Chuck E. Cheese's markets beyond the box

Chuck E. Cheese's markets beyond the box

Chain expands advertising reach outside television for greater return

The days of “don’t touch that dial” are waning at Chuck E. Cheese’s, as officials disclosed during their fourth-quarter earnings call that the brand has begun to pull advertising funds from TV commercials and reallocate them to radio and digital advertisements.

The move underscores the shift from traditional media to digital, as well as the 556-unit family pizza chain’s desire to target both children and their parents — two groups that have increasingly turned their attention from TV to radio and the Internet, said Mike Magusiak, chief executive of Irving, Texas-based parent company CEC Entertainment Inc.

“Media has changed over the past few years, especially when you start targeting younger families that use digital more than they ever have,” Magusiak said. “Our primary target has been kids — to [get them to] pester their mom and dad to take them to Chuck E. Cheese’s. We have an opportunity to change the creative to kids, but also to start talking to parents about the benefits of taking their family to Chuck E. Cheese’s.”

The move also could set Chuck E. Cheese’s up for “experiential marketing” over the long run — something similar brands should aspire to, said David Hale, chief creative officer for New York-based Good Eats Agency.

Through experiential marketing, restaurants — especially ones like Chuck E. Cheese’s with recognizable brand characters and a reputation as a go-to restaurant for birthday parties and celebrations — integrate everything from branded entertainment to sponsorships to licensing and merchandising, Hale said.

“I think this move is bigger than radio spots and digital campaigns,” he said. “By getting away from TV, [Chuck E. Cheese’s] can head in the right direction and get toward a restaurant client’s ultimate fantasy: generating a specific market demand to a specific audience at exactly the right moment.”

So far, the shift in advertising has saved Chuck E. Cheese’s money and improved efficiencies. Same-store sales in January 2012 fell 3.6 percent, which was identical to the decrease in January 2011, despite a 25-percent reduction in advertising spending, or about $700,000, on TV commercials and freestanding-insert coupons, Magusiak said.

Three radio commercials targeting mothers began airing in February in markets that account for 50 percent of Chuck E. Cheese’s sales. Through the first three weeks of the month, the brand’s same-store sales rose 0.8 percent.

The most significant modification to CEC Entertainment’s marketing plan will be implemented in the second half of 2012, when the first round of creative from new agency The Richards Group is set to run, Magusiak said.

“We will continue to talk directly with kids, but we also will be implementing an exciting multimedia approach against their parents,” Richard Frank, CEC Entertainment’s executive chairman, said during the company’s conference call. “The new ‘moms’ radio campaign that began the first week of February is our first step in this direction. We believe this expanded reach to adults will give us an opportunity to meaningfully impact sales.”

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The next marketing channel

Hale agreed with CEC Entertainment’s notion that children and their parents are not watching as much TV as before. He suggested that, for Chuck E. Cheese’s to reach them online, the brand could produce videos or cartoons starring its characters and post them to YouTube or the brand’s website.

Outside of the restaurants’ four walls, Chuck E. Cheese’s could take the characters on mall tours or have them bring the chain’s pizzas to kids’ houses so they could host birthday parties in their backyards, Hale added.

Before the brand can make that leap, however, it needs to shift its marketing budget, he said, which is why he called Chuck E. Cheese’s decision to pull back from TV a good first step.

While Frank said the company had taken its TV spending to high levels — “almost to the point of diminishing returns” — he added that CEC Entertainment would not abandon the medium.

“We weren’t getting much mileage on the top line from those additional dollars,” he said. “TV will continue to be a very important building block of our advertising efforts, and for that matter, TV against kids will continue to be an important component of what we’re doing. We just had our weight with kids so high, we could reallocate.”

Hale of Good Eats Agency agreed, noting that commercials work well when there is breakthrough news, but customers could tune the brand out if it is on TV too much.

“TV is great when you have something new or important to say,” Hale said. “For instance, Chrysler’s Super Bowl commercial with Clint Eastwood was perfect. But to have just an ongoing brand message — what is Papa John’s really saying to me? There’s no story or reason for them to be around if they’re just running a sustaining tactic. At that point, TV becomes unviable.”

Maintaining sales traction over the long haul continues to motivate CEC Entertainment’s move toward diversifying media, Frank said.

“We’ve got a lot of learning to do, but I think the key is, in the simplest form, two components to talk to your customer base: frequency and reach,” he said. “When you start to get into different media past just TV, we’re going to be reaching more moms and perhaps nonusers of Chuck E. Cheese’s. As we’re able to go to a broader audience, I think that well may be the key to us increasing sales in the future.” 

RELATED: Special Report: Creative communication [4]

Contact Mark Brandau at [email protected] [5].
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