Lowdown: Analysts Don't Seem to Care at All About Pepsi's Kendall Jenner Ad

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The Lowdown is Ad Age's weekly look at news nuggets from across the world of marketing, including trends, campaign tidbits, executive comings and goings and more.

Kendall Jenner in Pepsi's protests-and-unity-themed ad.
Kendall Jenner in Pepsi's protests-and-unity-themed ad. Credit: Pepsi

It was exactly three weeks ago when Pepsi pulled its much-criticized Kendall Jenner spot, causing embarrassment and loads of negative PR for the brand. But the people paid to track PepsiCo's financial performance have either forgotten about the incident or don't care. On Wednesday's first-quarter earnings call PepsiCo CEO Indra Nooyi didn't face a single question about the ad from Wall Street analysts. (She didn't bring it up, either.) Of course, the quarter ended before the ad fail, so if it had any effect at all on sales or revenue it would not be reflected in the numbers. But that hasn't previously stopped analysts from asking about their concerns for later quarters -- which didn't seem to be the case with the infamous ad. As for the first quarter itself, PepsiCo posted mixed results. Earnings-per-share of 94 cents topped expectations. But despite the earnings beat, "the quality of the quarter was disappointing as organic revenue, gross margin, and operating margin all came in weaker than we anticipated," J.P. Morgan said in a note to investors. On the call, Nooyi was quizzed about a range of non-Jenner topics, including how long-term risks like the impact of e-commerce on its ability to capture impulse purchases. "We are working on tools with all of our partners to make our categories look like impulse categories online," Nooyi responded, without giving details. "It's a work in process, but I must tell you that our growth rates are quite impressive."

Dawn Air-Assist packaging.
Dawn Air-Assist packaging. Credit: Procter & Gamble Co.

One tactic to fuel e-commerce sales is to redo packaging, a tactic that Procter & Gamble Co. is testing. Its Air-Assist packaging for select home-care items, including Dawn, which simultaneously reduces risk of leakage in shipping, uses less material, costs less and looks better to consumers coming out of the box, Chief Financial Officer Jon Moeller said on the company's conference call April 26. E-commerce now represents 5% of P&G's global business, and grew 30% last quarter net of the effects of currency, acquisitions and divestitures, he said.

Betty Crocker: How to Make a Big Top Circus Cake
Betty Crocker: How to Make a Big Top Circus Cake Credit: Betty Crocker via YouTube

Startups keep getting attention, but when it comes to brand engagement, newer does not always mean better -- at least for packaged goods. The 10 most engaging consumer packaged goods brands in the U.S. are mostly well-established (read: older) names, according to a new report from brand and design firm Landor. The only brand on the list created in the 21st century is Plum Organics, the baby food brand founded in 2007 and acquired by Campbell Soup Co. in 2013. Others on the list include Betty Crocker, Burt's Bees, Dove, Gerber, Johnson & Johnson, Olay, Pillsbury, Trader Joe's, and Weight Watchers. For the Landor Pulse list, the WPP firm said it did research among 17,000 U.S. consumers, looking at measurements of brand attributes -- including whether it cares for customers, is trustworthy or helpful, and how it fares on social -- using the 2016 BrandAsset Valuator database. Landor said it looked at 933 brands. "Many people may assume that established CPG brands that have been around long before the age of social media are lagging behind, but the results of our Pulse indicate that not only are they keeping up, they are doing a better job than contemporary brands born into this era," Mary Zalla, Landor's global president of consumer brands, said in a statement.

Speaking of old, the 101-year-old Toy Industry Association is getting an upgrade. The group, which boasts 1,098 members ranging from high-profile brands like Hasbro and Lego to smaller startups, is changing its name to Toy Association with a new tagline, "Inspiring Generations of Play," and logo that will change according to holidays and events. The association will also host an annual Play Fair for consumers, advertise for the first time in print and digital trade publications and sponsor other trade shows. It's spending hundreds of thousands of dollars on the rebranding, according to Steve Pasierb, president and CEO, who noted that the group is evolving to better address industry needs. "The industry is one that's constantly reinventing itself — it has to keep selling to new generations of parents and kids," he said. "You look at yourself as a 100-year-old organization and say do we make some tweaks or what if we tried to change everything, and that is what we did."

