CHALLENGE

Early last August LEGO executives met with Organic
Inc., the interactive agency that had run LEGO's first ever
online ad campaign just 10 months before.

They asked Organic to come up with an online marketing plan that
would both drive holiday sales (as the prior year's had) and also
grow millions of kids' excitement about and interaction with the
brand as a whole. Oh, and by the way, could they do it for a
budget that was about 30% lower than the prior year's?

CAMPAIGN

Luckily, due to the economy online ad prices had fallen
since the 2000 holiday season, so Organic's Director of Online
Media, Scott Witt, was not too daunted by the task. However, this
did not mean he was going to take advantage of the really cheap
run-of-network banner buys so many other marketers were grabbing
at bargain basement prices.

He explains, "If you're a print buyer, you don't just buy the
cheapest magazine. Online you buy the audience, real estate and
opportunity. You need to be very careful and prudent about how
you select the publishers with whom you choose to do business. I
don't want LEGO ads running on HamsterDance or CarandDriver.com.
That's not our target audience, even if it might be cheaper.
It's not all about price. I tend not to look at the ad
marketplace from a commodity standpoint."

Instead he chose buys based on five selection criteria:

1. Composition -- Were the site's visitors in the target market?

2. Coverage/Reach -- Did the site get enough traffic to make the
media buy worthwhile? Witt says, "One $60,000 buy does better
than two $30,000 buys just due to inherent economies of scale
when buying media." This was an especially critical factor in
the LEGO campaign because Organic planned invest in building
custom creative for each media buy, and would not see a reasonable
return on investment for this unless the site had considerable
traffic.

3. Historical Performance -- Had the site performed well for
prior LEGO campaigns?

4. Flexibility -- Was the site willing to be flexible not just in
terms of negotiating a mutually agreeable price, but also in
terms of working with Organic's creative team to run a unique,
custom ad for their context?

5. Instinct -- After grounding his decisions in all of the four
factors above, Witt relied on what he calls "old media school
tactics based on instinct."

After selecting media partners, Organic developed a three-tiered
campaign to approach LEGO's three very different target
audiences:

-> Kids

Although kids can not (generally) buy online, they are obviously
huge influencers of what their parents buy online and off. Organic planned a campaign that would engage and build brand
awareness for LEGO products among the under-14 set. Because kids
influence the buy rather than make it, the campaign launched in
late September which is normally a bit early for a holiday
campaign. "We wanted to stimulate demand before the child
started his or her holiday shopping list."

Creative was, well, highly creative. (See link to samples
below.) Special LEGO sections often resembling editorial content
and mini-sites were built into the CartoonNetwork.com,
Nickelodeon Online, Disney, FoxKids.com, Warner Bros.' Harry
Potter site and more. Kids could interact with many of the ads
or click through to the LEGO site, but the clicks were not really
the point of the campaign. It was all about brand interaction.

Witt notes that this type of advertorial creative is something
that is not possible for most advertisers. "We're not in this
case selling irrelevant products. It is a natural extension and a
natural fusion between where we place ads and what the LEGO brand
stands for."

-> Parents

LEGO's online campaign targeted parents launched a month and a
half later on November 1st, just about the time many parents
start thinking about holiday shopping. This campaign also ran on
popular kids sites - such as Disney - that parents might be
surfing with their children. However, the creative was adjusted
slightly to appeal to a parent's point of view.

Witt explains, "It was a question of creative rotation, not
necessarily different placements. Actual creative differences
were subtle changes in copy, color choice, graphical layout and
animation that would be naturally more appealing to adults than
kids. For example a message about shopping for gifts is more for
parents than a message about 'Come and Explore.' The exact same
piece of creative, just with different copy could appeal to a
completely different audience."

LEGO also bought the home page of About.com for the first two
weeks in November, again for a highly unique creative execution
featuring Flash, a banner, LEGO characters, and the famous LEGO
circles as a background theme. (Link to sample below.)

Witt remembers, "At first their response was, you want to do
what?! But then they were very fluid in the development process
and helped us get this thing up. About is the 5th or 6th largest
site according to Media Metrix. It was a huge brand building
opportunity around holiday time."

-> The Adult Enthusiast Market

As Witt puts it, "Myself and every other engineer and creative
person on earth with LEGOs on our desk don't shop on price point,
but on availability. These are our toys. It's no problem to pay
$200 for merchandise." As witnessed by heavy eBay and fan site
activity, this fan market is large and eager.

LEGO had a preexisting licensing deal with Lucas Arts for a LEGO
Star Wars line of merchandise. It made sense for LEGO to
sponsor starwarsgalaxies.com, the preview site for the new Star
Wars video game that fans were expected to visit heavily. Again,
creative included Flash and unusual ad units.



RESULTS

LEGO's holiday 2001 online ad campaign generated 236% more responses than the prior year's campaign, while the
average cost per click dropped by 79%. A Dynamic Impact brand
impact study on the About home page sponsorship revealed the
campaign lifted brand awareness 12%, purchase intend 13% and
message association by a whopping 234%.

The kids' campaign generated the highest direct response rate,
averaging 3%. Witt says that this was to some extent expected
because kids are far less cynical about clicking on banners than
adults are.

Interestingly results varied widely between sites, with one
creative on the Shockwave site pulling an 8.22%, while a
different creative on FoxKids was a lower-yet-respectable 1.37%.
Witt stresses that these differences are often due to the
differences in creative execution within the sites, because the
creative was custom for each. Therefore he did not purely judge
his media buy success by them.

He also notes that LEGO lucked out because most publishers "over-
delivered by a lot." In fact About tossed in an additional week
free of charge. Again this is something other marketers can't
count on happening to them. "LEGO is a great brand to put on any
site. The publishers love LEGO, their audience loves LEGO.
Putting LEGO on their site is good for everyone, it's a win, win,
win."

The parents' campaign proved to be successfully timed. For
fulfillment management purposes, LEGO did not want to get 90% of
its direct holiday orders all at the same time, so starting the
campaign in early November helped smooth out the shipping load.

While parents did not click at the same rates as their kids did
(for reasons explained above) LEGO's online store definitely saw
a latent response rate. "If you were to graph the related
heaviness of the ads in proportion to how many sales they were
getting directly, they were vertically congruent to each other"
says Witt.

The big surprise was the adult fan's reaction to the Star Wars
ads. While enthusiasts enjoyed the ads, their click rate was
"abysmal" (albeit respectable in comparison with industry average
rates) compared to parents' and kids' clicks.

In hindsight Witt can understand the low response perfectly, "We
were advertising to the pre-converted. These are people that
know about a product launch at LEGO before someone at Lego knows!
How do you get ahead of people who are naturally ahead of the
curve?"

Pleased with the overall success of the campaign, LEGO Global
Marketing Manager Alex Algermissen has said that although the
Company spent about one percent of its marketing budget online
last year, this year it will probably be closer to two percent.

See campaign creative samples at:
https://extranet.organic.com/pr/
user name: organicpr
password: pressrelease
(Yes these are case sensitive.)

http://www.lego.com
http://www.organic.com