Recession and Domino's
Q: Domino's recent good financial results – is it fair to say Domino's is having a good recession?
We do benefit from people trading down from restaurants and choosing to have a takeaway with friends at home. But we also have to be mindful that we are out there communicating the right message at the right time. We see a benefit from falling TV and outdoor rates – our marketing pot goes further. The recessionary environment allows us to do more communications for less money than it was costing a year ago. We're continuing to invest strongly in the brand, so it's a virtuous circle – sales-driven marketing which in turn drives sales. All Domino's marketing is direct response – you see a TV ad, pick up the phone and you can have the product in a half an hour. No other product has that immediacy.
Domino's marketing structure
Q: How exactly is marketing organised at Domino's?
We're a wholly franchised business. Our franchisees pay a 5% royalty of their net sales into Domino's National Advertising Fund (NAF). That's centrally managed and used to maximise sales and grow brand awareness. An example of national marketing is our sponsorship of Britain's Got Talent – the biggest show on ITV this year. Franchisees get the benefit of that marketing, which they couldn't do on their own. The advertising fund also produces a certain number of menus per store, and they can pay for run-ons, which we produce for them.
Q: It must be challenging to control the brand image of Domino's in a franchise set-up?
The vast bulk of our marketing is produced centrally – TV, direct mail and door-dropped menus come from here in Milton Keynes. In terms of franchisees producing their own marketing, there are guidelines set down and images they can use – our marketing team works as their consultants.
Best marketing channels
Q: Email… direct mail… door drops – what's the most powerful acquisition channel for Dominos?
In terms of acquisition I would have to say search marketing online – we do pay-per-click (PPC) and also search engine optimisation as well. People go to Google and search for pizza so it's important that Domino's is up there. It's down to managing your PPC strategically, so you're picking phrases and words and doing it at a local level. Longer phrases are cheaper and you get a higher ROI – we work hard on that. We might buy 'home delivery pizza Newcastle' and that gets you up higher in search and the ROI is better. The discipline is the same as our direct mail strategy – put a lot of work in to a channel to making it relevant and targeted. Q : The website is generating an increasing amount of your sales. How do you ascertain which channel drove the customer to the site?
Fundamentally you're never going to know 100% ... we know roughly the proportion of people that order directly or go through Google, but what causes them to do that is very difficult to know. You need to take a holistic approach to all your marketing activity because you never know where a consumer will come into contact with your brand. It's the case that the whole is greater than the some of the parts and you have to communicate effectively across all the channels so that the question of how they reach you is less relevant. We are extremely scientific with the precise ROI we get through PPC, direct mail and sponsorship of Britain's Got Talent (BGT). The fact that someone saw an ident on BGT and went online and ordered online is harder to back track and so we have to maximise all marketing on all channels. There will always be a degree of a grey area.
Targeting and new technology
Q: How innovative can a pizza company be in targeting people?
We're always looking at new ways of reaching people and making it easy for them to order. We've learnt a lot from our e-commerce experience. We've run online ordering for nine years and we developed the SMS service out of that. You register online and give yourself a key word for ordering. We're looking at other channels such as PDA devices. Q: An iPhone app perhaps?
It's under consideration. Along with many other things. There's a lot in development, all technology based. We'll be increasing online spend faster than other areas so proportion of spend. But door drop menus and direct mail are still the bedrock of our activity. It's still really important to communicate by traditional methods as well as using new technology. Q: What does Domino's mean by 'targeted marketing'?
Two things: it's targeting the right message to right people at right time – Thursday evening, Friday evening and Saturday evening for TV. With door drops and direct mail, they need to drop towards the end of the week too, when we know people are thinking of pizza. Q: Exactly how targeted are you?
Door-dropped menus are pinpointed at a group of households given their propensity to order pizza. We use newspapers and Royal Mail to distribute menus so targeting can go down to street level. With direct mail and email marketing, we use our behavioural data and overlaying that with social demographic data. The direct mail programme is managed out of head office down to household level, targeting loyal customers and prospects.
