Tempers Flare During Powerade-Gatorade Ad Hearing

Ad Campaign, Marketing Strategy -- Even Powerpoint Presentations -- Dissected During Testimony

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NEW YORK (AdAge.com) -- If you have any doubt the legendary rivalry between PespiCo and Coca-Cola is real, head down to U.S. District Court in New York.

Gatorade-Powerade

There, the beverage behemoths faced off this afternoon over ad claims pitting Coke's Powerade against Pepsi's Gatorade, and it was far from the civilized spat one might expect from Fortune 100 companies. Instead, it was an old-fashioned, no-holds-barred courtroom brawl.

At issue is an ad campaign that Powerade broke this spring, which included a striking outdoor billboard component and a series of print ads to promote its Ion4 product. Coke is touting Powerade's Ion4 as a "complete sports drink," because it's fortified with calcium and magnesium. That, by Powerade's reckoning, renders Gatorade's formula incomplete, which it implicates in its advertising.

Pepsi argues that there's no scientific evidence to support Powerade's "complete" claims. Moreover, the marketer is really miffed about the creative, from New York-based Ammirati, which Pepsi complains depicts Gatorade bottles as "mutilated" and "distorted." Pepsi reacted to the release of the Ion4 campaign nearly immediately, filing the lawsuit in April against Coke, alleging false advertising, trademark dilution and more.

Here are some highlights from today's testimony:

Cheerleading, not marketing
Lawyers for PepsiCo pulled up as exhibits an internal Powerpoint presentation created by Powerade's marketing department. It contained slides saying the following: "It's time to make Gatorade sweat like the dirty pig it is"; "Our squad is gonna kick the $#%! outta their squad"; "We're gonna crank up the pain on Gatorade in April"; and "Gatorade is really f---d now."

The Powerade brand manager -- visibly annoyed -- argued it was unfair to compare internal "ra-ra, cheerleading, locker-room type banter meant to rally the troops" to the actual ads that were made for public.

Objection, your honor
A discussion took place around the print portion of the Powerade campaign that broke in ESPN the Magazine. Powerade worked with its media agency, Starcom MediaVest Group, part of Publicis Groupe, to break new ground with a front-cover takeover. Powerade's cover ad featured a blank flap that obscures half of the cover image but retaining the magazine title. The front of the flap states, "You wouldn't want an incomplete cover." And the back of the flap shows half a Gatorade bottle with the text, "Don't settle for an incomplete sports drink." Powerade is then held up as the "complete sports drink" on the inside of the front cover.

When Powerade's brand director of marketing, who identified himself as Franklin Richard Bracken, took the stand today, he told the court that after that issue of magazine ran, he was on the receiving end of a series of frantic calls from the ESPN sales team, who he said were being strong-armed by PepsiCo. "EPSN indicated that Gatorade had called ... and threatened to withdraw millions of dollars worth of advertising" unless they pulled the campaign. That prompted one of several objections from layers this afternoon.

It's not baby formula
At one point it appeared that lawyers for PepsiCo tried to get some members of Powerade's team to throw others under a bus. Dr. Eileen Madden, whose reviewed the Powerade advertising to make sure it was accurate, admitted that she did have a "concern" over calling Gatorade "incomplete," thinking it would cause consumers to view the drink as non-functional. She said she voiced that concern inside the company but that she didn't "stand on the table and shout against it, because there is no standard of identity for sports drinks like there is for something like infant formula. ... It's in the mind of the beholder whether a sports drink is complete or incomplete."

She stated it was not her job to determine what consumers would interpret the advertising to mean. "That's the job of the marketing people," who, she went on to say, made the decision to run the ad.

'800-pound gorilla'
Pepsi's lawyer, Harold Weinberger, of Kramer Levin Naftalis & Frankel, tried to make the point that the name Ion4 was designed to conjure up an image for consumers of a highly scientific brand, even though, he claims, Powerade has little basis for such a claim.

"You thought that Ion4 [name] was a nice little trick you had up your sleeve, didn't you?" But Powerade's Mr. Bracken piped up, telling Mr. Weinberger that his line of questioning was "offensive, to be honest with you." Mr. Bracken added: "Let's keep in mind we're talking about an 800-pound gorilla," referring to the fact that Powerade is a challenger brand compared to category leader Gatorade.

Other creative attempts
The court was treated to campaign ideas from Ammarati that got tossed in favor of the "Incomplete/Complete" campaign in question. One concept featured Philadelphia Phillies' first baseman Ryan Howard shopping at a cheesy used-car lot. He comes upon a car that's painted in fluorescent Gatorade-like shades. He opens up the hood to take a peek inside only to find a mouse running on a wheel.

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Michael Bush contributed to this article.

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