Will Simon Cowell's New 'X Factor' Mark the Spot for Pepsi?

Tuning In: Fox Show Has Great Buzz, but Success Is Never Guaranteed

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The marketing world is abuzz with the news that Pepsi has signed on as a season-long sponsor of the much-anticipated "X Factor," a show that Fox and now Pepsi both hope will be the next "American Idol." Although the deal is a great start for "X Factor" and secures a potential "Idol"-esque platform for Pepsi, the program's success is still anything but guaranteed.

Simon Cowell
Simon Cowell
Heresy! How can anyone suggest that "X Factor" will be anything but a hit? The show, a proven phenomenon overseas, is coming to Fox with former "Idol" judge and "X Factor" creator Simon Cowell leading the proceedings. It may well do gangbusters, and it needs to.

A successful launch of "X Factor" is critical for Fox, which has seen ratings ebb for the "Idol" juggernaut and ran into other challenges last fall, particularly with the quick cancellation of the highly praised drama "Lone Star" and a cool reception for quirky comedy "Running Wilde." Things have gotten pinched enough that Fox has offered commercial time on Hulu to make up for ratings shortfalls on regular TV.

Runaway ratings for "X Factor" would take the heat off "Idol," which will likely see ratings sag in the season starting Jan. 19 despite new judges Jennifer Lopez and Steven Tyler, and give Fox's lineup another solid performer alongside "Glee."

Marketer anticipation for the new program is also high, according to Jean Rossi, who does double duty as president of Fox One, News Corp.'s cross-platform ad sales unit, and as exec VP-sales for Fox Broadcasting. Fox deliberately approached a group of beverage marketers -- Coca-Cola, an "Idol" sponsor, among them -- before other kinds of marketers after determining that drinks were a good fit for the show, Ms. Rossi said.

Fox may have additional reasons to cater to beverage companies. Its ad buys from Coke and Pepsi have declined recently. PepsiCo spent about $52.5 million on Fox in the first 10 months of the year, according to ad spending estimates by Kantar Media, down from around $77.3 million in the equivalent period a year earlier. Coca-Cola, meanwhile, spent around $77.6 million over the first 10 months of 2010, down from approximately $84.9 million in the first ten months of 2009, Kantar said.

When it comes to "X Factor," advertisers are eager to hear more, Ms. Rossi said. "We definitely have a lot of interest," she said, noting that Fox was now set to approach other marketers about shorter-term partnerships with "X Factor." Under terms of the deal, Pepsi will have the only season-long integration with the new show.

To give the show a boost, Pepsi will also help market "X Factor" around launch time, said Frank Cooper, chief consumer engagement officer at PepsiCo Americas Beverages, and is about to discuss plans to keep viewers talking about "X Factor" on social-media platforms such as Twitter and Facebook even when the show's not on the air. "The TV show for us is really just one piece of the broader 'X Factor' platform," said Mr. Cooper. "We think that we have ways to extend it beyond the TV viewing into the digital space and offline."

While the show is still untested in the U.S., Pepsi likes its track record overseas as well as the association it will have with Mr. Cowell, Mr. Cooper said.

The New York Times article breaking the news of a Pepsi deal with "X Factor" made much of the fact that Pepsi had snagged Mr. Cowell's attention; he used to swill Coke from red cups on "American Idol," after all.

But Coke may be happy enough still sponsoring a show like "Idol," which has continued to nail down the biggest audiences on broadcast TV even as it ages. You can't say that about "X Factor" yet -- and might never be able to. TV remains a fickle business. "X Factor" certainly has some x-factors surrounding it. Here are some of them:

Fox has a history of problematic launches in the first half of the TV season. Fox doesn't deliberately reserve weaker material for the fall -- "Glee" continues to fare well -- but its continued airing of World Series and other post-season baseball games often means its September and October lineups are shakier while rivals roll out new programs in more regular fashion. Fox has also used the fall to experiment with newer stuff, secure in the knowledge that "American Idol" -- often previously coupled with "24" -- would lift all boats in the spring. This year, however, "24" is off the air and "Idol's" singing voice is starting to sound a little pitchy.

"I have no concerns at all," said Mr. Cooper. "It's really a question of whether the show is any good. If the show is good, you can watch it midseason. You can watch it in the summer. If a show is not good, it will fail. Certainly, the viewers will ultimately vote."

Is there a credibility issue? So Mr. Cowell gladly sips Coca-Cola for years on "American Idol" and now the average viewer is supposed to swallow the notion he has really yearned for Pepsi all this time?

The beverage giants hate it when celebrity endorsers give even the slightest sign of enjoying the other company's products. In 2001, Pepsi had to remind then-spokesperson Britney Spears that she flubbed when she was caught in public sipping Coke and Sunkist rather than products made by Pepsi. Ms. Spears was at the time involved in a deal to promote Pepsi-Cola valued at around $7 million.

The new show tamps down any association audiences might have formed between Mr. Cowell and Coke, according to Pepsi's Mr. Cooper. "I think consumers understand that a cup on a table in and of itself is not that meaningful," he said. "What matters is whether or not the brand can contribute something that consumers find of value to them."

The song-and-dance show category is getting extremely competitive. Tasting blood in the water when it comes to "Idol's" weakening ratings , CBS and NBC have launched programs such as "The Sing Off," which has done reliably well for the ailing Peacock, and "Live to Dance," a new dance contest on CBS featuring Mr. Cowell's former judge-mate Paula Abdul. Meanwhile, the fall show to watch in this category has been ABC's "Dancing with the Stars," which got a decent boost this past season due to its inclusion of Bristol Palin.

Our question? Mr. Cowell's charisma aside, are the nation's couch potatoes getting fried from too many song-and-dance contests? The ratings tell us no, but there usually comes a time in the TV-network cycle when too many players craft too many variations on a big hit's formula. Think about all the failed efforts to duplicate the success of Fox's "24" or ABC's "Lost." At some point, the airwaves will send too many dancers and singers to our TV screens. That saturation point can't be too far off.

To be fair, much of the hype surrounding "X Factor" seems well-deserved. But Fox is smart to featherbed the show with advertisers well before this year's upfront, because no matter how heavily a new program gets promoted -- think NBC's "The Event" or ABC's "Flash Forward -- the public's attention is split 80 ways 'til Sunday. Whether "X Factor" can knit that attraction back together in the fall is for now, like the program's title, something of an unknown.

Tuning In is an ongoing series of commentaries by Ad Age TV Editor Brian Steinberg on the TV schedule, the ads it carries and changes within the industry. Follow him on Twitter.

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