Monday, February 08, 2010

Pepsi's Refresh is making marketing history

Pepsi's Refresh Project is a first-of-its-kind experiment in social media. Pepsi is shifting one-third of its marketing budget to interactive and social media. In a bold move, Pepsi pulled its high-profile Super Bowl spots in favor of heavy spending to push a digitally focused social-responsibility campaign. Consumers don't seem to mind; in the weeks leading up to the Super Bowl, Pepsi was the second-most discussed advertiser associated with the Super Bowl, according to Nielsen.

As part of the Project, launched on January 13th, consumers can apply for grants ranging from $5,000 to $250,000 in one of six areas: health, arts and culture, food and shelter, the planet, neighborhoods and education. One thousand applications are accepted monthly via Consumers will vote on the winning projects. Pepsi expects it will give out more than $20 million in grants before the end of the year.

Bonin Bough, global director digital & social media for PepsiCo, is responsible for Pepsi’s social media programs. He explains that "it's not about digital as its own channel anymore. It's, how do we infuse digital across all of our marketing programs? The first step was socializing the brands and getting all the brands to quickly move away from destination sites and start creating experiences."

Refresh Project is closely watched by the industry for its scope and ambition to put digital media at its forefront, its purpose-driven strategy and the way it restructures relationships within Pepsi's agency circle.

Cheryl Damian, a director in the cause-branding group at Cone observed that "this is big, new, getting a lot of attention. It's impactful; it's innovative.” Many of her clients have been asking her about Pepsi's program and watching its progress.

The risk for Pepsi is acceptance. Pepsi has a reputation for amusing and entertaining. As Kevin Keller, professor of marketing at Dartmouth College, puts it: "Pepsi has been wonderful for years at entertaining us. This [program] is reflective of the times and the realities that people love entertainment but also care and have concerns about the world as a whole. But I would hate to see them stop entertaining us altogether."

Other brands in the PepsiCo portfolio have been successful in using non-traditional marketing. Mountain Dew shifted the creation and marketing of new flavors to consumers through its Dewmocracy campaign. Doritos has been a success with its user-generated Super Bowl ads.

Pepsi is hoping that the Refresh Project will deepen its relationship with consumers. Since this brand has a youthful target and appeal, going for social marketing seems to be smart move. According to Mr. Bough, the concept of creating a TV spot and then making that spot into an online or Facebook strategy is passé.

To work on the company's digital strategies, PepsiCo's beverage brands have developed a stable of digital-agency talent, including Huge, Firstborn, Tribal DDB and VML. An agency executive who participated in one of the recent digital reviews said that Pepsi is looking for something different – a combination of being a giant conglomerate with some genuinely new thinking and creative approaches.

Will Pepsi be successful? Up till now, the reactions have been good with an approval rate of 71%. Tweets lauded the brand's decision to "wise up and focus online" and applauded it for "exploring what matters". But in the end, it all depends on the sales figures. The industry is watching, and if Pepsi’s strategy pays off, more clients will walk away from million-dollar TV ads and embrace social marketing.

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