Pepsi Goes Huge With Piece of Digital Business

Opts for Interpublic Digital Agency Over Traditional Omnicom Partners

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NEW YORK ( -- PepsiCo has awarded a piece of its digital business for brand Pepsi outside the Omnicom Group family to Interpublic Group of Cos. digital agency Huge, said executives familiar with the matter.

PepsiCo is one of Omnicom's biggest clients and has had the bulk of its $1.2 billion U.S. account parked at the holding company for years. Interpublic acquired a stake in Huge in 2008.

A spokesman for Pepsi declined to comment.

At the end of 2008, Pepsi named TBWA/Chiat/Day, Los Angeles, as its U.S. communications agency, after decades with Omnicom sibling BBDO. At that time, Pepsi also handed rebranding and packaging duties to Omnicom design firm Arnell. TBWA has since handled digital work for the brand, though other executives say the brand has no official digital agency of record and, in general, works with a number of agencies outside Omnicom. Interpublic digital shop R/GA created Pepsi's "Dear Mr. President" site in the lead up to President Barack Obama's inauguration.

The Huge assignment was awarded after a recent review in which TBWA and other digital agencies, not including R/GA, competed for the project. TBWA, whose relationship with Pepsi will not change, will continue to handle some digital work for the brand and partner with Huge, according to a person familiar with the matter.

Huge's area of expertise suggests Pepsi is looking to build an online platform, such as a website or content distribution system. While the agency, with offices in Brooklyn, New York; Los Angeles; Portland, Ore.; and London, has created one-off banner campaigns for clients, it specializes in information architecture, interaction design, customer-relationship marketing and integrated e-commerce, with website redesigns for the likes of Ikea, Warner Music Group, NBC's iVillage, and under its belt. Its work for won a 2009 Webby Award.

Huge declined comment for this story. TBWA also declined comment and referred calls to Pepsi.

Digital agency execs estimate a redesign of could be as much as $2 million.

Pepsi has signaled a new interest in digital and social media as of late. Last fall the company also created a director-social media role, filled by Bonin Bough. Mr. Bough previously spent time at Weber Shandwick and Ruder Finn Interactive. And CEO Indra Nooyi has said that PepsiCo has been shifting more of its spend toward digital media, recently telling Bloomberg that the company has moved almost a third of its budget into the digital world. Five years ago, she said, that type of digital spending didn't exist.

For brand Pepsi, PepsiCo spent $5.6 million on measured internet media in the U.S. during 2008 and $1.6 million during the first half of this year, according to TNS Media Intelligence.

Executives indicated that more news on the digital front could be brewing, as Pepsi closes in on its plans for 2010.

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Rupal Parekh contributed to this report.

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