Dominos Admits Pizza Was 'the Worst'; Bets the Company on Ads Vowing Change

(MoneyWatch) 

• Read the BNET Q&A with Domino's Chief Marketing Officer Russell J. Weiner in Domino's: Why We Reinvented Our Pizza -- and Then Promoted How Crappy It Used to Be.

Business case study writers, start your engines! Dominos Pizza (DPZ) is embarking on an advertising experiment that will make or break the idea that brands should be honest about their failings. You've probably seen the company's TV commercials for its "revamped" new recipe pizza. But have you seen the longer video (see below), in which executives and customers describe Dominos old pizza as "cardboard" and "the worst excuse for pizza I've ever had"?

It's brutal. Executives watch focus groups berate the product -- "the sauce tastes like ketchup," says one -- and admit that in the past, their pizza had its failings. "That's hard to watch," says one Dominos exec with a lump in her throat. "When you first hear it, it's shocking," says another.

The rest of the video is devoted to a description of the new, fresh ingredients that the chain has vowed to use from now on. (The campaign is handled by MDC Partners (MDCA)'s Crispin Porter + Bogusky.)

The chain has also given us some metrics to measure its success: Franchisees have agreed to contribute 5.5% of sales to a national advertising fund, up from 4%, according to Dow Jones Newswires, and the chain expects to see a 3% to 5% revenue increase at international stores.

The chain is literally betting its brand on transparency:

"The old days of trying to spin things simply doesn't work anymore," President Patrick Doyle, who will become CEO in March, told The Associated Press in an interview. "Great brands going forward are going to have a level of honesty and transparency that hasn't been seen before."

BNET has long argued that strong brands should be transparent with their customers (remember Nike's LeBron James dunk competition fiasco?) but we didn't expect such a direct, bet-the-farm test from a major chain like this one. Bravo, Dominos. Fingers-crossed that in a year's time shareholders and franchisees aren't demanding Doyle's head, blaming him for an ad campaign that criticized the product. (Dominos' marketing director Karen Kaiser and pr man Phil Lozen are both in the video, so their heads are on the block too.)

In the meantime, Citi is bullish on the stock.