Fernando Machado on turning creativity into a competitive advantage

0:06Ladies and gentlemen, welcome back to Uncensored CMO. We have a returning guest for you in this episode, none other than Fernando Machado, and we're going to be talking all about creativity. Now, Fernando knows a little bit about creativity, having won lots and lots of Cannes Lions. He's probably most famous for Moldy Whopper. And in this episode, we're going to talk about creativity, not just in advertising terms, but how creativity can be used across business and not just big brands, but also importantly, how creativity plays a mega role in small and emerging brands as well. finally how he's bringing all his experience being creative to bear in a new course called the growth mba with lions fernando as always is fantastic value so i'm excited to share this episode with you welcome back to uncensored cmo and i've got a returning guest here so all the way from well actually where are you fernando at the moment all the way from miami yes fernando machado well last time was at my home like where i was born rio de janeiro right yes during the web summit now we're in london that was a lot of fun as well i remember that it was it was like quite an operation that's huge it was the first time they were doing the web summit in rio and they keep coming back for more and continues to grow so it's nice to see and it is nice to have been part of the first one it was pretty cool a great experience now um you're you're working with lions now but we're going to come back to that so i want to talk to you a bit about what you're you know cooking up with with the lions team but you're um one of the things you're well known for is the role of creativity in marketing.

1:35And I remember last time you remembered exactly how many can lions you'd won over your career. But I'd love to find out a little bit more about the role of creativity for a marketer as well and how important it is. But maybe if you reflect on your time, what are the maybe the campaigns you've done that you've been most proud of that have had the biggest impacts on the business? Yeah, look, I was lucky enough to grow up in marketing at Unilever, it was my first job there. And I was looking up at amazing creative work, not just in advertising, but like in design, innovation, like even the way they do market research and all those things.

2:12So with people that were amazing, like whether it was Simon Clift was the CMO back in the day, or Silvio Lagnado, who became CMO for Bacardi, then McDonald's, worked for Natura. Like it was like really an amazing school, you know, like, so I I grew up learning that creativity can drive stronger results for the brand and for the business. So I was always striving to tap into creativity to do great creative work. And it's more than just advertising, right? I mean, sometimes you can be creative to cut costs. Sometimes you can be creative about finding an innovation that will extend the brand to a different consumer target.

2:55Sometimes it's advertising. Sometimes it's pricing. So there are different ways to be creative. And to me, like creativity is like a way of life, you know, like it's beyond campaigns. Now, if you ask me like which campaigns I think were the most memorable that I was lucky enough to be part of, it's hard to choose, right? But like, I think that Real Beauty Sketches for Dove was pretty transformational for the brand and for me and for the team and for my boss, Steve Miles, when we did back in 2013 for Unilever. And I can explain why it was such a blockbuster in terms of being transformational for the brand.

3:37on my Burger King days like there were plenty to choose from but I would say that Moji is probably like up there and then the third one I think is probably the trickiest one to choose because like there was so many like what it was Wopper the Tour or like burning stores or some stuff that we did for Notco which is a startup which again proves the point that even if you're small you can do great creative work in fact you should be aiming even higher because you're small so I will probably pick what per the tour yeah because I think the technology angle embedded on ID I think it's something pretty pretty cool yeah and just describe a bit about that campaign how it came yeah so like sketches uh which was the the number one on my list when I joined Dove it was I think like 2009-ish.

4:29And we were like really like struggling to create something as powerful as what the Dove team has done 10 years before. Right. I don't know if you remember, but like around, I think like 2004, 2005, Dove was on fire. Like the positioning for campaign for real beauty was brought to life for the first time. They did a very famous campaign for a firming lotion with the real women in white underwear. They did Pro-Age, which was like an anti-aging product. And they did Evolution, which was a brand film that was basically like a time-lapse of a real normal woman putting makeup and being photoshopped to look like a model.

5:19And that was very famous in the industry and most importantly famous with people because it really made people he think about the relationship with beauty and made them think about how the beauty industry was like putting forward unattainable beauty. And there was a bit of a vacuum like after that. So with Steve and I, I think that our ambition was to try to do something that was as close as possible, as good as we could, like trying to go into that direction. and we knew that the position about real beauty was still very relevant, but we had to find different insights. And we did a ton of research and in one of the quantitative research that we did, it was done in more than 20 countries if I remember correctly, there was a piece of data that was very shocking for all of us, which was that only 4 % of women consider themselves to be beautiful across the globe.

