PepsiCo has gained widespread attention for its social media initiatives, including its Refresh project and Mountain Dew's Dewmocracy campaign to crowd-source new flavors. And the beverage giant's decision not to run a Super Bowl ad this year underscored its broader shift away from traditional to emerging media.
More quietly, that transition is also happening at the local level for Pepsi brands. The company this year launched an effort in partnership with its network of 57 local bottlers nationwide to test online advertising after historically relying on established formats like print, radio and TV to promote deals and special offers in their areas.
"The initial thought behind this was knowing that digital has become a more important channel for consumers," said Katie Haniffy, a media manager at PepsiCo. "And we wanted to make sure our local bottling system had the ability to customize a relevant message for consumers in their markets as opposed to a national brand-equity message."
To that end, PepsiCo worked with Omnicom Group's OMD and ad technology company PointRoll to run local campaigns on behalf of bottlers and retailers across 150 designated market areas (DMAs) with placements on portals such as Google, AOL and Yahoo. An initial flight took place over four weeks in April and May, and another is currently running.
Pepsi says full results of the campaigns will not be available until the fourth quarter, but the company is pleased with the progress so far in shifting local ad spend to digital.
At the heart of the project is ShopLocal, PointRoll's service that allows retailers to run local online ads and offers using the company's rich media units. The system features a database interface where offers and products can be uploaded and localized, then combined with creative delivered via PointRoll's ad-serving platform.
"OMD is a longstanding agency partner of ours and a true believer in engaging users through technology," said Catherine Spurway, vice president, strategy and marketing at PointRoll. The company and OMD worked to train the bottlers themselves in using the system, although much of the actual work on the system was done by their local ad agencies.
The Web portals were selected for the campaigns because of their ability to deliver geotargeted ads at the DMA level. In addition to Pepsi, the interactive ads covered a variety of brands under the PepsiCo umbrella including SoBe, Mountain Dew and Sierra Mist. Through the ads, visitors could link directly to sites dedicated to those brands as well as clicking to get more information about a local offer or a store locator.
PepsiCo would not disclose the amount of the overall buy, but indicated that it was a relatively small amount compared to spending on traditional media. In its 10-K report filed with the SEC earlier this year, the Pepsi Bottling Group, which comprises the individual bottling companies and counts PepsiCo as a minority stakeholder, reported advertising and marketing costs of $360 million in 2009.
PepsiCo and the bottlers shared the cost of the digital ad experiment through an existing cooperative advertising and sales arrangement. "We've expanded that model into getting us out of the traditional media space and more into digital," said Haniffy.
After reviewing click-through rates and other results of the online campaigns at the end of the year, she said PepsiCo and the bottlers will determine how to go forward in 2011. She envisions expanding the interactive features within ad units to include things like printable coupons at local retailers that the bottlers sell products to. "That's something we didn't have the bandwidth or capability to do this year," said Haniffy. "We would like to have the ability to include multiple URLs within a given tagged ad."
But she expects the shift toward digital formats for local advertising will continue to gain momentum in the coming years. "From a media perspective, we know the space is something we have to test and figure out, so we want to make sure we continue to build and improve on it," she said. "The digital space is a priority for us."