Pepsi Bets on Local Grants, Not the

Super Bowl
By JENNIFER PRESTONJAN. 30, 2011
What’s better than reaching more than 100 million viewers during last
year’s Super Bowl? For Pepsi, it could be 6,000 football fans during a high
school game on Friday night in central Texas. Or a group of parents who
wanted a new playground in their Las Vegas neighborhood.

That is the bet that PepsiCo made when it walked away from spending $20
million on television spots for Pepsi during last year’s Super Bowl and plowed
the money into a monthly online contest for people to submit their ideas and
compete for votes to win grants.

Withdrawing from the Super Bowl for the first time in 23 years and giving the
money away for the Pepsi Refresh Project was considered a gamble by the
beverage maker as it explored the potential of social media and cause-related
marketing to make a difference in its business. But the company, despite
accusations that some winners used questionable voting tactics, says it was a
huge success and plans to expand it beyond the United States this year.

More than $20 million in grants, ranging from $5,000 to $250,000, has been
distributed to about 400 winners so far, including $25,000 for new uniforms
for the Cedar Park High School band in Cedar Park, Tex., which took its
campaign to win votes to Friday night football games. In Las Vegas, a new
playground opened last week with a $25,000 grant won in September.

“This was not a corporate philanthropy effort,” said Shiv Singh, head of
digital for PepsiCo Beverages America. “This was using brand dollars with the
belief that when you use these brand dollars to have consumers share ideas to
change the world, the consumers will win, the brand will win, and the
community will win. That was a big bet. No one has done it on this scale
before.”

As Pepsi had hoped, competitors have turned to their personal networks on

Facebook and Twitter to gain support for their ideas, extending the Pepsi
brand and its do-good message. Nearly 19 percent of the 77 million votes have
been cast through Facebook. On Twitter, participants were urged to use the
hash tag “#PepsiRefresh,” and they did.

B. Bonin Bough, who oversees social media for PepsiCo, said that the power
of social platforms, like Twitter and Facebook, and blogs allowed this
program to work and have reach. “But most important is the power of these
platforms to help individuals build communities to help support their efforts
and ideas,” he said. “These communities will exist long after and are a
testament to the type of social impact programs like this can have.”
But did the Pepsi Refresh Project sell more cans of soda? Prompt more
consumers to switch from Coca-Cola to Pepsi? Create more brand awareness?
Build stronger relationships with consumers?

Figuring out how to translate social media efforts into sales and customers —
and how to measure overall effectiveness — was cited as a top concern of
many companies looking to expand their efforts to reach consumers using
social media technologies in 2011, according to a recent survey by the
Harvard Business Review Analytic Services.

More than 79 percent of the 2,100 companies participating in the survey said
they either currently use social media channels like Facebook and Twitter, or
are preparing to start social media initiatives. But most executives reported
they were still struggling over how best to use the different channels and
measure their effectiveness.

Of those companies participating in social media, nearly a third do not

currently measure the effectiveness of their programs, and less than a quarter
are using social media analytic tools, the report said.

At Pepsi, the company is using dozens of methods to assess the impact of

Pepsi Refresh, but its success is not being measured by sales of the beverage.
Last year, Pepsi sales fell 6 percent, a sharper decline than the 4.3 percent
decline overall in carbonated sales beverages.

Mr. Singh said the Pepsi Refresh Project was not a sales-driving program, but
viewed as an investment to build brand awareness and cultivate a long-term
relationship with consumers. “It was designed to drive brand health,” he said.
“We look at brand equity, brand health and sales — and we have seen
movement in all of them.”

He also said the project had allowed the company to understand and learn
the priorities of many of its customers across the country. “There have been
120,000 ideas submitted,” he said. “It gives us a strong sense of what matters
to them and what is exciting to them.”

Allison H. Fine, co-author of the book “The Networked Nonprofit,” said the
upside of the growing number of companies’ embracing social media to run
online charity contests was that a local shelter could compete head-to-head
for money with a large national nonprofit and do well.

“But it is still different from traditional philanthropy,” she said, noting many
of the awards are to support “loving acts of kindness” and not aimed at
achieving social change or perhaps a community’s more urgent and
important needs.

