This is your third of seven free items this month.

To register, get added benefits and unlimited access to articles, Become a Member. Already a Member? Sign in.

Super Bowl 2010

Risk or Opportunity? PepsiCo Pulls Beverage Ads From Super Bowl

Leaves Field Wide Open for Rival Coca-Cola Co.

By Published on . 11

NEW YORK (AdAge.com) -- PepsiCo is taking a gamble, sidelining its entire beverage portfolio during the Super Bowl and ceding ground to rival Coca-Cola, in the midst of a tough environment for beverages.

Following a report in Ad Age that the marketer was considering pulling back from the Super Bowl this year, Pepsi confirmed to The Wall Street Journal that it would focus on its coming "Pepsi Refresh Project," a marketing effort that aligns Pepsi with social responsibility and has a heavy emphasis on digital media. The beverage maker will bypass the big game for the first time in 23 years (though its Frito-Lay sibling, Doritos, will advertise during the event). That's a marked turnabout from last year, when PepsiCo went so far as to block rival Coca-Cola and other non-alcoholic beverage marketers from the first half of the game.

"The fact that Pepsi is not going to be on the Super Bowl and Coke is could open up an opportunity for [Coke]," said Bill Pecoriello, CEO of Consumer Edge Research. "Pepsi is taking risks with the strategy, and it's going to remain to be seen how 2010 plays out. Is their [Pepsi Refresh Project] going to be a winning strategy? Time is going to tell."

Pepsi said the cost of advertising in the Super Bowl was not at the heart of its decision to keep its famous beverages from the game. (this year's broadcaster, CBS, has been seeking between $2.5 million and $3 million for a 30-second spot.) Instead, the new marketing strategy required different tactics. "The Super Bowl broadcast can be an amazing stage for advertisers if it aligns with their brand strategy; however, brands should not blindly anchor themselves to history," said Frank Cooper, senior VP-chief consumer engagement officer at PepsiCo Americas Beverages, in a statement. "In 2010, each of our beverage brands has a strategy and marketing platform that will be less about a singular event, less about a moment, more about a movement.‪"

A spokeswoman noted that despite the absence of any TV commercials for its beverage brands, Pepsi would have a presence at Super Bowl events in Miami, where the game is being played on Feb. 7. Pepsi will also be work with the National Football League to create special content around players and teams.

Pepsi expects marketing spending on its "trademark Pepsi" brands -- Pepsi, Diet Pepsi and Pepsi Max -- to increase in 2010 compared with 2009. This year's marketing investment includes $20 million in grants for the Pepsi Refresh Project.

Despite the digital elements of the campaign, Omnicom Group's TBWA/Chiat/Day, remains the primary agency for the brand and Pepsi's relationship with the agency has "not changed," said the spokeswoman.

At least one beverage could surface during the event. Gatorade, which some industry watchers had speculated could benefit from Super Bowl exposure, given plans for an overhaul that includes new products, marketing and advertising in 2010, will rely on its sidelines presence to generate buzz. Massimo d'Amore, CEO of PepsiCo's Americas Beverages group, told attendees at this week's Beverage Digest Future Smarts conference that consumers would get a first look at the new products on the sidelines at the Super Bowl.

A Gatorade spokesman downplayed the brand's absence from the big game, saying the Super Bowl, "was not part of our strategy for this year." Gatorade has been in the Super Bowl three times in its history, including last year.

The abrupt change in direction for the company's Super Bowl presence comes as PepsiCo Americas Beverages has floundered despite extensive, and expensive, marketing efforts in the last year. A year ago, Pepsi launched "Refresh Everything" with a push in Times Square on New Year's Eve, along with the new tagline, "Every generation refreshes the world," in the weeks before the Super Bowl. That optimistic messaging went head to head with Coca-Cola's "Open Happiness" campaign during last year's Super Bowl. Gatorade, meanwhile, unveiled the "What is G?" campaign, and Tropicana had "Squeeze it's a natural."

Yet, the beverages unit has posted volume declines throughout this year. Volume has declined 6% in each of the first three quarters of the year, while net revenues dropped 12% in the first quarter and 9% in the second and third quarters.

Carbonated soft drinks as a whole have struggled, making it an interesting time for Pepsi to back away from the largest marketing event of the year. Carbonated-soft-drink volume has fallen 2% year to date and between 2010 and 2013 volume is projected to drop 1.5%, according to Consumer Edge Research. The overall ready-to-drink beverage category is expected to grow 0.6%.

"The [carbonated-soft-drink] category has been in a decline for some years. And the biggest drop in consumption is among teens, so the question becomes, how do Coke's and Pepsi's marketing efforts and not just during the Super Bowl ... help stabilize penetration and per capita consumption with teens?" said Mr. Pecoriello. "How does the fact that Pepsi isn't going to be on Super Bowl, how does that play out? The bigger issue is this year Pepsi is taking one path and Coke has its own path."

John Sicher, editor and publisher of Beverage Digest, said that while the Super Bowl certainly generates excitement among the bottler community, bottlers are supportive of Pepsi Refresh Project. "The Super Bowl is a terrific ad vehicle for a lot of brands, a lot of the time. But given the shift with the Refresh Project, they're taking a dramatically fresh look at how they advertise and market Pepsi in the next year."

Read These Next

Comments (11)