Coca-Cola's Futuristic Soda Fountain to Get 2012 Ad Push

Freestyle Machine's 1,500 Stores Are Driving Foot Traffic and Sales -- and Sending Data Back to HQ

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Coca-Cola Freestyle has been generating buzz, sales boosts and foot traffic since tests for the futuristic machine were first launched three years ago. Now, as the next-generation soda fountain reaches a critical mass -- it will be in 80 markets by year's end -- execs are readying Freestyle's first marketing campaign.

Freestyle serves up 125 flavors of beverages.
Freestyle serves up 125 flavors of beverages.
The fountain serves up 125 different flavors of soft drinks, flavored waters, sports drinks and lemonades and sends usage data, such as what flavors are most popular at what times of the day, to Coca-Cola HQ. Already the beverage giant is analyzing data pouring in from more than 1,500 machines in restaurants including Wendy's , Burger King, Taco Mac and Five Guys.

While individual restaurant customers have done marketing campaigns using Coca-Cola assets, the beverage giant is now working with Ogilvy & Mather to develop creative concepts for a 2012 marketing campaign. Sydney Taylor, group director of Coca-Cola Freestyle consumer marketing, said that radio, outdoor and digital would likely be the initial focus of any measured media. "We needed to be at a certain threshold to make [a marketing campaign] pay off for us, so that once we advertise Freestyle, consumers can find it at most places," she said.

According to Bill Pecoriello, CEO Consumer Edge Research, more than 20% of consumers said they would be very likely to switch restaurants or convenience stores due to the presence of Freestyle. Interest in the machine is also particularly high among teens and portions of the multicultural population, he said.

The fountain channel accounts for nearly a quarter of total soft-drink volume, according to Beverage Digest. And Coke dominates fountain business with about a 70% share, compared with Pepsi's 19% share. While Gene Farrell, VP-general manager for Coca-Cola Freestyle, says Freestyle has yet to impact Coca-Cola's share, customers say the machines have been a boon for business.

Results have been so impressive at Firehouse Subs that the chain just announced it will be rolling Freestyle out to all of its 437 restaurants by year's end. Firehouse Subs was included in Coca-Cola's initial testing phase and saw a sales lift, even without marketing support, said CEO Don Fox. So, earlier this year, the chain opted to install Freestyle in 25 Jacksonville, Fla., locations, turn on marketing support -- in the form of billboards, 60-second radio spots, social media and events -- and watch what happened.

Mr. Fox said the stores saw a double-digit increase in traffic and overall sales, as well as an increase in people buying a drink and sandwich, rather than just a sandwich. Those stores also saw increased numbers of families with kids coming in, as well as more people choosing to dine in the restaurants.

"Even without the benefit of advertising, it hasn't been unusual for restaurants to [see overall sales] rise 20% to 30% when they put the machine in," Mr. Fox said. "When word gets out, there's a great curiosity factor, and it really doesn't seem to recede."

In addition to working on a 2012 marketing push, a new Facebook app and mobile app are also in the works, which will allow consumers to mix up and share favorite Freestyle combinations. Mr. Farrell envisions the recipe being converted to a 2-D barcode and scanned at a machine to immediately generate the blend. Barcode scanners will be retrofitted for testing on a limited number of machines in the first quarter of 2012.

Already Mr. Farrell says the amount of data being gathered from the hundreds of networked machines is "almost overwhelming." Coca-Cola and its customers are able to slice and dice data about the brands and combinations that are proving popular, as well as find trends during specific day parts. One insight has been the popularity of Caffeine-Free Diet Coke after 3 p.m. That could lead the company to suggest adding that brand to traditional fountains when customers have significant traffic in the afternoon but don't have Freestyle.

"Think about being a brand manager and seeing a snapshot of how a brand, a new product or a product that 's not at retail is performing. It's mind-boggling, from a marketer's perspective," Mr. Farrell said. "I don't think we'll really understand the total value for a few more years."

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