To Reach Core Audience, Wendy’s Busts Out Online

NEW YORK When Ian Rowden became chief marketing officer of Wendy’s in 2005, the restaurant chain spent just 4 percent of its overall marketing budget online. That percentage has climbed steadily since—to 6 percent last year and about 8 percent this year—and will likely exceed 10 percent in 2008, according to Wendy’s.

Along the way, the No. 3 fast feeder, which last year spent about $375 million in major measured media, has invested in online vehicles such as microsites to get closer to its core 18- to 34-year-old consumers, offering them, for example, a chance to win Nintendo Wii games and consoles via the purchase of Frosty Floats.

Now, Wendy’s is about to give away 100 million free songs through a partnership with online music site Rhapsody. Between Nov. 21 and Dec. 30, consumers who buy a combo meal featuring the new Jalapeno Double Melt sandwich will get an access code to download a song. The codes will be printed on cups.

The Rhapsody tie-in and microsites like hotjuicyburger.com and thisismyburger.com illustrate just how far Wendy’s is moving beyond ads to reach its core audience. And although lead creative agency Saatchi & Saatchi is creating spots to support online-rooted efforts, the initiatives are designed to live on their own.

“It’s go where people want you to go,” said Rowden, who has funded the online expenditures increase in part by spending less in traditional media, such as print. “What we look at here is user-based segmentation. If that’s where people are and that’s what they’re doing with their life in terms of the communication environment, then we have to figure out—and we have figured out—how to play in that environment.”

Nearly six months into the “That’s right” campaign that Saatchi launched in late May, Rowden is seeing positive signs in his quantitative and qualitative research. Consumer recall of the red wig motif featured in the campaign and messages such as “I deserve a hot, juicy burger” are both strong, he said.

Recent monthly sales growth, however, has flattened out: Between April and August, stores open at least a year recorded year-over-year sales increases of less than 1 percent and sales declined September, albeit only 0.2 percent, according to Wendy’s. This came after months like January and February, when Wendy’s reported 4.8 percent and 3.3 percent gains, respectively, compared to the same months last year.

Granted, last year’s monthly figures were up from 2005, creating more difficult comparisons. But Wendy’s, which finds itself under pressure from key shareholder Nelson Peltz and facing the prospect of being sold, clearly needs to accelerate its efforts to match the growth of bigger rivals such as market leader McDonald’s, which experienced same-store sales growth of 7.4 percent and 3.5 percent in August and September, respectively, per Technomic. “When you’ve got one-year comps and two-year comps, you see fluctuations month to month, quarter to quarter,” said Rowden. “We want to build sustainable profitable growth. So, I’m very, very pleased with the fact that on a two-year basis, we’re seeing consistent growth.”

Through the use of the wig—which represents “enlightenment,” according to Saatchi—and promotions tied to games, music, online communities and sports, Wendy’s hopes to grab more of the male-skewing 18- to 34-year-old crowd. It won’t be easy, though, given the competition for their attention. “Turning a brand around is a very, very tough thing to do,” Rowden said. “We’ve done an enormous job in the last 18 months. Now, we’re going to move even faster. We’re going to move more boldly with what we’re doing, we’re going to take on more components and we’re going to stay really focused on what consumers expect us to do.”