A baby food fight has broken out over ad claims, pitting Beech-Nut against Gerber. Earlier this month the National Advertising Division, administered by the Council of Better Business Bureaus, recommended Beech-Nut discontinue certain claims in its ads that were challenged by bigger rival Gerber, but also found certain claims supported. Among its recommendations, NAD recommended Beech-Nut discontinue the claims "no one but us makes food for babies this way," "glass is the ultimate in sustainability," and "glass is nature's safest container." Beech-Nut said it would comply with the NAD's recommendations, but made it clear that challenges against parts of its "Real Food for Real Babies" campaign applied to work that it was no longer running. "Beech-Nut Nutrition Company supports the self-regulatory process and will comply with NAD's recommendations. The challenged ads have long since run their course, and Beech-Nut will consider NAD's recommendations for advertisements it produces in the future," the company said in a statement. In recent weeks, both companies launched new campaigns. Gerber's campaign focuses on the new "smart flow" spout on its pouch products. It was led by Terri & Sandy and Ogilvy, and created in partnership with Metavision (media), Edible (PR), Hogarth (production) and Match (Promotions). Beech-Nut's, from Scrum50, focuses on looking at labels on its glass jars, with an online component that's more focused on trying to stop labeling other moms.

Here are the ads:

VaynerMedia's Gary Vaynerchuk.
VaynerMedia's Gary Vaynerchuk. Credit: Nathan Skid

Gary Vaynerchuk, speaking at the Association of National Advertisers annual meeting last year, made plain his ambition to buy an orphan packaged-goods brand with great equity he can make greater. Now he's got his chance. Unilever wants to sell its margarine business (I Can't Believe It's Not Butter, etc.) and RB (Reckitt Benckiser) is "exploring strategic options" on French's Mustard and Frank's Red Hot Sauce. So is Vaynerchuk interested? Not really. While he was reportedly close on another unnamed brand recently, he said he sees such a deal coming "more in 24 to 48 months, not 24 to 48 weeks." He's interested in businesses with $50 million to $200 million in revenue. Categories he's most intrigued by are toothpaste and bubblegum. But he remains focused on running VaynerMedia, and doing such a deal may be based on having "a proper CEO in place to run VaynerMedia" though he may try to do both initially. He confirmed recent reports of layoffs -- "17 to 18 out of 750," net of new hires and promotions. Vaynerchuk said the layoffs reflected a shift toward creative services and away from production, and similar moves could come in the future as he shifts focus toward such areas as small business and consulting.

Turning to this week's personnel moves …

Both Quicken Loans and Citi have new marketing heads. Detroit-based Quicken Loans has tapped Casey Hurbis, who had been leading North American brand communications and advertising at Fiat, to replace former CMO and president Jay Farner. Farner was promoted to CEO earlier this year. Meanwhile on Tuesday, Citi promoted Jennifer Breithaupt, previously managing director of media, advertising and global entertainment, to global consumer CMO. Breithaupt, who was an Ad Age Woman to Watch last year, has been with Citi since 1999 and spearheaded the brand's initiatives to expand its entertainment sponsorships to drive loyalty with cardmembers.

Conagra Brands Inc. named Barry Calpino as VP of innovation, reporting to Chief Growth Officer Darren Serrao. Calpino was most recently with Mondelez International, where he was VP, global platform innovation and had worked on the development of that company's new Véa brand. He is also an adjunct professor of marketing teaching innovation at Northwestern University's Kellogg School of Management. He previously worked on innovation at Kraft Foods.

Contributing: E.J. Schultz, Jessica Wohl, Adrianne Pasquarelli, Jack Neff

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