NEW YORK (AdAge.com) -- Expensive rebranding efforts backfired for Tropicana and failed to ignite sales for Pepsi in first quarter, leaving the newly dubbed Mtn Dew a hidden gem in PepsiCo's troubled beverage portfolio. It's among the few brands continuing to post sales gains (and hold on to 80% market share). The secret ingredient to Dew's marketing strategy: branded entertainment.
Mtn Dew slashed its measured-media budget to $21.6 million in 2008 from $57 million in 2006, according to TNS Media Intelligence. In the past few years it has invested heavily in branding subcultures such as action sports (the Dew Tour, a partnership with NBC returning for its fifth year this summer), indie music (the year-old Green Label Sound) and video games (Game Fuel, a new flavor to promote its partnership with "World of Warcraft").
Frank Cooper, chief marketing officer of sparkling beverages at Pepsi North America, said the main focus for Mtn Dew has been finding ways to bring the brand to life that go beyond the classic notion of reach and relevance, i.e., 30-second spots.
"Historically, you would get a lot of comments back saying, 'That's a way to build a niche brand and stay outside of a scale business.' We believe that's actually the recipe of success for all brands today," he said.
What other Pepsi brands have done only in pockets Mtn Dew has built into an entire long-term strategy, whether it's helping buzz bands such as Matt & Kim and Cool Kids gain exposure on the indie-music circuit or recognizing independent gaming developers at Spike's Video Game Awards in December.
"We clearly have moved from impressions as the primary determinate of whether something's successful to answering the question, 'Are we building relationships with the right group of people?'" Mr. Cooper said. "Whether it's a blogger at these events, influencers talking about it, those are more indicators of whether we're reaching the right consumer."
That hands-on approach has impressed Jon Cohen, co-CEO of music-branding agency Cornerstone, since the shop partnered with Dew last year for Green Label Sound. "Their entire brand team was involved from top to bottom, coming into our office with our Green Label Sound team to listen to upwards of 20 to 25 new acts across all genres," he said. "They are an equal part of the conversation."
Green Label Sound's first round of four singles collectively reached 7 million downloads last summer, Mr. Cohen said. Another six singles are rolling out this summer, with a full-fledged music tour to follow later in the summer in four or five major and midsize markets.
But even though Mtn Dew's traditional-media budget has been halved in the past two years, Mr. Cooper doesn't think media companies are big losers in the company's shift in thinking. This year's Dew Tour, for example, will add a new broadcast partner in MTV via Alli, the new Alliance of Action Sports, formed by NBC and MTV in 2008. The tour, which will kick off June 26 in Chicago, will also air on USA Network, AlliSports.com, Fuel TV, Universal HD and Fox Australia, stretching Mtn Dew's investment further than before. Green Label Sound has a close relationship with MTV2 that is expected to expand this year. And targeted cable networks such as Spike have benefited from branded-entertainment projects such as "Get Moe," a short-form action series Dew co-produced for the network in 2007.
The approach has paid off so well for Mtn Dew that Mr. Cooper and his team have started to adopt similar tactics for PepsiCo's flagship brand, from Pepsi's recent partnership with "Rock Band" to "Dear Mr. President," an online campaign developed with Interpublic digital shop R/GA in January to coincide with the soft drink's new logo and brand work from Omnicom Group's TBWA.
What has changed, however, is the company's overall upfront strategy. "We see value in having the conversation early, and we're absolutely having those conversations now about how we structure the relationship and the value we want to get out of that," Mr. Cooper said.