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The Pepsi Jenneration – History Repeats Itself

The Pepsi the “Live For Now” ad crisis is a case of history repeating itself. If any brand should know what happens when the focus of an advertising strategy turns cause-related it’s Pepsi.

The year is 2009 – ancient history in Internet Years. In its ongoing battle against Coke, Pepsi has made the bold decision to forgo ALL Super Bowl ads in favor of an all-social campaign dubbed “The Refresh Project”. The project dedicated the $20 million dollars that was usually spent on Super Bowl tv spots to an ongoing social marketing campaign to help local communities. The theme of the project was “refreshing ideas that change the world”; and Pepsi promised to giveaway $20 million in the form of grants between $5000 and $250,000 to social causes by garnering the most votes by fans on social media.

The results ? During the first year (2010) the Refresh campaign received 80 million votes on Facebook, 3.5 million “likes” on Pepsi’s Facebook page and added 60,000 new Twitter followers. Unfortunately for Pepsi, during the same period it lost 2.6% of the overall carbonated beverage market dropping from its traditional number two soft drink in America behind Coke to third place behind Coke and Diet Coke. Blue Can Pepsi sales fell by 4.8%compared to the previous year.

I’m not suggesting that The Refresh Project was the only contributing factor behind these stats; after all, Pepsi spent another $1.5 billion additional dollars that year on marketing and advertising. But it’s a pretty safe bet that The Refresh Project didn’t help sell much soda or help Pepsi’s share price at all.

Today’s “Live For Now” ad crisis was created by Creative League, Pepsi’s newly formed in-house content agency created in July 2016. Following the lead of other big brands with in-house content agencies such as Marriott, Red Bull, Budweiser and Yahoo, Pepsi’s Creator’s League was formed as an internal production arm for scripted series, films, music, recordings, reality shows, and other content distributed for TV, online viewing, and services like Amazon Prime. Behind this new “internal agency” are two key drivers – saving money and making money.

“People don’t pick up a Pepsi because the company built a playground in Omaha.”

That in-house content studios will save money compared to outside agencies is without question. According to industry estimates, hiring an editor costs on average $750 for a day, whereas outsourcing that to a shop will cost an average of $5,000. The ultimate goal of many content studios isn’t just about saving money it’s about making money as well. Kristin Patrick, PepsiCo’s svp of global brand development puts it like this, “We have taken a certain amount of digital content production in-house, so the Creators League has already helped to reduce our spending on branded content creation. Ultimately, we hope to see our unbranded content create an additional revenue stream for PepsiCo that will cover the costs of creating our ad content.”

Is it possible that all the young employees at Creators League in 2017 had no idea about the 2009 Refresh Project? Hell yes. All the fresh-faced twenty somethings were in their teens in 2009, and 8 years ago is ancient history in internet years; so there’s every chance they had no clue about Pepsi’s previous cause related ad failure.

Whether or not there will be any impact on Creators League remains to be seen. I’m guessing that it will be at least 8 more years until memories fade and Pepsi takes another stab at cause related marketing. Who knows, maybe Pepsi will have learned its lesson permanently. And in the words of Bob Hoffman, the ad contrarian, the lesson is this, “First, people like companies that do good things in the community but this doesn’t necessarily drive purchases. People don’t pick up a Pepsi because the company built a playground in Omaha. They pick up a Pepsi because they are thirsty and want refreshment.”