Heinz Is On A Roll ... And A Hot Dog ... And Some Fries ...

Today, consumers will begin voting for one of 15 finalists in H.J. Heinz Co.'s first entry into consumer-generated commercials. Already, the ketchup giant is planning a similar contest for the fall.

"It's incredible," says CMO Andrew Towle. "This has unleashed the creativity of your average person." The YouTube "Top This TV" challenge drew thousands of entries, especially in the final weeks. Towle says some of them are "extraordinarily brilliant."

The commercials of the five finalists will be aired, with the grand prizewinner walking off with $57,000, a nod to the brand's 57 varieties.

The contest draws to a close as Heinz begins its second quarter of fiscal year '08 on a decidedly upbeat note. Last week, the Pittsburgh-based company reported first-quarter sales growth of 9%, to $2.25 billion, and credited a 25% increase in marketing. It followed a 44% market spend hike in the final '07 quarter.

Heinz is spending $100 million in marketing this fiscal year and last, focusing its efforts on innovation and a ramped-up pipeline, Towle says--such as the fridge-fit ketchup bottle and the extra-crispy Ore-Ida frozen fries. "We're allocating the money for new products, more than 200 of them with more than half the business being outside of the U.S.," says Towle.

In fact, Heinz Chairman, President and CEO William R. Johnson told analysts in a conference call on Friday that with the exception of Wrigley, Heinz is the most global U.S. company, with 60% of its business being international.

Towle says he is especially proud of the work done by the international units, citing the Mum's Own brand in the U.K. and the Pudliszki line in Poland, both of which grew out of interactive programs with consumers that elicited the favorite recipes of British and Polish mothers. Half of the increase in market spend for '07 went to Europe, where sales increased 12% in the first quarter of '08.

Having traveled to company headquarters all over the world, including New Zealand, Russia and China, Towle reports a "universal feeling of confidence. The people at Heinz are optimistic about the future."

Back in the U.S. and working with its agency, Cramer-Krasselt, Chicago, Heinz is moving away from traditional broadcast, Towle says, "and we have become especially good at determining targets." For example, the company's new Smart Ones, a line of healthy entrees, appeals only to a certain consumer, and therefore, Towle says it would "be silly to use broadcast. Instead, we use direct mail, the Internet and word of mouth."

This year, from January to June, Heinz has spent nearly as much on advertising ($18 million) as it spent in all of 2006 (almost $20 million), according to Nielsen Monitor-Plus.

"It's a challenge finding the right target and the right vehicle," he says. But apparently, he has found it--sales of Smart Ones rose 25% in the first quarter, buoyed by the launch of Smart Ones Anytime Selections.

Another example of the right target and vehicle is about to launch. Over the next weeks and months, Heinz will distribute 200 million single-serve packets of ketchup on which the artwork of a dozen kids from the first through 12th grades will be showcased. That contest, which ended in April, drew 15,000 entries.

Towle knows why asking consumers to share their creativity works so well for Heinz. "It's the iconic relationship Americans have with the brand."

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