to both the Agencies and our brave Client who worked collaboratively to get a campaign with such a seismic shift away from convention through the various stakeholders and levels of approval which were required. Digital communication strategy typically spends media money driving people to a destination website, which can often be an effective strategy. However, with this target audience and the need to enter their online social arena, this typical online strategy seemed inefficient. Did we really need to get our audience to come to us? Surely it would be better to go to them? In fact, we realised that if we went to them then this would free up a large proportion of our total budget. Instead of investing the lions share into media, we could significantly increase our production budget and develop a campaign that might just be able to engage and entertain enough to create the social currency that we so desired; if we could achieve this, then we didn’t need to worry about limited media spend, we would become part of their online social world. The third bold decision we made was to invest approximately 50% of our total budget into production to give the creative the best chance to engage and entertain. Compared to both typical digital and ATL spending splits, this was an adventurous decision by Nestle. This left $250K, 50% of our budget to invest with online media partners with which our audience had existing relationships with such as Facebook, MySpace, Bebo, YouTube (final costs in media plan is $350K2, which includes a significant investment into media-owned production within specific destinations, e.g. MySpace. Estimated media / production splits are 50/50). We now needed a creative strategy and idea to maximise our presence in these environments. The fourth bold decision of the Cookies and Cream launch was not make product messaging central to the communication. A typical product launch messaging strategy would be to find a rational point of difference or product truth and make this the hero of the execution. While effective at announcement and establishing a product, it is often difficult to make this approach engaging and entertaining. Given these objectives were paramount we discounted this rational strategic approach. Rather, it made sense to integrate and leverage our brand and media strategy. ‘Break the boredom’ was the creative point of entry, with Cookies and Cream being the hero product, not the hero message. The creative department was given the thought ‘Chunky Cookies and Cream is the big hit that breaks the boredom.’ Hans Fagerlund and the Chunga championship were born. Revolving around an invented sport called ‘Chunga’ (Chunky-Game), the product became the playing piece in the hands of the games greatest player, Hans Fagerlund.

Image 2: Hans Fagerlund

To bring Hans to life, we created a social media marketing strategy to get everyone talking, laughing, competing, recommending and coming back for more. We needed to weave Hans and the Chunga game into the fabric of our target’s online social lives for the campaign to become social currency. Contact with one, would inevitably stimulate engagement with the other. The central story of the campaign was told through a 5-part mockumentary film called 'Chunga-Struck' on video sharing sites. The film provided the back story to ‘Chunga’ while recruiting consumers to play the web based Chunga game against Hans, friends & other players in real time. This was a tournament designed specifically around users of social networking sites.

Image 3: Chunga Campaign Creative

Chart 1: Flow Chart Depicting Layers of Campaign Engagement

Rich Media Banner Advertising

Watch ‘Chungastruck’ Webisodes

Play Chunga Championship Game

Share with your friends

We developed an over-arching platform with individual strategies created for specific communities. We wanted to establish a conversation by using Hans Fagerlund in environments where interactivity was encouraged.

Chart 2: Summary of Media Strategy Across Paid and Unpaid Media

Extensive and detailed media messaging strategies were utilised, from Hans having his own social networking profiles, to search engine marketing, to downloadable applications, to promotion within the online gaming scene to classical banner and road-block media buying to drive reach. Importantly, all aspects of the campaign worked together to create a seamless integration. In totality, the strategic and creative solution had been a collection of brave yet cohesive decisions. Chunga represented a serious adventure for Agencies and Nestle alike. We were excited to see what impact the campaign would have. The Results There are three key layers to be examined to effectively analyse this campaign.

1. Online metrics: Reach and frequency, engagement & entertainment (social currency)

2. Campaign and brand tracking: Conversion into mass awareness, consideration, sentiment, preference and intention to purchase.

