Your iPhone wants you to buy a box of crackersNovember 15, 2012: 6:47 AM ET
Mondelez International, the company formerly known as Kraft Foods, is betting it can use mobile phones to drive sales of snacks.
By Jennifer Alsever, contributor
Mondelez International (MDLZ), the company formerly known as Kraft Foods, is betting it can. The snack food company discovered last year that smartphones can be powerful marketing weapon. The firm ran a mobile campaign with startup Shopkick that rewards customers with points for scanning products with their phones. Those points can be redeemed for prizes. In just three weeks, consumers scanned Ritz Crackers 100,000 times -- and 59% of them said they either had purchased the product or planned to do so.
Throughout the year, 3.4 million people opened the app and scanned 35 varieties of Mondelez products, which include Oreo cookies and Trident chewing gum. "We had no idea those numbers would be that high," says Ed Kaczmarek, director of innovation at Mondelez. "It put our brands in front of the shopper at the right time."
The result? A wholesale shift in how the snack food giant thinks about mobile marketing. The company currently dedicates 1% of its marketing budget to mobile. By 2013, it will grow to 10%. "The goal is to become one of the top mobile marketers in the world," says Bonin Bough, a Mondelez vice president. (Bough was on Fortune's 40 Under 40 list.)
The proliferation of smart phones continues: some 36% of consumers are "SuperConnecteds"-- those who access the mobile internet at least weekly. Now big brands are chasing a new advertising platform, promoting their products using games, loyalty programs and social TV apps. Nearly 70% of marketers say they are either doing something in mobile or planning on it by 2013, according to a recent survey of 232 marketers by Forrester Research (FORR).
Mobile phones have proved a puzzling marketing tool. Blasting simple banner ads does not work, for instance. "It's an intimate device on which you can reach your customers," says Melissa Parrish, senior analyst with Forrester. "It's with you all the time. It's next to your bed. It's in your pocket. One survey showed 70% of people panic if they don't know where their phone is."
Marketers are trying to find innovative campaigns that recognize this special relationship users have with their devices. To find new ideas, Mondelez and PepsiCo (PEP) both created programs this year to court entrepreneurs and help them build mobile apps.
Mondelez's Mobile Futures program includes an incubator that pairs brands with an entrepreneur to develop apps, pilot them and create ventures in 90 days. Mondelez will offer introductions to companies like Viacom (VIA) and AT&T (T) and also help the companies pitch their stories to venture capitalists at the end of each session.
Meanwhile Pepsi created Pepsi Digital Labs earlier this year to work with mobile startups to promote its beverage brands. "We're taking the VC model to heart, and if a concept works we're putting big money behind it," says Josh Nafman, PepsiCo senior digital brand manager.
In February, PepsiCo worked with San Francisco startup Kiip, which rewards consumers who hit high-scores in mobile game apps. As part of a Valentine's Day promotion this year, Pepsi gave free flowers, chocolate and Diet Pepsi to high scorers, and 50,000 of them redeemed the coupon. "It was our highest coupon redemption ever," says Nafman. "It solidified our belief that mobile is the direction we should be going."
Both Pepsi and Mondelez want to do more than just boost their mobile marketing. They say they aim to bring new entrepreneurial cultures to the companies so brands start to think and act more like startups. The Mobile Futures program at Mondelez requires entrepreneurs to coach brand leaders on how to think more innovatively, and the company also hired a consulting firm to direct more collaboration and a culture of urgency, speed, decisiveness, and ambition, says Kaczmarek.
Chris Redlitz, a venture capitalist and founder of KickLabs, a Silicon Valley accelerator that connects brands to technology startups, says that kind of new mindset is needed among marketers. "They're being broadsided by so much disruptive technology," Redlitz says. "In my mind, there is no doubt there will be more and more of this kind of collaboration happening."