Kellanova Embraces AI to Revolutionize Marketing Strategies

Table of Contents

1. Key Highlights:
2. Introduction
3. Utilizing AI for Effective Marketing
4. Real-World Applications of AI in Marketing
5. The New Landscape for Marketing Agencies
6. The Future of Creative Marketing

Key Highlights:

• Kellanova leverages AI technology from Vidmob to enhance creative marketing and measure effectiveness across multiple platforms.
• The initiative resulted in doubling of view-through rates (VTR) and an 11% increase in ROI for well-scored assets.
• The shift towards AI-driven evaluation is leading to changes in agency compensation models, with an emphasis on performance-based metrics.

Introduction

In a world where attention spans are dwindling, brands are under continuous pressure to optimize their marketing strategies. Kellanova, the parent company of iconic brands like Kellogg's, Pringles, and Pop-Tarts, has recently embarked on a groundbreaking initiative utilizing artificial intelligence (AI) to refine its creative marketing efforts. This moves the company closer to solving the 'Wanamaker problem'—the age-old dilemma concerning the difficulty in measuring marketing effectiveness. As marketing budgets retract across the industry, Kellanova’s innovative approach demonstrates the potential of AI to not only enhance efficiency but also effectiveness in advertising.

Utilizing AI for Effective Marketing

The partnership with creative technology company Vidmob, along with insights from MMA Global, marks a significant step in Kellanova's journey to better understand consumer engagement. Over the past year, executive teams at Kellanova have diligently tested the performance of 443 creative assets across 10 of its brands within the U.S. market. The results are promising. Kellanova's adoption of machine learning models and historical data through Vidmob’s Aperture solution indicates an innovative approach to modern marketing.

Kellanova developed 19 scoring criteria to evaluate various aspects of creative assets, including copy quality, logo placement, narrative tone, and pacing. By measuring these dimensions against the effectiveness of the content in capturing consumer attention, Kellanova can preemptively assess the performance of marketing materials. Remarkably, the predictive models achieved an accuracy rate of 83% in forecasting view-through rates, effectively doubling the performance of creative assets that met established benchmarks.

The Impact of Data-Driven Decisions

Nicole Vinson, Kellanova's VP of Global Digital, Media, and Omni-Shopper Experience, emphasized that the insights gained from these AI implementations allow the team to make informed decisions about future marketing strategies. Her assertion that "AI is not just an efficiency unlock, it’s an effectiveness unlock" speaks to the dual potential of AI to streamline operations while also enhancing the quality of marketing campaigns.

Facing declining marketing budgets—down from 11% to an anticipated 7.7% of revenues in 2025 according to Gartner—this efficient, data-driven approach is crucial for Kellanova. The company's marketing expenditure fell from $766 million in 2023 to $611 million in 2024, highlighting the need for optimized spending and robust strategies yielding measurable results.

Real-World Applications of AI in Marketing

The drive towards AI in creative marketing isn't confined to Kellanova. Notable brands like Unilever and Kimberly-Clark have also implemented AI solutions to enhance efficiency and effectiveness in their marketing. Unilever's approach involves an in-house generative AI production suite, which includes pre-flight effectiveness checks to optimize advertising campaigns. This trend underscores a broader industry shift where companies are starting to leverage advancements in AI not just for operational improvements, but also to build a bridge between creative production and analytical insights.

Other firms like Mars and Diageo have explored similar avenues through CreativeX's effectiveness systems—illustrating a growing maturity within generative AI applications for marketing. Dale Um, COO of CreativeX, posits that such advancements would have been unthinkable a decade ago, underlining the tech's evolving role in creative processes.

Investing in Measurement and Improvement

The rise of creative effectiveness measurement firms, such as System1 and EDO, highlights marketers' increasing reliance on data to justify spending. There is heightened demand for analytics that can assure stakeholders of every marketing dollar spent. As Gartner analyst Nicole Greene states, "AI helps teams develop creative and test it before they’re spending significantly on production."

The implications for agencies are profound as well. With techniques and strategies increasingly fueled by AI, marketing firms risk falling behind unless they adapt to changing demands for accountability and efficiency.

The New Landscape for Marketing Agencies

As Kellanova reconfigures its advertising strategies to include AI-driven effectiveness measures, the repercussions are reverberating through its relationships with marketing agencies. Companies such as FCB, The Martin Agency, MullenLowe, and others that partner with Kellanova may find themselves reevaluating their roles within the newly data-informed framework.

Traditionally, agencies have relied on the subjective perspectives of creative directors and copywriters. However, with the introduction of Vidmob's predictive models, Kellanova's executives can back their creative evaluations with quantitative metrics. This shift not only empowers marketers but provides a transparent basis for discussions and negotiations regarding agency remuneration. By promoting a performance-based pricing system, Kellanova aims to create a symbiotic relationship with its agency partners.

Vinson explained that this would mean tying agency bonuses to measurable creative performance, transforming subjective evaluations into more objective standards. As the company rolls out this effectiveness framework beyond social media to other platforms including TikTok and Pinterest, the stakes and expectations for agencies are rapidly changing.

The Shift Towards Performance-based Compensation

This metamorphosis is not unique to Kellanova. Data from the World Federation of Advertisers (WFA) indicates that approximately 87% of marketers believe agencies exhibit reluctance towards adopting transparent fee models. Given the new landscape where AI significantly alters marketing operations, agencies must reconsider how they approach compensation structures and service offerings to stay relevant.

As Bruce Biegel of Winterberry Group notes, "It’s going to become a major talking point"—as large advertisers scrutinize agency pricing agreements in light of evolving AI capabilities. The current agency model faces challenges in sustaining itself amidst the growth of AI in marketing, urging agencies to align their creative output with explicit business outcomes.

The Future of Creative Marketing

As Kellanova and other brands forge ahead with AI-optimized strategies, the future of creative marketing appears increasingly data-oriented. The ability to harness AI for actionable insights not only enhances the efficiency of ad campaigns but also instills a more scientific approach to creativity that was once left to intuition.

The impact of AI goes beyond a mere technological upgrade; it challenges the foundational dynamics of agency-client relationships. As data becomes integral to creativity, marketers and agencies alike must cultivate a culture that embraces adaptability and transparency. The ultimate beneficiary of these advances will be the consumer, who can expect a more engaging and relevant marketing experience.

FAQ

What does Kellanova’s use of AI entail?
Kellanova is employing AI technology from Vidmob to optimize creative marketing efforts, enhancing performance metrics across various advertising platforms and driving concentrated insights about consumer engagement.

How effective are the AI predictive models used by Kellanova?
The AI models developed by Kellanova have exhibited an 83% accuracy rate in forecasting view-through rates (VTR), with resulting campaigns seeing a doubling of VTR and an 11% increase in ROI.

Will this shift impact creative agencies?
Yes, Kellanova's embrace of AI-driven effectiveness metrics is likely to influence its agency partners, leading to performance-based compensation models and a reevaluation of traditional agency roles.

Are other companies following Kellanova’s lead?
Yes, Kellanova is part of a growing trend among large brands incorporating AI into their marketing strategies, with notable examples including Unilever and Kimberly-Clark, which are also implementing similar tactics to enhance marketing outcomes.

What are the broader implications for marketing budgets?
As companies face declining marketing budgets, the shift towards data-driven and AI-enhanced marketing strategies aims to maximize efficiency and ROI for each dollar spent, potentially leading to a reallocation of marketing funds based on performance outcomes.