6:184 %? Yes, it's pretty temporal, right? That's tiny, isn't it? It varies a little bit depending on the count. Is it the same for men? What would be the male? Oh, men it would be 95%. I was going to say. Confidence. In fact, like, there are some parodies on real beauty sketches which are exactly about that. But, like, so we decided to, like, focus on that insight or on that fact, right? And we had a brief that was very simple, which was make women feel more beautiful. And Ogilvy Brazil, Ogilvy São Paulo, came up with the idea of Real Beauty Sketches, which was a social experiment. We didn't know if it would work.

6:53I would argue that it's hard to test before you produce the thing. We took the chance, we produced, and it did work. And it was like a massive blockbuster. It was the first time I worked on something that if you took an Uber, there were no Ubers back then, but if you took a taxi, there was a high chance that the taxi driver would talk to you about Real Beauty Sketches. If you went to a pub, for sure, someone would be talking about Real Beauty Sketches. So the world was talking about it and I really think it made an impact. So that to me, because of the impact it created to this day, like sometimes I present with a beauty sketch and there is always someone who may not have seen it.

7:29And you can tell like, and even if you watched it before, like it still touches people. So it was amazing, like an amazing feeling to do something so meaningful that create an impact for the brand. you could see on the brand tracker. We end up like selling more Dove, even though it was not the main objective of the campaign. It was like amazing, that feeling. And it was the first time I felt that feeling to that extent, you know what I mean? Like, and it's addictive too. Like after you create something like that. Moji, what people don't realize is that Moji Whopper started probably like four or five years before Moji Whopper.

8:06Like it started based on the fact that the level of, like when you look at the brand tracker for the Burger King brand, most of the key attributes were much lower with the younger folks than with the older folks. So if you looked at things like feeling good about the food or even association to flame grilling or great tasting food, all the key attributes of the category, because at the end of the day, it's food, right? The index for 20 to 30 years old was way lower than 40, 50 plus. So we knew we had to do something about it. People, when they go and eat a burger, they know it will probably have a little bit more fat, a little bit more salt, a little bit more calorie than eating a salad, right?

8:54But they want to eat something that is real. You know, that's the real deal. They don't want to eat artificial crap. And this sentiment was much stronger with the younger folks. So imagine that, right? We already had a position that was weak, weaker, let's say, than with the older folks. At some point, these guys, they will be demarked, right? I mean, because they will get older, the other guys will graduate from the category. So we had to do something about it. Honestly, I never thought that 10 years from now, people would still eat stuff with artificial ingredients on it, right? So if you had that vision and if you have the conviction that that's where it's going, you have to do something about it.

9:34So we embarked on this journey to change the product, you know, and it was a nightmare to do it because there is a reason why companies use artificial ingredients, right? It's cheaper, the shelf life is longer, people actually like the taste of that stuff. You know, if you put more salt, if you put more sugar, people like more, I mean, like just like evaluating taste. So it was a nightmare to find alternatives, to make sure that we are not compromising on taste, to make sure that we found clever ways to bridge the cost gap, because there was a gap, to train the people in the restaurants. Like mayo.

10:12Mayo was not refrigerated because it had a GTA, which is a preservative. Now it doesn't. So how we need to refrigerate. So it changes the procedures in the restaurant. So I'm actually more proud of that work than Moji Whopper. But Moji Whopper is what becomes famous. But people don't realize the work behind the scenes and why we did. And by the way, there is one thing on Moji Whopper that I think that people don't realize either, which is before we did Moji Whopper, we did another campaign, which was much more didactic. It was not even that bad, but it was more didactic in terms of explaining what we did.

10:50and people trying the product and liking the product and all that. We air that thing pre-Super Bowl, which is cheaper than airing on the Super Bowl, but still more expensive than airing in a normal day in the U.S. No one knows this because it didn't go through at all. It was just like a self-serving ad of us talking about ourselves in a way that people just don't engage. It's very important to improve the quality of the food if you are a restaurant. it's amazing what the team was able to do in terms of removing ingredients from artificial sources. But in the grand scheme of things, you have bigger fish to fry in your life, right?

11:30So to make that message cut through, because you need to make the message cut through. You did all the work. By the way, we lost a little bit of margin because it was more expensive. So I need to get credit for that. So we need to do something that people will notice, right? And because I had a very clear target audience, which was the younger folks, we did something that was very digital by nature that had, we thought it would have a high degree of virality because of the way it was done. We put a lot of attention on the craft because we know that no one wants to eat a moldy burger, but we made it look mesmerizing and beautiful, almost like hypnotic.

