Media Evolved

PepsiCo Is Looking at Startups as Potential Partners, Not Experiments

With Digital Labs, Beverage Giant Intends to Be More Than Simple Funding Source

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If you're a startup, sorry, but PepsiCo is not your monetization strategy. Your partner? Sure. Your adviser? Absolutely.

Shiv Singh, the global head of digital for PepsiCo Beverages, delivered that message loud and clear during Ad Age 's Media Evolved conference in New York today. It's a message that Mr. Singh has been preaching of late, as he tries to inform the industry of PepsiCo's evolving approach. The company's strategy, he explained, is to get in on the ground level with companies that could become the next Twitter via its Digital Labs program. In the case of Foursquare, for example, PepsiCo first teamed up with the company when the service was in its infancy. Today, Foursquare has more than 10 million members worldwide.

Shiv Singh speaks at Ad Age 's Media Evolved conference Nov. 15
Shiv Singh speaks at Ad Age 's Media Evolved conference Nov. 15 Credit: Patrick Butler

"The fact that we're there through the journey, young consumers appreciate that ," Mr. Singh said. "It's authentic."

That Digital Labs program, which has been in existence for about a year, gives startups such as Foursquare or Bluefin, a social-TV measurement company, the ability to work with a large brand to develop and test products. In the case of Bluefin, PepsiCo began working with the startup before it even had a product out, integrating its technology into the Pepsi Music program.

Mr. Singh said that those startups participating in the Digital Labs initiative are often discovered through the company's relationships with venture capitalists or by speaking at industry conferences. It also supports the tech community, hosting and attending social-networking events. Ultimately, PepsiCo Beverages pours roughly 10% of its digital spend into startups, Mr. Singh said, though he was clear that 's not an "experimentation" fund.

"We get great ROI off that ," Mr. Singh said. "It's held to the same rigor as [other media spend]."

This new way of thinking is part of a move by PepsiCo to own and build its own platforms and experiences. For example, the company leveraged Gigya's social technology in creating Pepsi Sound Off. Modeled after Twitter, Pepsi Sound Off is a place for "X Factor" fans to connect during the show and incorporates a gaming mechanism. Viewers can post comments in a stream, as well as organize streams by popular hashtags. Mr. Singh said that Pepsi Sound Off could also be leveraged during the Super Bowl, Grammys or Video Music Awards.

"The more successful it gets, the more valuable it is to us, vs. the more successful it gets, the more expensive it gets for us," Mr. Singh said. "We want to create and own experiences that we can leverage again and again throughout the year."

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