Data and segmentation
Q: Transactional data is a gift to targeting…
We're very fortunate in that we have a real richness of data: how much customers have spent, frequency of order, what they've bought. [From that] you can extrapolate a customer's lifetime value and getting people to trade up from infrequent to regular customers. The DM pieces that work well are those that are highly targeted. We look at the type of pizzas people have ordered, and tailor the offer so that the uptake is higher. It's about marrying the creative with the data insights to produce something that people are happy to get. Q: Do you have a single customer view?
We do have a central household database and a single household view. Our data is structured by telephone and email. We split out landlines from mobile telephone numbers and treat them separately. Families tend to act as one or individual members will order on their mobile phones. Q: How segmented is your direct marketing?
We tend to segment based on behavioural data – so for instance we call one segment 'Hard Core Loyals'. We feel behavioural segmentation is more accurate rather than artificial methods like age or location. We're in the process of re-doing the segments.
Domino's and the environment
Q: Domino's generates a lot of paper with its menus. What green initiatives have you implemented?
In terms of recycling, there is the shift into online ordering. We also have a number of green initiatives [in development] which unfortunately I can't go into. There's a senior director here that looks after this. So watch this space for several green initiatives coming out in next six months or so which demonstrates Domino's commitment. Q: Direct marketers are quick to blame pizza menus when they themselves get targeted for generating junk mail. How do you respond to that?
The distribution of pizza menus has been integral to Domino's for the 20 years we've been in the UK and will remain so. However it's important we respond to consumer wishes and if they're uncomfortable we make sure we respond. All our menus come from FSC-endorsed sustainable resources. We also give consumer the chance to opt out of direct mail and door drop menus and we respect their wishes.
US marketing strategy v UK
Q: How different is Domino's marketing in the UK compared to the US?
The NAF concept originated in the US – but it's managed differently around the world. For instance in the US, regional TV is much cheaper, so a much higher proportion of their budget is spent on TV. Q: To what extent does the UK have autonomy from the US vis a vis marketing strategy?
Very much so. There are some guidelines in terms of using the logo but outside of that, we're given real freedom to develop positioning and creative executions of the brand we have regular dialogue with the US – but they understand that everywhere in the world the brand is at a different life stage and has different competitive sets.
The YouTube incident and social media
Q: There was that YouTube incident in the States…. Did that affect you in the UK?
It [had] no sales impact in the UK – it wasn't publicised widely [here]. The people that did it were surprised at the strength of reaction and the fact that they got arrested. Domino's in the US took very quick action and it was important learning that showed this sort of activity won't be tolerated by us or by any brand. Q : How does Domino's view social media after this…the lack of control over your message must be frightening….
[The YouTube incident] demonstrated the need to be vigilant and alert on all social networks. You can't stop people posting things and it reminds brands that they need to take swift decisive action. We have a PR department internally which liaises closely with marketing on managing social media. Q: Your favourite Domino's social media activity?
We have a nice Facebook page – lots of competitions and a truck that goes round to festivals. We advertise on Facebook and have promotions too but the page we have with our competitions is the focal point.
The Domino's marketing team and its agencies
Q: Can we talk about you - how many in your team first of all?
There are 10 in my team so it's small enough. We work closely with agencies so that's a key part of what we do. We tend to be a very reactive and high productive team. People have clear empowerment and makes for more reactive team. I report to Chris Moore, the CEO of Domino's UK. Q: Your background?
I've been at Domino's for five and half years and for the bulk of that have been sales and marketing director. I came in as brand controller and was promoted in 2006. Before that I was senior consultant for a WPP agency called Headlight Vision, now called Henley Centre Headlight Vision. I also worked as senior brand manager at Carlsberg Tetley, working on the lager portfolio. Q: Having worked at an agency must help you manage your own agencies and suppliers
It's really important to work on both sides of fence. I was advised that agency side experience gives you great insight and knowledge of practical things like what makes a good brief. A big part of my job is managing agencies to optimise performance. Our lead agency is Arena BLM, for creative TV we use BIG, several design agencies and data management agencies, a key one being Data Lateral. Q: What do you look for in an agency?
We look to find agencies to fit in with our resources and style. Given we're a retail business we need quick turnaround and rapid response. Agencies don't have to be huge to be really good. Sometimes smaller ones are hungrier.