Coke consolidation in line with strategy

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With the consolidation of its $350 million U.S. media planning and buying account with Starcom MediaVest Group, Coca-Cola Co. last week took another step toward enabling its plan to create the "experience-based, access-driven marketing" mandated earlier this year by President-Chief Operating Officer Steve Heyer.

As archrival Pepsi-Cola Co. edges dangerously close to matching its soft-drink market share, Coca-Cola is focused on driving soft drink volume up and marketing costs down. With the cola wars officially escalated, it's under intense pressure to find new ways to connect with consumers.

The consolidation allows Coca-Cola to "respond quickly to innovative ideas and opportunities, while enhancing efficiencies and accountability," said David Raines, VP-integrated communications for Coca-Cola North America, who led the closely followed and intense two-month pitch. The Starcom Media-Vest Group selection was first reported on AdAge.com.

Coca-Cola in September said it wanted to name a single agency to handle planning, media execution, strategic analysis and media tracking for its entire beverage portfolio, and cited the company's January merger of its three North American divisions as the catalyst for the review.

The Atlanta-based beverage giant selected the Publicis Groupe agency over WPP Group's MindShare, considered by many observers as the front-runner, as well as longtime general market incumbent Universal McCann and Aegis Group's Carat. MediaVest had handled planning for the Coke and Diet Coke brands and the beverage giant's waters, juices and flavors groups; Starcom handled planning media for Minute Maid.

`excellent marketing'

In an October conference call with analysts, Mr. Heyer said the company was "focused on driving profitable volume growth through excellent marketing and brand-building," led by pushing volume of brand Coke, while at the same time lowering costs and boosting efficiency.

Coca-Cola and PepsiCo are nearly tied in their retail share of the carbonated soft drink market with Big Red's 36.6% share just edging out its blue rival's 35.1% share (excluding Wal-Mart sales). For the first nine months of 2003, Coca-Cola's volume grew 0.2% across four channels while PepsiCo was flat, according to Beverage Digest. However, both marketers are struggling with their core trademarks. Volume for Coke Classic fell 2.9% and Pepsi-Cola dropped 5.5%, prompting Pepsi to launch a rare fall brand campaign this month with a food-focused theme using the tagline "Pepsi. It's the cola" (see Ad Review, P. 37.)

As media becomes more fragmented and personalized, Coke has tried to cut its traditional media spending in favor of more embedded branding opportunities that have a greater impact on leading cultural cues. Already in 2002, Coca-Cola's domestic ad spending dropped 21.3% to $347.8 million, according to TNS Media Intelligence/CMR, and through August, the company spent $219.2 million.

None of the Coca-Cola executives contacted by Advertising Age would hint at specific directions that Starcom MediaVest might take the company's marketing other than to point to tie-ins with reality show "American Idol," and deals with College Sports Television and Universal Music Group.

In his Feb. 5 keynote speech at Ad Age's Madison + Vine conference, Mr. Heyer said agencies and marketers need to "look at one another not in terms of how much we can pay, but in terms of what we can do and make together" to "exchange value to create value."

skepticism

One observer was skeptical of such strategies for Coke, however. "Branded entertainment only counts if you come up with something that really is effective and that's the hardest thing in the world," said Manny Goldman, a former Wall Street analyst turned consultant. "They've gone from one tagline to another to another and they're trying to find some way to make it work. Even though they're looking for other marketing venues, when push comes to shove it's nice to have a tagline and that's what they're going to have to get back to."

While Mr. Raines called the review a "very close" competition, he said Starcom MediaVest's "highly collaborative" methods and "all star" staffing around the world gave the shop an edge over its competition.

"They have a suite of tools to support resource allocation to understand the best ways to allocate their dollars to have the right message to the right consumer," Mr. Raines said.

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