CNBC Transcript: Interview with Julia Goldin, Chief Marketing Officer at Lego

Marketing|Media|Money profiles the chief marketing officers at some of the world's biggest brands, exploring their careers, their business challenges and how they are directing their significant advertising spend.

Following are excerpts are taken from the latest episode of Marketing|Media|Money with Carolin Roth and Julia Goldin, Chief Marketing Officer at Lego.

CR: We're now joined by Julie Goldin, Chief Marketing Officer at Lego. Thank you so much for joining us. Really appreciate your time. Whenever we talk about Lego at CNBC I'm always really surprised and fascinated about the fact that kids still play with Lego despite the dominance of smartphones and tablets. Why is that you think?

JG: I believe that what's in Lego is a very enduring and very simple idea but it's an idea that gives kids tremendous number of possibilities, unlimited possibilities to express their creativity, their imagination and to make something. So every year, we come up with something new for them, something that entices them, something that makes things exciting for them. But what I see when I see kids engaging with Lego is exactly that kind of indescribable experience that is really engaging for them. They love to build and at the same time develop so many different other facets, their ability to express themselves, their ability to problem solve, their ability to break something and put it back together. And it's incredible how much you can do because six of these bricks can come up with nine hundred and fifty million different combinations, it's just amazing what they can do with Lego, and I think the endurance of that is what actually makes it continue to be so important to their life.

CR: Julia, how exactly do you do your research, because you say every year you try and come up with something new, but kids are so fickle and big data doesn't really help with telling you what the next big thing is that kids are going to catch onto. How do you do that?

JG: Well, I'm very lucky to have an incredible team that's super excited and committed to kids, but it's through a combination of different things, one, we definitely follow what's out there, what interests kids and what are they into. It's social media, it's looking at the trends, it's looking at the themes and what's coming up. And second, speak to kids directly, every week they come over, we actually have them over at the development office where we develop the products and reengage with them, we ask kids about the product. We ask kids about what they're in, we show things to them and the best way that we can learn about kids is actually to see what their real lives are like. And to actually ask them what they think about things.

CR: I want to talk a little bit more about Lego's history, roughly 12, 13 years ago your company was in real big trouble. You racked up massive financial losses, more than $400 million or so, your company was close to bankruptcy, but then got a new CEO and he really turned things around. Now Lego is one of the biggest, most profitable toy companies in the world, in terms of the brand value it's in the top 100 of the most valuable brands in the world. From a marketing perspective what was the biggest driver in the turnaround?

JG: Returning back to the core, returning to the belief about this, the power of the brick, and focusing our energy on making the brick the essential and building off of the idea that's so enduring and continually renovating it, continually bringing new ways of introducing kids to it. That enduring idea is still very much within the company which is why they are able to go beyond the brick, but always come back to the brick, that always is the core.

CR: You've also made a very big push into film and TV production. I want to give viewers a look at the Lego Ninjago TV series.

(LEGO NINJAGO TV SERIES CLIP)

CR: It's not the production of series, it's also of course the production of the big Lego movie and other movies. Are you surprised by how much of a hit that was? And how did this whole idea of going into movies and TV series actually come about?

JG: Well that idea comes from the fact that Lego… we always think of Lego as play materials and Lego doesn't just have an amazing experience with the bricks but it also has a voice with a sense of humor that people recognize, and that of course inspires many different interpretations. So we are very lucky to have people like Warner Brothers who are great partners, who were inspired by the idea and came to us, you know, with a proposal. But of course, to take it from that concept to reality is a lot of hard work on the part of many, many very creative people. You could say the results probably surprised everybody. You know it was just such an amazing experience for anybody who views the movie, both from a perspective of the idea that it gives, and themes that it has about creativity and not losing your imagination, even when you get older, which is something that just really resonates with everybody, adults and kids. But at the same time, also in of course a completely unexpected look into what LEGO can do. So it was a very great experience and of course inspired more cooperation and collaborations of the future.

CR: Are you a content producer or are you a toy producer, what are you?

JG: Well, we always think of Lego as more than just toys. But we are definitely committed to developing products that give kids the best experiences. Of course we also develop content that engages them. Of course we also produce digital games that they love to play. But at the core it's about Lego, it's about the bricks.

CR: You mentioned digital games and I want to pick up on that in terms of your digital strategy, you're really pushing into the new segment called "toys to life" category. It is in the U.S. alone a seven hundred million dollar category. Some people say that you're entering it too late. What are you think?

JG: Well we've had the launch of Lego Dimensions this year and it's definitely captured kids imaginations but it would be also fair to say that you always have to stay on top of the trends because trends evolve, kids get into new and different things so we're very happy with the way that the products have gone and we've had great responses from kids who've been playing with them but they're also looking into the future.

CR: But hashing out a digital strategy certainly isn't easy and we saw that there have been many trials and tribulations when it came to defining your digital strategy. Some failures too. How difficult was it getting to the stage to actually launching Dimensions?

