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PepsiCo exec urges agency change

News, 16 October 2015

ORLANDO, FL: The traditional agency model is "not going to bend; it's going to break" as the process of continuous disruption reshapes the marketing ecosystem, a leading executive from PepsiCo has argued.

Brad Jakeman, president of PepsiCo's global beverage group, discussed this subject at the Association of National Advertisers' (ANA) 2015 Masters of Marketing Conference in Orlando, Florida.

"The model is not moving fast enough," he said. (For more, including tips for how agencies can change, read Warc's exclusive report: PepsiCo's Jakeman warns that agency model will "break".)

More specifically, Jakeman suggested that many shops are still organised on the same principles which shaped brand building over two decades ago, when television unequivocally ruled the media roost.

"The model is built around four pieces of content that take four months to develop and cost $2 million (£1.3m; €1.8m) each. It's not a sustainable model," he said.

"I started in the business 25 years ago … and I can tell you that the agency model that I grew up with largely has not changed today."

"Yet agency CEOs are sitting there watching retainers disappear [and] projects come in; they're looking at clients that are being way more promiscuous with their agencies than they ever have."

Such promiscuity is based in large part on the desire to produce a content stream with short turnaround times and budgets of roughly $20,000 apiece.

"If you're working on a brand like Pepsi, for example, we have to move at the speed of culture, we have to be reacting to what's happening in the world. We can't take four months to do that," he said.

While a new breed of content creator - say, Makers Studio - effectively point to this future, the same does not universally hold true for mainstream agencies focused on tent-pole material like Super Bowl spots.

"I mean, there will always be a need, probably for that content. It's just that agencies will continue to see more and more projects leaving them. They will get a smaller and smaller share of the pie," said Jakeman.

Data sourced from Warc