by Ryan Joe // Wednesday, January 7th, 2015 – 1:14 am.
CPG giant Kimberly-Clark is one of the more progressive companies when it comes to digital strategy, largely for the way it adapted programmatic advertising way back in 2011, eventually setting up its own internal trading desk with the help of WPP agency Mindshare.
It’s in this spirit that the manufacturer of Kleenex, Kotex and Huggies established a Digital Innovation Lab in late 2013. The Digital Innovation Lab, or D-Lab as it’s colloquial known at Kimberly-Clark, is an initiative that lets the company work directly with startups whose technologies might eventually help Kimberly-Clark reach out to or attract more customers.
It manifested originally as a competition at last year’s CES, in which startups pitched their ideas to Kimberly-Clark execs in marketing, R&D and IT. Mindshare and various venture capital partners vetted the initial list of and distilled it down to a select few, the most promising of which had a chance to work directly with Kimberly-Clark’s brands.
Last year’s winner, a video creation startup called Simpler, has since been integrated into a campaign for feminine hygiene product line Kotex. And on Monday, the company held its second annual startup competition with 11 companies (though Kimberly-Clark won’t announce the winners for another couple of weeks).
The Digital Innovation Lab is still experimental – it has two offices, one in Chicago and one in Tel Aviv, with a total of four employees – and its newly-appointed lead Hugh Jedwill declined to specify how much exactly Kimberly-Clark had invested into the unit.
Jedwill, who started four months ago, spoke with AdExchanger about some of the challenges big brands and small startups face when working together, and what Kimberly-Clark looks for when working with a new technology.
AdExchanger: So why is this necessary?
HUGH JEDWILL: There’s an intermediary needed. Our role is to bring innovation into our world, where we’re trying to solve consumer needs. Every brand is trying to solve that. It’s not enough to find a great startup, great technology. There’s an enormous gap between the expectations of an entrepreneur and a brand manager.
We serve as that bridge, the language interpreters and facilitators of this innovative technology. Many brands don’t know how to utilize it.
Beacon technology is a great example. Only when you tell someone it can be inserted into a display in store do they say: “I can use it to help my marketing plan.”
What’s the expectation gap between entrepreneurs and brand managers?
Misconceptions from the startup side to the brand side would be that it’s okay for a product in beta to operate at less than full promise. From the brand side to the startup side, if you say you’re going to deliver something, you’ve got to deliver it.
Another expectation gap is when a startup says: “We brought this product to market, got to the first stage of our road map and we’re pivoting in a new direction.” To a brand, that’s failure.
There’s an all-or-nothing game with a CPG product launch, whereas the startup launch is extremely iterative.
Your agency Mindshare is helping you. Why not have them do it entirely?
If you look at how most brands discover startups, it’s through their agencies. We dipped our toe in the water last year [with the KChallenge at CES 2014] and could see the potential for us to learn by being more deeply inserted in the startup world.
We see the value that our brands can get. We know our consumer, but we don’t fully understand the way digital impacts their lives. And these startups understand a piece of it.
What facets don’t you understand that you’d like to?
We ask this question: What is the problem that’s preventing us from making money? We must first understand the problem and the underlying consumer behaviors influencing that problem. It’s difficult to determine that. The way most companies approach new technologies is to say: “I like that one the best.” We start with the problem.
You mentioned beacons. What have you learned from your early experiments?
The biggest insight this early on is the technology is easy. It’s really easy. It’s become commoditized. For us, the real nut to crack is understanding the problem preventing us from making money. And that’s taking time.
Say you put a beacon into a display stand. So what? Is that solving a problem? Short answer is: No. We are trying to figure out what the problem is, then the technology comes after that. Beacons may or may not be the solution.
What was last year’s KChallenge winner and what problem did it solve?
Last year’s winner was a video creation startup called Simpler. It allows people to express themselves through a video and music track customization tool. They’re working right now with our Kotex brand. They were a bit earlier stage than I would have anticipated, so it took time to work with them and develop them. They just finished being part of a commercial program where we invited an artist community to create a music video and post them and get people to share them.
The problem we were trying to solve was bringing an experience to consumers that told them we understand who they are. They had a desire to express themselves through this new type of content, and we become more relevant.
The issue with investing in new technologies is proving ROI. How do you guys do it?
We measure in two ways.
First, the number of external innovations we’re bringing into the company and implementing it with our brands and business. Second, we have to approach each innovation separately. We have to look at the current tool we’re using and how it measures up against ones we’ve seen previously. In some cases, no previous tools exist and we look at the quality of the experience.
Why did you launch Simpler with Kotex?
We need brand managers who want these innovations and in this case, we felt the best match was with Kotex. Not every brand will work with that. [Adult diaper brand] Depend probably wouldn’t be the best place to ask people to make music videos.
What technologies this year were most promising?
There was one using spectrometry, squeezed into the size of a small flashlight. Another one goes into the area of predictive analytics, a startup that correlates data and ties it to our sales. And that’s unusual. That’s a powerful tool we can utilize in many different situations.
How do they pull that off?
Correlating online data. They aggregate social chatter and they use a proprietary algorithm. We asked for it, but they said no. They have a bevy of PhDs building these analytical tools.
We try to innovate across the product, channel and experience. If you look at Simpler, that’s the experience. If you look at [the predictive analytics startup] Consumer Physics, that’s the product.
These technologies sound really cool, but how do you vet them so you know they’re not smoke and mirrors?
Our partner Mindshare has been doing this for two years. Between their resources and ours, we’ve reached out to a lot of people in the startup community and organizations that have vetted the startups for us. And between myself and my Israeli counterpart, we have experience in the startup world and understand when they’re ready to do business with a large corporation like Kimberly-Clark. It’s a disadvantage on both sides to bring them in too early.
There are signifiers of validity. Blessing from VC funders is one. Understanding their funding is another. Roughly speaking, we look for growth in late-stage startups.
Kimberly-Clark also made a splash when it brought programmatic in-house. Are these innovations feeding into that arena?
Ideas that will help us bring innovative media opportunities is what we’re looking at with the D-Lab. And we saw some startups [Monday night] that could provide that.
For instance, the scalability of content is important. Finding solutions in that area will help us contribute to the assets we already have in the digital media space.
So is there a single killer feature or functionality?
The thing that will help us make money isn’t held by one startup, it’ll be held by layering many startups together. Because we look at it from the problem side versus the tech side, we can recognize that.
Couldn’t that cause integration or scalability problems though?
If there’s value in their capability, we can test and learn with them. At the point we decide whether we’ll invest further, then the scalability piece becomes a stronger factor.
Read on AdExchanger: http://adexchanger.com/advertiser/ces-2015-kimberly-clark-embraces-the-start-up-scene/