PepsiCo looks to consolidate media account

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PepsiCo is conducting a review of its $170 million national TV planning and buying business.

The review is being conducted in "the utmost secrecy," said one executive with knowledge of the process and, surprisingly, includes unidentified non-roster agencies as well as roster shops.

PepsiCo executives did not return phone calls.


The review was started, according to executives close to the review, after the spinoff of PepsiCo's fast-food restaurants, which left the marketer with just its soft drink and Frito-Lay snack food divisions.

"The decision was that a review and consolidation there would make a lot of sense, that Pepsi was now down to a manageable size, mediawise," said one executive.

BBDO Worldwide, New York, with the soft drink account, has the bulk of the billings and it would be a major jolt if the agency lost the media on the showcase account. BBDO and Pepsi-Cola Co. have a relationship that goes back more than 30 years, to 1965.

The agency is participating in the review.

"In fact, I'm shocked that Pepsi is even considering taking the media away from BBDO," said the executive with knowledge of the review. "It's a great media shop and has done a great job."

In recent years, that agency has become known for buying multiple spots on the Super Bowl broadcast for the client, providing it with a high-visibility venue rival Coca-Cola has largely ignored.

The other roster shops participating are BBDO's sister agency in Omnicom Group, DDB Needham Worldwide, which does planning for Frito-Lay; and TN Media, which does national buying for Frito-Lay.


The agencies all declined comment. It could not be determined what non-roster shops might be involved.

The marketer wants to make a decision on its media agency-of-record assignment by yearend, executives close to the review said.

That PepsiCo would consider non-roster agencies in the consolidation surprised observers.

"That means PepsiCo really wants to prove to itself it's getting the best, most efficient deals out there," said one agency media executive. "God knows how long it's been since they've taken a real serious look at their media, so from their perspective it's probably a good thing.

"While I'm sure BBDO and TN Media hate having to go through this, it's also a chance for them to reinforce to the client what a good job they've been doing."


As one media executive not in the review noted: "There's the foot-in-the-door philosophy. If you're X agency, and you only have the media account for a major advertiser like PepsiCo, you're always hoping that [it] might some day try you out with a creative assignment as well."

PepsiCo spends close to $140 million in broadcast network TV alone, according to Competitive Media Reporting, with the rest split between syndicated and cable TV.


It joins a long list of blue-chip advertisers that have conducted consolidations and/or reviews of media buying in the past 12 to 18 months, including Procter & Gamble Co., Miller Brewing Co., Marriott International and Glaxo Wellcome. Also on that list is a slew of telcos, such as Ameritech Corp., Bell Atlantic Corp., BellSouth Corp. and SBC Communications.

Contributing: Louise Kramer

Copyright December 1997, Crain Communications Inc.

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