CORPORATE CASE STUDY: PR prowess gives LeapFrog a jump on the competition

While the education value of its products helps Leapfrog stand out from the other toymakers, its sales success is aided by a steady PR strategy that could serve as a learning tool for many.

While the education value of its products helps Leapfrog stand out from the other toymakers, its sales success is aided by a steady PR strategy that could serve as a learning tool for many.

Kimberley Pierce has a lot to say about Leapfrog Enterprises, the Emeryville, CA-based company where she's handled PR since 1999. But one thing she won't say is that LeapFrog is a toy company. "We see ourselves as a learning company," she says. Semantics? Not quite. By skillfully using PR to position its products as fun learning aides for toddlers, children, and young teens, LeapFrog has essentially created a category of toys - and made itself the leader. "They've revolutionized the educational category. It was a dormant category, and they brought life to it again," says Jim Silver, publisher of The Toy Book, an industry publication. Positioning its products as educational aides also means LeapFrog can promote its offerings year-round, rather than merely in the frenzied pre-Christmas selling season when every other toymaker is fighting for media attention. Indeed, some PR pushes, such as for new offerings this year in its grade- and middle-school-targeted Quantum Leap line, have been tied to events such as the beginning of the school year. Targeting parents "PR is absolutely a year-round proposition here," says Pierce, LeapFrog's PR manager. Those who have watched LeapFrog grow say PR has been the primary driver of its business. By focusing its PR efforts on parents and key influencers of parents (trade magazines, women's publications, TV morning shows, and others that create lists of hot toys nationally and regionally), LeapFrog has gone from a 1995 start-up to a publicly traded company that ranks just behind industry heavyweights Mattel and Hasbro in terms of market recognition and reputation. This year, it's pushing four hot products: its long-established LeapPad, its LeapStart Learning Table, its Quantum Pad, and the Pretend & Learn Shopping Cart for preschoolers. "We're talking to influencers all the time. It's one of our top priorities," says Lorie Appelbaum, the management supervisor in MS&L's San Francisco office, who oversees the agency's LeapFrog team. Adds Bill Orr, managing director in MS&L's San Francisco office, "I think the power of this brand is its availability to everyone - its ability to put the product in front of the right reporters and the right influencers." The results are evident in sales and earnings. The company had revenues of $313 million in 2001, and will easily surpass that this year. It reported sales of $182.1 million in the third quarter, it's first since going public in July. It expects fourth-quarter sales to be between $185 million and $200 million. Third-quarter sales represented a 62.1% increase from the same period last year. More importantly, net income for this year's third quarter was $26.7 million, up 89.4% compared to the same period last year - impressive results, particularly when the overall economy is going through a recession. "In a challenging economy, parents really want value for their money, and we stress that," Pierce says. "We also stress fun with learning, and how our products grow with the child." LeapFrog has been highly adept at adopting its PR messages to the marketplace, and to what would play well with key media. It has also been adaptable to changing world conditions. After September 11 last year, LeapFrog decided to take a personal approach to getting out its PR messages, sending senior executives on media tours in the top 20 US markets as Christmas approached. The result was 30 national broadcast spots featuring LeapFrog products. "I think they're very good at focusing on a message," says Chris Byrne, editor of The Toy Report. "They've got an image in educational toys that is really top drawer." PR commitment begins at the top When the company started using PR in its early days, a great deal of focus was placed on founder Mike Wood and the tale of him starting the company because he couldn't find a product that would help his child learn how to read. "Mike Wood is dedicated to PR, and he was very active in it," recalls Bill Southard, president of Southard Communications, LeapFrog's agency until mid-2001. "I don't think he backed out of any individual media request." Southard placed stories about Wood in such major publications as Forbes, Fortune, and People. "His accessibility to PR was a driving factor in the company's early success," Southard says. Wood remains a strong believer in PR. "Mike's passion still drives our passion today," says Pierce, who was employee number 60 when she joined the company in 1999. LeapFrog now has more than 600 employees. Others say Wood is willing to make a financial commitment to PR. When the company had sales in the $25 million-a-year range, he was spending $250,000 (1% of sales) on PR, for example. Pierce won't comment on PR spending, but MS&L has five to seven people working on the account at any one time, which means Leapfrog PR spending with the agency is likely in the $500,000-a-year range. LeapFrog switched from Southard to MS&L a year-and-a-half ago because "we really needed to have an agency with more arms and legs around the world," Pierce explains. LeapFrog wants its agency to be integrally involved in PR decision-making, Pierce notes. "Internally, it's our job to set and drive strategy, but MS&L gets involved too," she says. As the company grew and developed new products, PR focused more on those products. "The quality of our products is what consistently drives our PR," says Pierce. LeapFrog's major leap forward came in 1999, when its LeapPad became a hot toy to have. Southard, the company's agency at the time, used the success of the LeapPad to garner coverage of Wood, positioning LeapFrog as an up-and-coming tech company as it prepared for its IPO. "I certainly think our PR challenges are different now," says Pierce. "Just a few short years ago, we were the little underdog that could." Now LeapFrog is a category leader. It's been expanding its product line from the preschool market, where it began, up to the early teen audience. LeapFrog has backed its PR with a strong product line, says The Toy Report's Byrne. "The good news is that they've made some good toys along the way. They have invested in technology and curriculum development," he notes. Working with the media Telling its story to key industry influencers like Byrne has produced results. LeapFrog products consistently make top-10 toy lists, and are spotlighted on such shows as NBC's Today show, which recently featured the company's Quantum Pad. "When we're on the phone talking to reporters, we try to build enthusiasm for LeapFrog's breadth of products," says MS&L's Appelbaum. "They are a learning-products company, and that is carried across all our messaging." FAO Schwarz is planning a December SMT to discuss the LeapFrog Learning Table, says Bob Friedland, the toy store's corporate PR manager. Toymakers clamor to hold such events with the prestigious FAO Schwarz. "You have to pick the best and the brightest," says Friedland. "We don't take on partners lightly." Yet Friedland sought out LeapFrog for the December tour, a sign of how well-respected its products are. "LeapFrog is an important part of our business," says Friedland. That's the type of endorsement no amount of advertising can buy. Rather, it's the result of a carefully crafted image for excellent products, backed by quality merchandise, which has propelled LeapFrog to the forefront of the toy industry - despite the fact that it's a "learning company," not a toy company. ----------- PR contacts Corporate communications director Cherie Stewart Public relations manager Kimberley Pierce Outside agency MS&L

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