12:10On the case study, if you watch, there is a reporter that says, I shouldn't be looking at this, but I cannot stop looking. You know, like we wanted to have that effect. We never put Moldy Whopper in the restaurant. We never put Moldy Whopper in the menu board. We didn't put close to the food. We put where people would see, notice, and understand the message. And all the research that we did shows that they did. And the tour, Whopper the tour, is in my view, the best example I can think of on how creativity can bend reality. You know, like, man, I tried everything to have people download the Burger King app and use mobile order and payment.

12:55Like, it was pretty damn expensive if I were just to spend in performance marketing to achieve that. Maybe even with the expensive price, it would still be worth it because the lifetime value of those people would be much higher than 10 or 15 or 20 bucks that we're spending for each person. But I didn't have a big budget. You know what I mean? Like, I have a constrained budget. We tried, man, absolutely everything Like someone on my team said Why don't we just give away Whoppers? And I was like, that's brilliant Because the Whopper is probably like less than$2 For Burger King in terms of cost And the cost to have someone download the app And use the app is like more than$15 So I'm printing money by giving Whoppers to people And we took like 10, 20 restaurants in Miami Because Burger King owned, the corporation owned those and we put like a massive sign behind the counter saying, download the app, order the app, get a free Whopper.

13:52So I cannot think about the best media placement for a message, right? People are in the line to buy the Whopper. In front of them, you have a sign that says like, download the app and get a free Whopper. And no one did. They didn't. No, they did not. Why? Despite getting a free? No, because people just don't pay attention to anything. Everyone is on their phone. Like people, if they saw it, Some people don't want to put the credit card number on the app. People just don't care. You know, like I've been in London for a week now. I don't remember any out of home. You know, like every single bus shelter has an out of home here.

14:28I don't remember any. I don't remember any billboard. I didn't watch much TV, but the little that I watched, I don't remember any TV ad. You know, you talk a lot about the cost of dough, right? But most things are dough. So we did something that was based on the fact that we knew that our fans love a good banter between Burger King and McDonald's. By the way, when we do the banter, we don't punch them. You know, that would be stupid. People love McDonald's. Why the hell would punch them? There are more people who love McDonald's than they love me. So it needs to be done with a self-deprecating tone, a little bit crazy, a little bit out there.

15:04And this is what the tour was. It was a promotion where you would be able to buy a Whopper for one cent, but only if you're close to McDonald's, which is kind of like a mindfuck. I don't know if I can say that. But when people listen to that, they're like, whoa, whoa, wait, wait, wait, wait. What are you talking about? You know, like when I presented the idea to the CEO and to the CFO, which, by the way, I used to do that more to bring them in the journey than anything else. It was at the stage where I had like full trust from those guys. But I said, hey, we have the idea to launch mobile order and payment.

15:41And they were like, tell me. And I would present without slides. I would just tell them. It was not even in a meeting. It was in a corridor in a hotel because we were having a workshop. Then I told them, imagine the headline. You'll be able to get a Whopper for a cent only at McDonald's. And they looked at me and were like, at Burger King, right? You mean Burger King? No, no, at McDonald's. And they were like, what do you mean? And then I explained and they died laughing. We were laughing for like two, three minutes And then I told them, guys, don't give me feedback now I don't want your feedback Tomorrow we'll meet and then you'll give me feedback But when you come, just remember how much you laughed And they went home, told their families, their families laughed The mom told the son, the son laughed Told the daughter, who also laughed So they all laughed So they came back next day, like, yeah, let's do it Because there is little downside anyway That's the thing that people don't understand moldy uh the tour even sketches the budget was not high you know like the idea was so powerful that we pulled back a bit uh on media budget because it took off in terms of organic coverage in terms of social chatter in um like facebook instagram um all that yeah it's funny you mentioned in the presentation there's a little bit of the presentation i've become a little bit obsessed about, which is we were looking at research about what makes something not dull.

17:08And Adam and I came across this piece of work done in 1972, right? It was a guy called Murray S. Davis. And the whole study was what makes something interesting. And the summary of all the study was what makes something interesting is when you deny a key assumption of your audience. In other words, you surprise them. So the key assumption of your audience is you only present pictures of food that are beautiful, luscious, desirable, melt in the mouth, you know, the food porn or whatever, you know, that people say. And you absolutely denied someone's assumption by doing the opposite of what people are expecting to see.

