Pepsi spanks BBDO over Sann

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PepsiCo's surprise move of creative duties for Diet Pepsi from BBDO to DDB wasn't just business; it was personal.

Several knowledgeable executives said the move was largely a response to uninspired creative on the brand, but also a public spanking for BBDO, which, like DDB, is part of the Omnicom Group.

PepsiCo, which had already watched several key executives depart from the account, was said to be angered by the awkwardly handled dismissal of longtime creative chief Ted Sann by CEO Andrew Robertson. Pepsi's public comments that the Diet Pepsi assignment was promised only through 2005 reinforced the punitive nature of the shift, they maintain.

These executives said that Chief Marketing Officer Dave Burwick and PepsiCo Beverages and Foods CEO Gary Rodkin shared in the decision with Dawn Hudson, president, Pepsi-Cola North America, who was said to be especially peeved by BBDO's bungle.

Ms. Hudson denied that. "This was not about a vendetta-it was a business decision. This was about getting work ready early in the year, using the full resources of Omnicom. BBDO continues to be our overwhelming agency of record and they are critical to our future success. We're enjoying building our relationship with the new team."

Both BBDO and DDB referred calls to Pepsi.

Few observers would dispute that the agency's reel for the brand had gotten stale in recent years. Diet Pepsi's most recent creative idea, "It's the diet cola," was seen as lackluster for one of the company's most important brands. BBDO struggled with the challenge that Pepsi created when it shifted its positioning from entertainment and youth to being a complement to food.

odd timing

Though the $33 million Diet Pepsi account has decamped, BBDO still handles the Pepsi, Aquafina, Sierra Mist and Mountain Dew brands, which cumulatively bill about $300 million.

Still, the timing of the move was surprising. It comes as Diet Pepsi's share growth is outpacing that of Coca-Cola's Diet Coke and Cadbury Schweppes' Diet Dr Pepper. Through the first nine months of the year, Diet Pepsi share grew 0.4% and volume grew 3.6% in supermarkets, drug stores, mass merchants (excluding Wal-Mart) and convenience/gas channels, according to Beverage Digest data. Diet Coke's share grew 0.2% and volume fell 0.1%, while Diet Dr Pepper grew 0.2% and volume grew 11.1%.

Several executives said that Pepsi's September 2001 account consolidation at Omnicom Group made it easy for the marketer to leverage its agreement as a censure rather than its intended use as a business retention safety net for the holding company.

just business

Though asserting that Pepsi executives liked Mr. Sann's work and were angered over his ouster, these executives avoided any characterizations of pettiness. "Pepsi would never cut off their nose to spite their face," said one executive who is knowledgeable about the situation.

"If business isn't performing well and the agency is struggling, they don't wait a long time or go into marriage counseling to fix things," said another executive.

It's not the first time Pepsi gave another agency a shot at creative for an underperforming brand. Since being afforded the freedom to tap agencies in the Omnicom family, Pepsi has readily done so, shifting Aquafina to BBDO from sibling Element 79 Partners, Chicago; and Tostito's from BBDO to GSD&M, Austin, Texas, while opening up a review for its struggling Tropicana.

"If I had an open invitation to talk to agencies and their creative directors for free, I'd be out of my mind not to," one of the executives said. "It's not just punishment or opportunity, it was a little of both. The stakes are getting high and what qualifies as loyalty ain't what it used to be."

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