3. Sales: Cookies and Cream & brand sales, ROI Online Metrics The reach and frequency of this $500K campaign was impressive. With a total reach of 736,000, Chunga reached 46% of 12-24 y/o’s at an average frequency of 12 impressions. These impressions undoubtedly led to engagement. Over 250,000 messenger theme packs were downloaded, which led to over 11million winks being traded between

friends. 67,121 people visited and interacted with the significant content destinations (microsite, MySpace & Youtube). The game generated 44,000 total game plays at an average playing time of 7mins. From 30secs with a banner to 7mins playing the game, to 3mins watching the webisodes, we achieved a significant amount of interaction time against this audience online3. Between the gaming and theme packs it seems that we had gone some way to achieving our goal of becoming social currency with one third of all people that Chunga touched. Highly involved engagement with the campaign was also strong, a good indication that the impressions made across the broader reach of the campaign would have connected with our consumer. Campaign and Brand Tracking Results A significant campaign tracking study used a total sample of 900 people, split into an exposed and control group (498 & 402 respectively). Of these, 75% fell into our target audience of 12-24y/o’s4. When the campaign tracking first hit we nearly fell of our chairs; as the online metrics rolled in we became excited by the reach and interaction, but with the adventurous nature of this campaign, we had not predicted the traction that the campaign achieved. It seemed bold decisions had led to big tracking shifts. The impact on both the Chunky and the Kit Kat master brand was phenomenal for such a small spend.

Chart 3: Prompted Brand Awareness

This was reflected in a 3 point increase in top of mind awareness for Kit Kat master brand (note: data not available for 15-24y/o only) Chart 4: Top of Mind Brand Awareness

Critically, given the brand imagery issues for Kit Kat against this target audience relative to the competition, Chunga positively impacted sentiment towards the brand.

Chart 4: Brand Sentiment

This change in awareness and sentiment converted into a positive shift in consideration. Given our size of brand & perceptions versus brands like Snickers and Boost, this was a serious win for Chunky: Chart 5: Consideration 15-24y/o

Thankfully, but perhaps unsurprisingly given the category, this increase in consideration was mirrored in an increase in intention to purchase:

Chart 7: Intention to Purchase 15-24y/o

Even more promisingly, claimed purchase had increased the same points as intention. Chart 8: Claimed Purchase 15-24y/o

9% 14%

19%17%

58% 55%

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Never eaten this brand 14% 15%Ate this brand longer than 4weeks ago

58% 55%

Ate this brand between 2-4weeks ago

19% 17%

Ate this brand in the past week 9% 14%

Control Exposed

37

+55 pt increase in recent consumption

(55%)

Kit Kat Chunky Actual ConsumptionTarget: 15-24yrs

We couldn’t wait to get the subsequent sales results.

Sales Results5

A key metric to determine the effectiveness of the campaign is to look at sales of Kit Kat Cookies and Cream against our core target audience, relative to brand and category. A strong uplift would be a very strong indicator of the success of our campaign due to the highly targeted nature of the media. Relative to these measures, we had successfully persuaded males 12-19 to buy Cookies and Cream more than their typical purchasing behaviour would dictate. Indeed, achieving an index of over 115 would have proved successful persuasion against the core target - Chunga achieved a buyer penetration index of 197. Chart 9: Nielsen Homecan: Index of Sales By Age Demographic (Men only)

With the success of persuading teens, we were surprised to not see the same result against our older age bracket of 20-29 y/o, and decided to further interrogate the data. This examination showed that we had over indexed with ‘Young Transitionals’, defined by Nielsen as ‘Adult households (no children <=17) Head of household <35’, with a buyer penetration index of 138 versus our target of >115.

Chart 10: Percentage of Sales of Cookies & Cream by Nielsen Homescan Life Stages

We had successfully reached our target audience and persuaded them to buy Cookies and Cream, but had we actually persuaded them to buy more Cookies and Cream in absolute terms? 12 weeks after launch Cookies and Cream had achieved 150% above sales forecast. Chart 11: Cumulative Sales of Cookies of Cream 12 Weeks Post Launch: Indexed Actuals vs. Indexed Forecast

Cumulative Sales of Kit Kat Chunky Cookies and Cream: Indexed Actuals vs. Indexed Forecast.

