Interpublic's Pepsi challenge

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We can think of 119 million reasons why Coca-Cola Co. should have a problem with the $119 million of PepsiCo business handled by Coca-Cola ally Interpublic Group of Cos. Interpublic should not be working for the enemy, and Coca-Cola should press its partner to unplug Pepsi. But if this is a true partnership, Coca-Cola should sweeten the deal with new work.

Coca-Cola has worked with Interpublic's McCann-Erickson Worldwide since 1942. But Coca-Cola has an unusual formal relationship with the holding company: It named Interpublic "creative consultant" on flagship Coke's $900 million global account last December.

Then two things happened. PepsiCo agreed to buy Quaker Oats Co., maker of No. 1 sports drink Gatorade. And Interpublic agreed to buy True North Communications, whose Foote, Cone & Belding handled Gatorade and two PepsiCo brands, No. 1 water Aquafina and No. 1 refrigerated orange juice Tropicana. The deals now are done.

Clients, not agencies, define conflicts. A Coca-Cola spokesman told Advertising Age the company has had "conversations with [Interpublic] about conflicts. ... We think they have our point of view, and we think they will take appropriate action."

We strongly support the idea that global agency companies should align their resources to serve global clients. But there must be a quid pro quo.

Interpublic is in the curious position of handling three of PepsiCo's category-leading brands but none of Cola-Cola's No. 2 selling alternatives: Powerade sports drink, Dasani water, Minute Maid orange juice.

In helping build PepsiCo brands, Interpublic is not serving global client Coca-Cola. The marketer should press the case. But in so doing, Cola-Cola should sweeten any demands by assigning Interpublic more work. Two recent Interpublic acquisitions have demonstrated ability in beverages: FCB and Deutsch (which at some point could face its own Coca-Cola conflict in its work for Cadbury Schweppes' Snapple).

Interpublic and Coca-Cola are global partners. They should work together-and make sure Interpublic is working for, not against, Coca-Cola.

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