The Pepsi Challenge

In 2010, Pepsi made a radical and bold marketing move. After 23 years they turned their back on the Super Bowl in favour of social media. Instead of spending $33 million (as they had the previous year) on big bang Super Bowl advertising, they invested $20 million in the ‘Pepsi Refresh’ campaign, a crowd sourcing philanthropic social media project.

The Pepsi Refresh project offered grants from $5,000 to $25,000 for social initiatives, community projects and any worthy causes that had the potential to ‘refresh the world’. Social media was used to source submissions and allow the public to vote on their favourite projects. Each month grants would then be awarded to the ideas that received the most votes.

The response was enormous. The Pepsi Refresh project generated 4 million ‘Likes’ on Facebook, 60,000 Twitter followers on Twitter and 80 million votes were registered for the different projects.

Fabulous! A great success.

Or was it?

That year, Pepsi’s sales fell by 6% and Diet Coke replaced Pepsi as the second biggest cola brand in the US.

The New Yorker and many others called Pepsi’s social media campaign a ‘big failure’. According to commentators, the problem with Pepsi’s social media strategy was that it had lost touch with their core marketing purpose – to drive product sales. While the Refresh project clearly engaged and encouraged people to support community causes, it did not sufficiently engage and encourage them to purchase and consume a can of Pepsi. Mark Ritson suggested that Pepsi had been blinded to the realities of the market and “was not marketing a movement it was marketing cola”.

Despite public statements from Pepsi that the campaign was about ‘brand health’ and ‘understanding their consumers better’, their actions told another story and the following year they were back advertising at the SuperBowl and have just recently announced a multi-year super bowl sponsorship arrangement of the half time shows.

So what is the moral of this story?  Social media bad, traditional media good?

I don’t think it is as simple as it sounds and there are a lot of factors to consider:

1. Is there a conflict of interest in the commentary? Whilst traditional media have been quick to label Pepsi’s social media campaign a failure, are they impartial? It is well known that newspapers are struggling with their own loss of advertising dollars to new media and may be quick to criticise a competing channel, so their comments must be viewed within this context.

2. Was the campaign itself flawed? The campaign faced some technical issues and contained innate structural flaws in that it favoured community groups who could mobilise votes rather than those who had genuinely valuable projects to fund. So the problem may lie within the campaign structure rather than the platform.

3. Did the company place all their eggs in one basket? Moving from one channel to another after over twenty years is a massive shift for any brand. Perhaps Pepsi expected too much, too soon from the Refresh project and had unrealistic objectives about what it could achieve. While social media platforms offer the chance to engage customers, it is only one  tool that can be used in an integrated marketing communications campaign. By neglecting other channels and relying solely on social media, Pepsi may have been overly ambitious and myopic in their focus.

4. Has the evaluation been too short term in perspective? Branded a failure by so many, it may be easy to ignore the fact that Pepsi engaged millions through this campaign and built positive brand equity in the process. This can be leveraged for the future.

To me, this case demonstrates that social media offers an important but not the only marketing tool for brands in the twenty first century. In spite of all the buzz, do not lose sight of all your marketing channels and utilise them together to create integrated campaigns to achieve your objectives.

What do you think? Love to hear your comments and perspectives!

Until next time..


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