17:43And therefore you're surprising people. I mean, I know when we did the system one test on, we have not seen so much disgust and surprise at the same time. In the spike rating, which is, I mean, we work out the short-term activation number is derived from how strongly do people feel and how quickly does the brand you're advertising come to mind on both those things you were off the scale you literally just went it just you know because you it was so arresting wasn't it as an image and it kind of destroys it kind of challenges the norm in that category in a dramatic way doesn't it yeah but what by the tour is the same yeah if you think about it right i mean i'm going to do a promotion by sending you to the competitor like who would do that you're denying assumption like no one would do that everyone like what yeah what are you talking about and i think that's why it works i would say that sometimes surprising people with something that there is no reason for being can also grab people's attention you know i remember like the classic i think it's david ogrevy uh print ad where the guy had the eye patch and people are like why does he have an eye patch like no reason yeah you know but you remember yeah because it stands out because you you you'll you notice because the brain is so efficient at processing the world that when something doesn't fit with your kind of mental view of the world it's like well why is that there yeah and it's it's yeah well like i think that one of the key challenges we have in marketing is how to not conform with the sea of sameness that's out there you know and we need to be creative to find ways to do that ways that like have a reason for being, right?

19:22I mean, that have like a business objective or like a business objective related to sales or profitability or brand attributes that you want to shift and all that, which ultimately should lead to sales and profit anyway. Yeah. I mean, it's like the first job of any advertiser is not to be ignored. And I think that's why we do the cost adult because you do realize that most advertising is ignored, generates no emotional response. And your first job is to be noticed. It's the classic quote from Bill Bernbach, right? I mean, one of the founders from GDB, which is, if your advertising goes unnoticed, everything else is academic.

19:55Exactly, yeah. But when growing up, like in marketing, I used to spend much more time focusing on whether it's communicating the message and whether it's well-branded than on whether it would get attention. And as I grew older, of course, the brand should be part of the story. It should be well-branded. Of course, it needs to communicate the message. We are not here to just do artistic, crazy stuff. But I give a high premium for control and attention. Because if it's well-branded and communicates the message and no one cares, unless you have infinite amounts of money to rub that thing in the face of everyone, no one will care because they will not notice.

20:36Yeah, there's a lovely quote. I think it's Greg Hahn who said, I tell my clients they don't have the budget to be boring. I mean, if you have massive budgets, you can afford to be boring. But for most of us, we can't afford to be boring. You said something at the beginning of the conversation which struck me in terms of creativity is more than advertising. I remember a few years ago, I set myself a task of trying to work out the five most creative things I've done in my career. And what was interesting is only one of them was an advert. In fact, the fifth one was an advert. but the top four involve some kind of other business, you know, solving a business problem.

21:09I was just curious from your point of view, like what would you say the most creative things you've done that haven't involved advertising? Oh my God. I did like in no particular order. On my first job in marketing, I was a trainee working on fabric softwares in Brazil. And I had never read Philip Kotler. I didn't know what the four Ps were I was clueless I studied mechanical engineering and I was working as an intern in a factory and I pitched Unilever to go to marketing and they allowed me so I arrived there on fabric softeners Unilever had two brands in Brazil Comfort, which was the more premium brand and another brand called Fofo which is kind of snuggle, it's a teddy bear brand and of course they are not that crazy so Fofo had no budget so I was managing Fofo So, and I was coming to the meetings with the comfort team to see what you can do when you have budget, let's say.

22:08And my boss, his name was Dimas Mieto. He told me, I came to him and said, hey, I would love to invest a little bit behind Fofu. And he said, well, you won't because there is no budget and the little budget that we have goes to comfort. But then he said, but if you're able to save some money, you can invest the money that you save. And then what I did was I tried to leverage my background in engineering and packaging to basically find ways to save money. And then I work with supply chain. I work with the guys that give me the whole breakdown of cost. And I try to have an impact in cost without changing the quality of the product.

22:49So one thing I did, just as an example, was I had read this research about the fact that color really influences how people perceive fragrance. So I did a quantitative study to check if I put all the, like if I just had the same fragrance on the three varieties that I had for Fofo, with the same fragrance and different colors, people would notice. And they didn't. and the number one product was the blue one, which had the best fragrance and it was the cheapest because of scale. It was like 60 % of the volume. So lots of scale, lower cost. So I put the same blue fragrance on the tree, right? And no one, probably to this day, no one realized that.

23:32That was nice. And I saved like 300K or something. Wow. And he invested that on creating a bottle that was the shape of the teddy bear, which took me a year to do it. And it was not my idea, by the way. That's the other thing. Great ideas are ideas in the real world, not in the PowerPoint. Oh, totally. Right? So that was like in any brand or any company, you have usually like a pantry full of ideas that people didn't do because it was too difficult, because they were impossible. The teddy bear shaped bottle was one of those impossible ideas. So I leveraged my background in packaging. I had a really good connection with the packaging team at Unilever because I worked for them.

