PepsiCo seeks effective ads

09 September 2011

NEW YORK: PepsiCo, the food and beverage giant, will focus on building its brands and delivering effective advertising as a means of driving growth in a difficult financial environment.

Hugh Johnston, PepsiCo's CFO, warned "stagflation", or high inflation coupled with low economic growth, and "stressed" US consumers posed challenges, but also stated cutting back on marketing was not the solution.

"We must support our brands because it's more important than ever to sharply define and clearly communicate their value and distinct positioning to the consumer," he said.

Speaking at the Barclays Capital Back to School Consumer Conference, Johnston revealed Pepsi was committed to backing brands like Pepsi, Mountain Dew and Sierra Mist with meaningful advertising and marketing (A&M) spending.

He argued strengthening these "powerhouse" brands, innovation and pursuing "occasion-based marketing" are all similarly vital. "We believe that together they will enable us to really change the game," he said.

Among the initiatives in this area on behalf of brand Pepsi are sponsoring the X Factor, a forthcoming US entertainment talent show, and running an affiliated competition to find a star for its Super Bowl spot.

"The X Factor partnership is also significant because it demonstrates how our brands extract value from entertainment platforms," said Johnston. "You'll see Pepsi integrated into The X Factor in ways that enhance the overall experience for viewers."

Digital holds an equal appeal for PepsiCo, Johnston added, saying: "When we talk about more media, it's not just TV but more media across a broad array of communication channels, including social media."

The recent "Summertime is Pepsi Time" TV ads logged 1.4m YouTube hits in 36 hours, with the brand trending on Foursquare for five weeks in a row, and 135m people being exposed to this campaign in all via digital media.

Alongside sharpening its marketing activity, PepsiCo has also set clear goals regarding the objectives of its output, according to Johnston.

"The things that I'm looking for out of the A&M investments are number one improving brand equity scores," said Johnston. "Number two, I look for on the brands that we're supporting with A&M increased velocities off the shelf," he said.

"Then ultimately number three, the A&M needs to be combined with innovation. I'd look for innovation to be incremental and to drive both higher growth and expanded margin."

Data sourced from PepsiCo; additional content by Warc staff