100117

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.08

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.08

Index ForecastIndex Actual

This immediate and sustained sales success motivated Nestle to aggressively revise their sales targets, and with good reason; at its peak Cookies and Cream even

outsold Kit Kat 4 finger and Kit Kat Chunky original in petrol and convenience, which given the size of 4 finger is an amazing achievement. Chart 12: Average Unit Sales Per Week (12 weeks post launch) Petrol & Convenience

P & C A V G U P S P W

K i t K a t C k ie & C r m 6 5 g B a rs 2 0 .4K i t K a t 4 5 g B a r s 1 5 .5K i t K a t C h u n k y 6 0 g B a rs 8 . 8K i t K a t K /S 6 5 g B a r s 8 . 7K i t K a t K /S 7 8 g B a r s 5 . 7K i t K a t M in t 4 5 g B a rs 4 . 5K i t K a t F rg m t h 1 7 g B a r s 4 . 2K i t K a t C a ra m e l C h n k y 6 5 g B a rs 4 . 1K i t K a t C o o k ie 6 5 g B a r s 3 . 1K i t K a t O v e r lo a d 4 5 g B a r s 2 . 5 This converted into some very strong dollar sales of Cookies and Cream, achieving $3.1M revenue 6 months post launch6. Such strong and immediate sales return meant that the Chunga campaign was very lucrative for Nestle, with some outstanding ROI figures. Using the traditional ATL method of working out ROI (dividing revenue by media expenditure), Chunga achieved an ROI of 8.9! However, given the non-traditional campaign strategy and importance of production investment, this ROI may be a little flattering. If we include production investment and measure the campaign against total expenditure of $500K, Chunga achieved an ROI of 6.2. Even with this tougher measure, return remains impressive. Chart 15: 6 month Revenue Campaign ROI Revenue 6 months

post launch $ Campaign Investment

ROI

Chunga: Media Investment (inc. approx. $100K production) Only

$3,100,000 $350,000 8.9

Chunga: Total Campaign Expenditure

$3,100,000 $500,000 6.2

Long Term Impact on Total Brand Given the danger of a decrease in sales with 3 SKU’s being deleted, the Chunga launch of Cookies and Cream gave the brand momentum (13% growth in value, year on year). Because of the positive impact of the campaign upon brand imagery and preference, the cannibalisation was not considered an issue.

Chart 16: Total Sales of Kit Kat Chunky 24 Weeks Post Launch vs. YA

Discounting Variables As previously mentioned, Chunga was the only live activity to launch Cookies and Cream. A standard point-of-purchase campaign was invested in, but this level of investment was comparable to previous Chunky SKU launches. The product was without doubt a good one, and it certainly contributed towards a successful launch. However, because Chunga did not hero product, product appeal can not explain the shifts between people exposed to the campaign and the people not as detailed in the brand tracking results4. Distribution was not a contributing factor, with a similar reach and amount of facings to previous launches Chunky variant launches. Seasonality was not an issue, with sales targets and total brand sales built on year ago comparisons. Indeed, the results that Chunga achieved washed away those residual fears that our brave decisions had in fact been foolhardy. That in fact, those brave decisions led to results that we could never had achieved had we just invested our $500K into another off-the-shelf chocolate launch campaign. The results also clearly demonstrated the power of connection with consumers over overtly selling product news. Granted, chocolate is a particularly emotive category, but none-the-less, if you can build an emotive connection based on a clear product role or truth, such as ‘breaking the boredom’, then these connections can be very persuasive. Synergy between creative and media clearly helps to create these emotive connections, effectively heightening the ability for communication to leverage insight. The results of this campaign clearly demonstrate that this synergy can dramatically increase return upon media investment; making this simple but powerful strategy central to your media planning and creative can make a limited campaign budget highly effective.

References

1. Adquest, Sep – Nov 2008 2. See attached media plan 3. Online tracking sourced from Webtrends, Google Analytics, YouTube,

Clearspring & Nestle Database 4. Nielsen Online Tracking, ‘Online Ad Effectiveness Kit-Kat Chunky’,

November 2008 5. Nielsen Homescan Data, 2009, ‘Cookies and Cream Launch’, 24wks

24/01/09 6. Aztec national grocery and route sales data, Aug 08 – Jan 09

Appendix Appendix 1: Campaign Media Plan

Word Count: 2912 (exc. Tables)