JG: It was again a very collaborative process with our partners at Warner Brothers. It took a lot of work to develop exactly the right experience and give the kids a really interesting experience and that's how digital products are. You know, in this space, you always have to experiment and iterate and learn and take some risk. So I wouldn't look at the past as failures, I would more say it's just a different road to how you can develop some of the future.

CR: When your company was dealing with all the troubles back in 2003 and 2004, the new CEO came in and he said one of the problems at Lego was the fact that you were over diversified. Now when we look at your strategy once again, it's still the core around selling the physical bricks but also going into gaming, into television, aren't you becoming over diversified once again?

JG: I think it's a very different story from where we were in those times. We were diversifying away from the brick into different types of products. We're actually staying very close to the core and if you look at our digital games and if you look at all of the content that they're creating, it actually connects back to the themes of our physical product. So we're looking at what we're delivering from a very integrated experience standpoint. What is very different in the mindset today is that, of course, this starts with a core product but we know that it's not just the product alone that the kids expect. Kids are living in a very multidimensional world and they are so used to having multitudes of different touch points around themes that they love. They want to be able to see something online. They want to be able to engage with an app, that they want to play a game, they want to be able to see another kid unboxing the product and building something with it. So we look at it as a 360 holistic experience and that's where we get the ideas to develop the multitude of the different touch points. But everything connects and that's very different from the diversification that was happening in the past.

CR: Do you think though that maybe in five, 10, 15 years I don't know, pick a number, you might not be selling physical bricks anymore?

JG: No… I believe that the core of the idea is very enduring and that's our mission. We know that when kids play with Lego, when they build with Lego, they have an incredible experience that develops them, that gives them what we call 21st century skills and then, at the same time, they have fun and it stimulates their imagination, and I don't think that there is a replica of that in a non-physical world. So I know for sure that 30 years from now we will be focused on the core, but of course the experiences around that core I expect will evolve as the kids evolve.

Part Two

CR: Welcome back. You're still watching Marketing|Media|Money and we're now joined by Charlie Crowe, founder of C Squared, a regular commentator and industry expert. Charlie, I'm sure you're a big fan of Lego, did you play with it all your life?

CC: Well everyone loves Lego and that's one of the great strengths of the brand isn't it? I think what's interesting about the discussion so far is to understand the balance between what we call in marketing 'paid media', 'earned media' and 'owned media', it's is a big issue among brands at the moment, how much of the budget you deploy on buying ads and TV spots. How much time do you spend trying to create things like games and films and how much time do you spend harnessing your passionate evangelical fans through media you might earn on social media and so on. So I think, you know, it was interesting to hear what Julia says is, what is the balance right? What have you learned from your time at Lego, how much time and budget needs to be deployed across those three things for maximum impact?

JG: Well what struck me when I came to Lego is how impactful and accessible the brand is and how much it draws the attention from kids and from parents and from adult fans of Lego. At the same time as we already also discussed, content is also becoming increasingly more important because Lego is an amazing set of play materials and we've learned that it can create content that truly engages. So both owned and earned and actually stimulating advocacy and continuously supporting our adult fans of Lego who are such tremendous advocates for us – all of that of course is very important at Lego, probably more so than I've experienced ever before – provides us with huge opportunities.

CC: And when a big brand company focuses more on owned media, that actually requires quite a change of culture and approach, working with new partners, trying to investigate new metrics. How much of the marketing and content expertise do you bring in house for Lego and how much are you prepared to outsource and cede a little bit of control?

JG: We have tremendous developers in house. We have very talented teams that came up with new themes like Lego Ninjago - is a home born idea. We also have our own consumer marketing agency and they create a lot of our content. But one of the things that is also very important is to be organic in how you work with partners. So we have very organic and seamless relationships with our partners and there is content we create together with our partners because they bring a set of expertise and there's also things that we create internally but we've partnered very successfully with TT Games who develop a lot of our digital games, with Warner Brothers, with Disney, we have some tremendous partnership opportunities and we build them as well as building in-house capabilities.

CR: Julie before this you worked at Coke and Revlon. What would you say are the biggest differences working in the cosmetics and in the fast moving consumer goods industry versus this?

JG: The biggest difference with Lego is the culture of Lego because there's such commitment to the mission of inspiring and developing the builders of tomorrow, that is not anything that I've ever experienced before. And that commitment is through and through with all of the thousands of employees that we have no matter where I go, that's what truly inspires people and that's why they're so committed to the brand and to the company and that has been a very rewarding experience for me.

CR: The other big difference between the companies you worked at before and now is this is a privately owned company. There isn't as much scrutiny, you would think. Is that an advantage, disadvantage?

JG: We have tremendously dedicated owners who really believe in the Lego idea and I think that stimulates us to always focus on delivering the absolutely best to kids and make sure that we continue to inspire and engage them and to reach as many kids as possible with Lego experiences.

So that commitment, that level of commitment, of course, is something that is a real benefit for everyone who works at Lego.

