A Pepsi challenge: make ‘friends’, lose customers

September 12th, 2011

A Thinkbox blog by David Brennan for Brand Republic

April 5 2011


There have been some shenanigans across the Atlantic that have seen social media’s power to impact on the bottom line being put under a glaring spotlight.

Pepsi had been gearing up for a major social media push for quite some time, calling for ideas as far back as 2008. Its main activity in this area kicked off early last year: the Pepsi Refresh Project funds small public projects based on online votes. The Project was funded primarily – and very publically – with money taken from Pepsi’s TV budget. TV had been sacrificed for social media.

A couple of weeks ago, PepsiCo’s CEO reported on progress at TED. The RefreshEverything.com site now attracts more unique users on a monthly basis than other sites with which the brand would previously have considered purchasing display advertising.  In addition to this, the sites accrued more than 7,500 applications in its first year, and 80 million votes. Meanwhile, the brand’s “likes” on Facebook have increased from 225,000 to well over 3 million in that period, and its Twitter following (600,000) and YouTube presence have also grown.

Big online numbers; they sound fantastic and Pepsi has certainly been praised for the social good that many of these activities create.

However, not everybody is happy – especially Pepsi’s shareholders. They have seen their main brand drop to an unprecedented third in cola sales, falling behind Diet Coke for the first time in history, and with an overall sales slump of over 5%, which is worth up to half a billion dollars. This has been commonly attributed to the lack of branding or even visibility in the market, allowing Coca Cola to steal market share at an unprecedented rate.

‘Whoops’ doesn’t quite cut it. Here is a genuine Pepsi challenge.

I think this is a great example of the binary thinking that still too often exists in the digital world. One thing HAS to replace another; the ‘social media is the new television’ kind of mantra that ‘herdistas’ continue to preach is just one example of this. It is cutting off the nose and spiting the face. Marketers need to concentrate on and, not or. (Thinkbox firmly believes in and – we welcomed Facebook’s David Parfect to speak at our youth event last week and he was very clear about this complementary relationship; he pointed out that it isn’t just the number of fans you get, it is the about the level of engagement you create and this is where TV works so well with social media).

Meanwhile, if we look at the winners in this carbonated spat, we can see what happens when binary thinking makes way for a more nuanced and integrationist approach.

It wasn’t as if Coca Cola merely responded by betting the kitchen sink on TV, indeed it has been rightly praised for its social media presence even whilst Pepsi was floundering. But, Coca Cola conducted social activity in line with its TV activity and worked hard to make the two work together. A good example is its ‘social zone’ in support of its sponsorship of the NCAA tournament. The result has been a highly visible presence, a well-understood brand position (The Happiness Factory) and a boost in market share.

Of course, this does not mean the end of ‘social media’ as a marketing channel – that would be a ridiculous conclusion; but it should hopefully hasten the end of the ridiculous binary approach. We need to think very seriously about what social media means and how it is best integrated with more established marketing channels, rather than seeing it as an alternative to them. It is well-documented that a significant amount of our social media conversation about brands is inspired and encouraged by their advertising and marketing content.

Conversations don’t happen in a vacuum but this kind of binary thinking may well create a vacuum in terms of brand visibility and emotional engagement.


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