24:15I had a really good connection with the factory because I was working there and I played soccer or football with the factory team. So we made it happen. And it was the record high sales. No advertising. Imagine how they stand out of that packaging, right? I mean, a teddy bear shape in the sea of sameness of colors, which is the fabric softener's category. So saving money, reinvesting money to do something. I think there was creativity on both. There was creativity on saving money. It was creativity on investing on something that people consider to be impossible. I think that's a great example.

24:51I think that the other thing, and I don't know, like, I think that I can talk about, like, things that I'm most, that I'm really proud. like I'm really proud of the creative culture that we build at Burger King you know like and people don't realize but I used to control the budget mostly for the U.S. all the other markets they were master franchisees so it's not that they don't report to me they are completely different company all together right I mean sure like they need I have certain boundaries that I can impose, but that doesn't, it's not how it works, right? You really need to bring people along on that journey.

25:36And I don't know if that's creative or not, but like, I think I invested a ton of time making sure that the brand was clear, that was easy to deploy, making sure that those guys felt part of the same team, making sure that they got the credit for the ideas that they brought to the table, making sure that they saw me as a partner in crime to do great creative ideas. And I'm really, really, really proud of that, right? I mean, and the fact that they continue to do good work even after I left, to me, that's also our role as leaders to create an organization that is not just dependent on you. What else?

26:17in terms of creativity, I think that like I was, maybe because I was an engineer, I was always like very curious about the technology behind the products. So when I was a new lever, and even on Nautico too, I used to spend a lot of time understanding how the products work, the ingredients, the claims, how we measure things, you know, like I remember when I was on Vaseline or when I was on Dove, I spend a lot of time on the R &D center in the R &D facility in Trumbull, Connecticut I was based out of New York or based out of London for Dove and I will go there all the time and I think I helped the guys many times to come up with product ideas that they're still in the market today I remember when we came up with the idea of launching Vaseline Cocoa Butter which was a lotion that was very targeted on African American skin back in the day we had never even done like a test a functional test of the product just with african-americans even though african-americans dramatically over index on the brand on vaseline but we are doing clinical tests and product tests and advertising research and all that stuff with gender population never with an ethnic group and that both african-american and hispanic over index with Vaseline.

27:42So we said, let's create a mix that over delivers to that target audience. And then we started to study the way melanin works, the way dark skin reflects light differently than white skin, all the kind of like the science behind skin, behind dark skin, behind white skin, behind how the products work and so on and so forth. And we target ourselves to create a product that would improve, shine, or glow on black skin. Okay? And I remember that when I explained to the R &D team why we needed that, I remember the R &D team looking at me and thinking, Fernando, we don't even have a machine to measure that.

28:25You know, like, so I was like, okay, so we need to buy a new machine for the lab. And we did. Like, we bought a new machine to measure light reflection on skin. and we designed a whole range with a lotion, a thick cream, an oil, and a body butter focused on improving the glow and shine of black skin. And I think that's very creative because you understand your target audience, you understand what the needs are, you find an opportunity, and we created a product from scratch with claims that we could not even do before focusing on that target audience. And by the way, the product is still in the market today.

29:06And the story I'm telling you is like probably like 20 years ago. Right. I mean, how many products stay in the market for five years? I love those examples. Amazing. I mean, going back to your first one as well, like every marketer moans they don't have the budget. Now, imagine if you're pitching to the CFO going, I want to increase my budget by 50 % or whatever. Your chance is fairly low. If you went to the CFO and said, I found a way of saving money. Will you give me permission to reinvest that in the brand? I think many of them would say yes. So again, creativity and framing, you know, how you approach business.

29:39It's funny, I remember the most creative thing I worked at when I did my list of five, I was working for a small juice company and I accidentally found myself on a government committee. I've never been on a government committee before, right? And this government committee were deciding new legislation for schools, right? And they wanted to reduce portion sizes. They wanted to limit the amount of sugar that kids were taking in, right, every day. and they wanted manufacturers to comply. And I was one of 10 manufacturers represented on this committee. And what was amazing is we're around the table.

30:14All my competitors were going, oh, that's a lot of investment. We'd have to change the lines. We'd have to invest in capital. You know, it would be loads of complexity to make a smaller bottle. And I sat there and thought, this is amazing. If I'm the one that moves and moves quickly to make this new smaller bottle. You'll be the only one in school. Exactly. I know. I was like, this is brilliant, right? So I was listening to everyone else. And of course, I was pretending, oh, it's going to be really complicated for us. It's probably an 18-month project, you know, secretly go, right, when I get back to the factory, we're doing this now sort of thing.