Forget champagne glasses. Networks had to be toasting with Pepsi cans this week.
It’s always welcome when a wealthy marketer hits a trouble spot and tries to spend its way back to a recovery. With word that Diet Coke had passed Pepsi to become the number-two soft drink, Pepsi executives are set to follow that playbook, caffeinating network sales teams.
At the parent PepsiCo, sales of Doritos may be growing and efforts to capitalize on a thirst for Gatorade increasing. A recent Russian acquisition attracted attention, along with putting logistics in place for a China boom. No question, PepsiCo continues its evolution as a multi-faceted $63 billion global business.
The Pepsi brand’s importance in the U.S. could be waning. Yet, Pepsi falling behind Diet Coke this week is more than a matter of dollars and cents.
It calls to mind what happened with NBCUniversal. NBCU may have grown into a splendid cable operation, so the impact of NBC in prime time may have decreased -- financially. NBC, however, is the name on the door, so that has led to a colossal drag on image.
The Pepsi brand, which dates to 1903, has a similar role at PepsiCo. Last year as Pepsi sales dropped notably, the brand for the first time fell from its decades-long spot in second place behind Coke.
Even if the decline has a contained role within giant PepsiCo, the dramatic change in the cola wars can do some outsized damage.
The networks will benefit handsomely as Pepsi seekds to avoid the prospect by investing to, at this point, become the choice of not just the new, but any generation.
On Friday, a PepsiCo executive said beverage ad spending would increase this year by 30% -- on TV alone -- with a concerted effort behind flagship Pepsi.
"We need television to make the big, bold statement," Massimo d'Amore, CEO of Pepsi Beverages Americas, told the Wall Street Journal. (Pepsi may have struggled to find a compelling tagline itself, but that's the seed of a pretty good one for a network sales group.)
D’Amore said the PepsiCo is “totally committed” to growing soda sales in the U.S., while a new Pepsi campaign is on tap for the summer.
Fox looks to be the biggest beneficiary from Pepsi’s spending boost. The brand is signed as a signature sponsor of the new “X Factor” show this fall, the one Simon Cowell left “American Idol” to launch.
Last year, PepsiCo cut ad spending behind the Pepsi brand in all media nearly in half to $20.1 million, according to Kantar Media. Pepsi was out of the Super Bowl and there was a focus on promoting the public-service-type Pepsi Refresh Project.
There are many examples of marketers hoping an advertising swell can reclaim momentum. Wal-Mart and Microsoft come to mind -- but with opposite results.
Networks, however, can win either way. If the spending works, more spending is likely to follow. If it doesn’t, more spending is likely to follow.
By reducing TV dollars (and dropping a Super Bowl position in 2010 among other things) in favor of an internet campaign for the Refresh project, Pepsi has reaped what it sowed.
Let this be a cautionary tale for marketers that reduce TV advertising to fund half-baked stuff on the internet.