FRITO, PEPSI TEAM UP BRANDS AT BBDO: AGENCY WINS SNACK GIANT'S CONSOLIDATED $200 MIL ACC'T

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It was the "Power of one" that helped swing Frito-Lay's $200 million-plus global advertising consolidation to BBDO Worldwide.

That term is the rallying cry for parent PepsiCo's -- and Chairman-CEO Roger Enrico's -- plan to harness the power of its soft-drink and snack brands by combining their considerable marketing leverage on a worldwide scale.

With the move, New York-based BBDO now handles creative on all Frito-Lay brands, adding Cheetos, Lay's and Rold Gold to its already full cupboard of company products. Also, it was named media agency of record in the U.S. for all PepsiCo brands, beating Grey Advertising and TN Media, both New York, in a review.

Allen Rosenshine, BBDO chairman-CEO, called it "one of the largest account wins in our history."

A spokesman for Pepsi-Cola Co. said the consolidation is "a great example" of how the company is "always looking for ways to leverage our synergies."

A LEG UP

Although other factors came into play, executives close to the review said BBDO's longstanding relationship with Pepsi-Cola gave it a leg up going into the creative competition against two other roster shops, sister Omnicom shop DDB Needham Worldwide and Y&R Advertising.

DDB Needham lost about $45 million in billings, which included creative on its brands plus media planning and some spot TV buying. Y&R had been considered a long shot, because of the three contenders it had the least amount of Frito-Lay business -- about $15 million to $20 million in billings outside the U.S.

Y&R is the agency for rival soft-drink marketer Dr Pepper/Seven Up, and earlier last week parent Young & Rubicam's Media Edge unit won the rest of Dr Pepper/ Seven Up's media business (see item on Page 44).

Media Edge recently picked up the $300 million consolidated media business for Tricon Global Restaurants, a spinoff of PepsiCo.

The PepsiCo consolidation is a vindication for BBDO, which in January 1997 beat out DDB Needham in a creative shoot-out to retain its $40 million Doritos account only to lose the flagship Lay's potato chips to DDB Needham a month later.

The one brand that didn't land at BBDO is Cracker Jack, awarded to Goodby, Silverstein & Partners, San Francisco, when Frito-Lay bought the brand last year.

On the Pepsi-Cola side, BBDO has experienced some troubles this year, as bottlers expressed displeasure with some of its "Generation Next" ads.

ALIGNING MARKETING

The agency's task now will be to align the soft-drink and salty snacks brands' marketing, advertising and distribution base under the "Power of one" idea.

"As we go forward, we think we can bring a lot of excitement to the retail trade by virtue of these two powerhouses [Pepsi and Frito-Lay] marketing together," Phil Marineau, president-CEO of Pepsi-Cola North America, said last month.

According to Mr. Marineau, PepsiCo's two businesses contributed 11% of the growth in the U.S. retail food business during the past three years.

"When you look at that kind of impact, you have to believe there is a huge opportunity for the two companies to market together," he said.

"Until now, there's been very little cross-promoting between the two," said PaineWebber analyst Manny Goldman.

Mr. Marineau wouldn't discuss specifically how Frito-Lay and Pepsi will work together, noting that "a lot of rocks are being turned over to see how these products can help one another."

Pepsi is testing the use of a can of chips in soft-drink vending machines.

Observers have suggested that PepsiCo is looking at combining direct-store delivery systems; leveraging shelf positioning by putting chips in the soft-drink aisle and vice versa; jointly promoting and merchandising entertainment properties such as movie tie-ins; and even creating commercials highlighting both brands.

That wouldn't be much of a disconnect actually, since at least one ad spokesman, actor Michael J. Fox, has pitched both Pepsi-Cola and Lay's.

Contributing: Mercedes M. Cardona, Laura Petrecca.

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