Papa John’s Shaq ads more effective at driving consumer search engagement: EDO

Shaquille O’Neal joined the Papa John’s board of directors in March 2019, but the basketball legend is under scrutiny after a proxy firm claimed he attended less than 75% of board meetings during his first term. EDO, Inc. CEO & President Kevin Krim joins Yahoo Finance’s Zack Guzman to discuss why Shaq is still an important asset to the pizza company.

Video Transcript

ZACK GUZMAN: One of those stocks that is up right now is Papa John's, up by about 4%. And you might think that it would be smooth times for a pizza chain as more Americans are staying at home and delivering. But it's been a bit of a dramatic week for Papa John's.

And that's because a shareholder advisory firm, Institutional Shareholders Services, came out gunning for Papa John's board member and former NBA superstar Shaquille O'Neal, saying that he should be not re-elected to the board after missing more than 25% of the company's board meetings.

But of course, ISS reversed that statement, saying yesterday that he should be elected to the board because it was his first year on the board, and therefore he was not able to change his schedule.

All that drama, though, got us thinking just how effective has Shaquille O'Neal been for Papa John's as a board member and the way he's appeared in advertisements just like this one. Take a look.

SHAQUILLE O'NEAL: Growing up, I never thought I'd get to this side of the counter.

1, 2, 3, Papa John's!

As an actual store owner and board member--

I'll be back, boss. I'm going to drop off some pizzas.

--I want to bring that Papa love to the community.

ZACK GUZMAN: All right, so for more on this, we're joined by our next guest, Kevin Krim, who is CEO and president of ad analytics platform EDO. And he joins us now on the Hangout. And Kevin, I know you dug into the data, your team did in looking at this, to figure out how customers are responding to Shaquille O'Neal ads for Papa John's. What did you find?

KEVIN KRIM: Thanks, Zack. Yeah, the campaign that Papa John's launched last-- the end of last summer, right, as the football season was kicking off, featuring Shaq, who's a brand ambassador and a board member and an owner of nine restaurants of nine Papa John's in the Atlanta area, was super effective. It was a huge rebranding effort for Papa John's after all the controversy they had with their founder.

Our data at EDO showed that every time one of those Shaq ads for Papa John's aired on TV on national TV, Papa John's saw an excess amount of search engagement, as we measure it, after every one of those airing, versus their own benchmarks of historical ads on TV, plus the pizza category overall. I think you have some of that data from us, and it shows that that was an incredibly effective campaign at driving engagement, driving a change in how people were thinking about that brand.

ZACK GUZMAN: Yeah, it's kind of surprising to see, 37% more likely to go in search online for the brand in the minutes after Shaq's ad versus other pizza competitors, and then also 30% more likely to search compared to Papa John's own ads. So I guess that would indicate that he is at least delivering on being in the ads, but the question is, should he be on the board? And I guess, you know, that's a little bit harder to tease out here.

But of course, right now, a lot of companies are kind of vying for Americans' attention as they are staying at home and delivering. What have you seen in the broader context of restaurants as well here?

KEVIN KRIM: Well, it's fascinating, Zack. So you know, Shaq's work with Papa John's coincided with a real turnaround in performance from Papa John's, where they saw results up in the last quarter of 2019. Obviously-- and a strong stock response as well.

Obviously, things changed dramatically as COVID sort of swept through the country in the world. We saw stocks down. We saw restaurants closing. And yet, what we've seen in our data is that people are watching a lot of TV. They're at home. They're watching a lot of TV.

The response to ads has changed dramatically. As consumers have started realizing what the economic impact is going to be of COVID, the way they've responded to ads overall has gone down. The average consumer has responded less well to ads since COVID really kind of kicked in.

We used March 11th, when the NBA canceled its season, as our demarcation line. And since then, the response rate from consumers to overall ads has been down about 10%. For certain categories like non-luxury automotive, it's been down more than double that.

The one category out of over a dozen that we track closely that's been up has been pizza and quick service restaurants. As those brands started changing their creative to emphasize delivery, take-out, contactless payment, and those other ways that they could serve people in this crisis, consumers have responded and responded really well. So pizza ads have been up 9% in certain weeks since then. And that marks a huge trend across the industry.

ZACK GUZMAN: Yes, potentially more reasons for a Papa John's not only to keep company ads, but keep sticking with Shaquille O'Neal here, too, as it seems to be working. But for more, I mean, on all of that, it's just, it's kind of shocking to see how many industries have been impacted by this. But if yours hasn't, more reason to continue with it. But for now, Kevin Krim, CEO and president of ad analytics platform EDO, appreciate you bringing us the data, my friend. Stay well.

KEVIN KRIM: Thanks, Zack.