The Phantom Results

Blame it on Jar Jar. Some moviegoers hated the character because it came uncomfortably close to being a racial stereotype. Others hated the digitally created comic relief simply because it was annoying. Either way, if people don’t like the character, chances are they’re not going to visit their nearest restaurant to buy a Jar Jar cup topper.

Consumers in droves didn’t visit Taco Bell, KFC, and Pizza Hut to buy cup toppers this spring. In fact, they didn’t visit Louisville, KY-based Tricon Global Restaurants’ three chains for any reason – at least none connected with the company’s $50 million-plus promotional tie-in to Star Wars: Episode I – The Phantom Menace.

Rarely in the annals of marketing partnerships has a company so blatantly – and publicly – admitted failure. Tricon’s massive Star Wars program “was surprisingly ineffective at driving sales and actually slowed momentum in the U.S.,” chairman Andrall Pearson said in the company’s second-quarter financial release. “We’re moving quickly to regain the top line momentum . . . that was lost as a result of the negative effect of our . . . tie-in,” he said.

That’s a little stronger than the typical “sales did not meet expectations” companies normally proffer when a promotion falls flat. But with same-store sales rising only one percent at Taco Bell and two percent at KFC in the quarter (Pizza Hut sales jumped nine percent thanks to the Big New Yorker Pizza product launch), Tricon apparently was a little sore. “We might as well not have been on the air,” Pearson told Bloomberg news service. Tricon officials reportedly told Wall Street analysts that sales increased after the Star Wars TV spots were yanked.

There’s no question that the movie didn’t live up to its hype. Of course, that’s a ludicrous thing to say about the second most successful film in history, with a box-office take of $421 million in the U.S. and $318 million overseas through Sept. 6. Problem is, The Phantom Menace was expected to become No. 1, and it’s not going to get anywhere near Titanic’s $1.8 billion total. (The original Star Wars is still ahead in box-office receipts, too, but only because of its 1997 re-release.)

Sales of licensed merchandise have been strong in some categories (toy makers Hasbro and Lego say they were extremely successful) and poor in others (the Jar Jar inflatable chair might have been a bit much). But the other-worldly stampede on stores many industry watchers predicted never materialized. And retailers were discounting product so often by late summer that the movie’s title seemed to be Star Wars – 70% Off.

Most licensing partners, however, are singing the praises of the Force. Although there admittedly were some product misses, “the program was still one of the most successful ever executed,” says Charles Riotto, executive director of the International Licensing Industry Merchandisers’ Association, New York City. “You have to put everything into perspective. Some people’s expectations were just too high.”

Force field

Tricon wasn’t the only promotional partner on board, either, although it was the only one complaining about results.

“It went great for us,” says Lynn Markley, spokesperson for Frito-Lay, which ran an instant-win game (handled by Chicago-based Frankel & Co.) that awarded $1 million to a Pennsylvania woman and teamed with sister company Pepsi-Cola for huge in-store displays. The tie-in helped Frito-Lay to $200 million in sales for the week of July 4th – the company’s most successful Independence Day ever, says Markley.

Numbers for Frito-Lay North America’s second-quarter, which ended June 12 and included about a month’s worth of Star Wars efforts, weren’t particularly impressive: growth of 4.1 percent in revenue and 3.5 percent in volume. In comparison, the division posted increases of eight percent and five percent in second-quarter ’98, when Star Wars was just a twinkle in its marketing eye.

Pepsi-Cola likewise had a good second quarter but not a great one (although it did soundly beat rival Coca-Cola in the period). North American sales rose 4.7 percent, while bottler case sales rose three percent and concentrate shipments one percent. Sales climbed an equal 4.7 percent last year – and ’99 figures included sales of Pepsi One, which wasn’t around in second-quarter ’98.

“Right now, we’re very pleased with what we’re seeing,” says Pepsi spokesperson John Harris, pointing to corporate-wide sales that rose 6.7 percent in the first Star Wars period (but were not as high in the second, he notes), and a survey conducted by Wall Street firm Sanford C. Bernstein & Co. in which 97 percent of participating retailers said they were pleased with the program’s results.

“It’s done exactly what we wanted it to do: build relationships with existing customers and reach new customers,” says Harris. “The promotion has taken on a life of its own. They’re selling our P-O-P on the Internet.”

Pepsi’s efforts continued through the summer. In August, the company added a 25th can with four-color artwork and a limited 50,000-unit circulation to its collectable series. Pepsi will keep the partnership going with a tie-in to the video release in 2000, says Harris.

Hallmark Cards, Kansas City, MO, which went the licensed merchandise route with ornaments and party supplies, joined with New York City-based Topps Co. on a promo via SJI, Inc., St. Louis. The effort gave away more than 750,000 trial packs of Topps’s Star Wars Trivia Trading Cards through 3,400 Expressions from Hallmark retailers. A sweeps overlay let consumers call a toll-free number inside the pack for a shot at a themed fantasy game room and other related prizes. The effort generated a 13-percent response rate. (Hallmark declined to comment on the program.)