CC: We talked a little bit about your advocates. One of the classic challenges that marketers face again is how to harness influencers without perhaps trying too hard, you need to keep the trust, it needs to look natural. How much of your social media work is forced and pushed by your marketing teams and how much is genuinely natural and true consumer input which you just allow to go out to social media channels?

JG: When it comes to adult fans of Lego we're completely open. It's very important that people can feedback what they think and it's very important for us to support the adult fans, for example, who do a lot with Lego, a lot of very interesting things and then just make sure we support them and we acknowledge them and we help them as much as we can in their endeavors. So that's not a push. We do very interesting social media campaigns that actually invite people in, like last year we did a campaign on Facebook when we asked moms to ask their kids to build a crankywangy. Crankywangy's nothing, it's just an idea, but it's an opportunity for kids to express themselves and we had 15 million moms engaged and that was a very well received campaign with loads of kids uploading their videos and photos. You know really, really great ideas of what crankywangy means to them. So there's a good mix there. But in terms of people's ideas, we take them in.

CC: You mentioned mothers, again a challenge to any toy manufacturer is how much of the advertising budget goes to the people who are going to buy the product as opposed to the people who are going to pester for the product. How do you manage that difference?

JG: Our number one priority is always kids. And it's not about pestering but it's more about creating that desire and making sure they know about the new products that are coming out, you know, and exciting them and engaging them. So that's really always the number one priority. We do communicate with parents, I just gave you an example of a social media campaign that we did, but we also do communicate with parents in mass media as well because it's also very important for parents to understand what Lego delivers to kids. And in many countries around in the world, parents have not experienced Lego. I'm a perfect example of that. I grew up in Russia and didn't have any Lego experience so I learned about Lego through my oldest son when he started to actually get into it and I really, you know, that's how I discovered it and we're continuously entering new areas, new places, like China being a great example, where parents don't know what Lego is all about. So it's also important to give them the message.

Part Three

CR: Julia I want to come back to your movie franchise, a very, very successful one and you're launching a new film, The Lego Batman Movie, I want to give viewers a quick sneak preview.

(LEGO BATMAN MOVIE TRAILER)

CR: Julia, what exactly can you tell us about that? Well, we will take any snippet of information, a plot or any spinoff toys, anything?

JG: I can tell you I'm anticipating seeing the film as much as everybody who has seen this trailer, it's been extremely well received and of course, Batman is such a well-known character, but Lego Batman is something completely unique with his own sense of humor. It's going to be a very exciting ride for all of our audiences and I'm really looking forward both to the movie and the products.

CR: Charlie what do you make of Lego's movie strategy? It seems like they've hit a goldmine with The Lego Movie in 2014. Do you think this is a viable strategy going forward?

CC: Absolutely, it's a lesson to many marketers about how to really understand how their consumers engage with the brand and how they extend it is going to be quite a challenge. I mean the business has been, they've seen Minecraft a few years ago and has responded to that through its gaming, it's looking at what Pokemon Go are doing now with the virtual and physical world so I suppose the one concern might be that the overreliance of all of these film franchises which is creating a huge extensive amount of new toys that you have to make may well cause something of an over stretch. That's the danger, how do you not go too overboard on movies and the product developments around those movies.

CR: Is there an overreliance on movies you think?

JG: I think that's a very important point that you've mentioned about not being over reliant. We love the opportunities that the movies provide, of course, and we are working with our partners on the launch of Lego Batman, we're looking forward to that very much.

But again you know our focus every year is starting from scratch. So our focus is always on what are the right themes, what are the right products and very importantly what are the building experiences and what are the 360 experiences that we want to create for kids and therefore we're always focusing on what is right and what is new and not over relying on one particular aspect of our strategy.

CC: How important is 3D printing and the potential revolution, if every home has a potential 3D printer obviously the potential for LEGO, the disruptive nature of that, do you think that's a reality?

JG: 3D printing is something that we are already incorporating, how we develop the molds, and there are some very good technologies that are out there that are very useful, in terms of 3D printing in the homes, the technology is not nearly in the quality we would need it to be in, you know, in order to actually match up with the kind of expectation of quality that we have from our products. But it's something that we continuously monitor, we always monitor all the trends, all of the new innovations and technologies that are out there and figuring out ways to incorporate them in our business.

CR: Julia, based on the facts and figures and what you're telling me, things are going very well over at Lego, no doubt about it. But what are the biggest inherent risks to your business, what's keeping you up at night? What are the challenges?

JG: The biggest challenge that is always something that I think about is the fact that to capture kids imagination and to capture their interest is increasingly more and more challenging because there are so many different things that occupy them, there's so many different things that steal their attention, there are so many different things in which they can engage. So I think our job to innovate is probably the most important and the most challenging, and that's what keeps me up at night. What's the next big thing, what's the next innovation, what's the next portfolio going to look like, what's the next big theme that's going to engage them?

CR: Julia, thanks so much for that, I want to thank Julia Goldin, the Chief Marketing Officer at Lego, also want to thank Charlie Crowe the founder of C Squared. That's it for Marketing|Media|Money. I'm Carolyn Roth. Bye. Bye.