Darth mauled

Granted, Tricon had a much tougher task than its packaged-goods peers, who could fall back on the P-O-P displays – and a much wider sales window – if traffic-building efforts failed. Still, Tricon’s results are perplexing. So as Jar Jar might ask, “Whasa happen’ Tricon?” After Pearson’s early laments, the company declined to discuss the question further. And while nobody else has a definitive answer, the industry has been abuzz with possible reasons. Here are a few bouncing around.

Meesa no like dese ads: TV spots from TBWA Chiat/Day united Taco Bell’s beloved Chihuahua with a live-action KFC Colonel and a Pizza Hut delivery girl, thereby visualizing just how tough an assignment the agency had. Creating spots that would appeal to the chains three diverse consumer bases – while also enticing burger loyalists to visit the restaurants – was a little like, well, trying to defeat the Dark Side.

It was the first time Tricon had attempted to bring all three chains together, and the strategy diluted the restaurants’ unique brand messages. Some industry experts wonder if the company might have been better off letting each chain mount its own program.

Compounding the problem, according to insiders, was the tight control Star Wars producer Lucasfilm kept on marketing efforts, which prohibited Tricon from using character imagery before the film was released – despite the fact that merchandise hit retail stores three weeks before the film’s premiere and more than a week before the restaurant campaign broke. That dampened early efforts, killing momentum that could have been gained before the movie opened to less-than-stellar reviews and what’s-the-big-deal media coverage.

The spots hit their mark in terms of awareness, catching the attention of 70 percent of consumers, according to research. But only five percent of people who saw the ads acted on them, Pearson told the press.

Meesa tinkin’ too hard: Several people involved with the campaign suggest that advertising didn’t give consumers a clear understanding of the program. “Some people said they didn’t even know [it was running] at all three restaurants,” says one source. Ads “didn’t cut to the chase to say, `Here’s what you get when you come to Tricon,'” suggests another.

Once at the restaurants, consumers were bombarded with information and too many offers, sources say. Should they play the Defeat the Dark Side and Win game (developed by Chicago-based Wunderman Cato Johnson), go for the Kids Meal offer, buy a toy, or get a cup topper? “There was too much going on and you didn’t know which way to go,” says one executive.

Meesa no like dese toys: While the tie-in didn’t produce the expected boost in food sales, the biggest disaster for Tricon came through anemic premium sales that were as low as 25 percent of projections, sources say. “People just didn’t like a lot of the toys,” says one exec.

Other sources say Tricon finds no fault with the premiums, which were supplied by Applause Inc., Woodland Hills, CA. (Insomnia Creations of Santa Monica, CA, produced the toy packaging, also designed to be collectable). Pearson noted publicly that the toys were forced to compete against hordes of licensed merchandise sold through every imaginable retail outlet, which left consumers with little incentive to head to Taco Bell to buy Anakin’s podracer. “Consumers could be part of the Star Wars experience anywhere they went,” says one source. “[Tricon’s program] just wasn’t special.”

While Tricon’s toys were tanking, rival QSRs McDonald’s and Burger King were selling out with their respective Teenie Beanie Babies and Teletubbies programs, both of which offered toys efforts couldn’t get anywhere else.

The success of those rival efforts points to another possible problem: that the movie simply didn’t resonate as strongly with the QSR-crazed kid set, over which Tricon’s chains historically have not held the same sway as McD’s or BK. (Indeed, the die-hards who hit Toys R Us in early May to buy cart-loads of Hasbro toys were mostly Gen X’ers and older.)

“The target audience for a lot of merchandise was younger kids, and they weren’t around when the original movies came out,” one industry expert says about the licensing program in general. “I don’t think the anticipation was there from that age group.” Still, “I’ve seen a lot of kids with Star Wars backpacks running around,” notes another source.

Meesa eyes too big: Some people suggest the unprecedented buzz surrounding the film backfired on Tricon, with potential customers avoiding the restaurants because they assumed everybody else was going to be there. (The fact that Tricon’s previous growth momentum stalled suggests this point could be valid.) Despite all the reports about Lucasfilm’s determination not to have the movie overhyped, it was. And many consumers actively chose to sit the frenzy out.

Some wags suggest that Tricon bought into the hype too deeply. “They did get traffic into stores and they did sell a lot of toys,” says one source. But when you’ve ordered more than 50 million premiums, a lot can seem like a little.

Whatever the reasons, Tricon is understandably questioning whether it should exercise an option to tie into the next two Star Wars films. (PepsiCo is contractually obligated to do so; Tricon, which was a part of PepsiCo when the deal was signed in 1996, is not.)

Industry experts suggest the repercussions could go much deeper than that. Tricon has shown that even a can’t-miss property can miss by a mile, which could have marketers taking a harder look at properties in the future – and requiring better terms and guarantees from licensors.

Yousa betta watch out.