At Cedar Park High School, band members waged a four-month campaign to

win the $25,000 grant from Pepsi Refresh for new uniforms last fall; their
efforts included distributing fliers during a game and asking people to vote
online in support of their request.

They also urged people to use their mobile phones to cast a vote during
halftime. To help them text the number, band members created a formation
on the field of 1-0-2-1-1-4 while an announcer told fans what to do.

“That was a lot of fun,” said Bob Chreste, associate director of the high school
band and the driving force behind the band’s successful campaign. “A lot of
people in the audience during the game pulled out their phones and voted.”

For Pepsi’s advertising agency, TBWA/Chiat/Day, based in Los Angeles, the

decision to skip the Super Bowl ad last year and use the money for the Pepsi
Refresh Project acknowledged the consumer shift toward social media and
the need to reach the millennial generation with a project that allowed them
to participate in a meaningful way.

“It was a big deal,” said Carisa Bianchi, president of TBWA/Chiat/Day, about
the decision to forgo a traditional ad. “But it really placed Pepsi as a modern
brand.”

What about this year’s Super Bowl? The Pepsi Max brand will join its sibling
brand, Doritos, in the Crash the Super Bowl contest, which will offer six ad
spots this year for consumer-created commercials. Voters decide which spots
get on the air.
Thoughts about Pepsi Refresh
Project (A Case Study)
The criteria to evaluate a digital marketing promotional campaign:

Companies choose varies criteria to evaluate campaign effectiveness, depending on

the objective of the campaign planned at the beginning.

If the purpose of a digital marketing campaign is to promote sales instantly,

evaluation criteria includes sale increase percentage, conversion rate from digital
channels to sales, marketing ROI (the amount the firms invested into the campaign,
vs. the financial benefits of increased sales), and customer data analysis (newly
registered customer number, customer response rate, customer’s demographics,
etc.)

Some digital marketing campaigns do not directly promote the sales in the short
run. Companies choose a proper cause to demonstrate their social responsibility
and enhance image and reputation. For example, Pepsi Refresh project, and Dove’s
Real Beauty campaign. The above evaluation criteria are still applicable, but
tracked more in a longer time span, and interpreted in the quarterly and annually
financial reports. Furthermore, marketers will conduct deeper customer data
analysis, such as positive reviews number, inbound website visitors from social
networks, fan base on the social networks, customer demographics, etc.

In all, marketing promotional campaign should always consider ROI. Depending

on the purpose of the campaign, the criteria might focus on short-term or long-term
financial benefits respectively. The criteria should also reflect the “digital”
essence, including in-depth customer data analysis and social media data statistics.
Whether is Pepsi Refresh Project a success?

If we only talk about the social contribution, Pepsi Refresh Project is a great success. It

sponsored 100+ programs, which will be beneficial to the development of communities in

various regions.

In terms of social media engagement, Pepsi Refresh Project is also a great success. It generates
huge buzz in the social media world and let the participants better know the Pepsi brand.

However, even this project attracted lots of fans and likes from social network, it seems not
achieving its real objective of expanding the brand and pushing sales. The financial data showed

that the project did not effectively increase sales in the following years. Also it is not very clear

whether the project prompted more customers to switch from Coca-Cola to Pepsi, create more
brand awareness or build stronger relationship with customers.

The unsatisfactory result might be due to the weak connection between the marketing campaign

and Pepsi products. People feel good about the marketing campaign, but difficult to connect it
with the product quality and characteristics.

There is also a contradiction of authentication between the marketing campaign and product.

Pepsi and other soft beverage have long been claimed as unhealthy beverage due to the high

sugar and energy level. Such a company initiating the Doing Good to Community campaign will

make people imagine that the company tried to use the cause marketing to cover its product
problems and acquire public support deliberately.

Finally, there is a mismatch between the customer and marketing campaign participants. Those

who drink soda beverage might not be interested in the campaign, and the campaign participants

might actually not be the fans of soda beverage. This mismatch affects the customer conversion
rate from the campaign to sales.
What should Pepsi do about this project?

It is a pity that this project is paused after two years. The company
should continue this project, but making proper adjustment to solve the
above mismatches. After all, a long-term cause marketing campaign
could generate more lasting result.

Pepsi Refresh project could refer to Dove’s Real Beauty program in how
to maintain and evolve a long-term cause-marketing program. Some
suggestions include:

1. Be more focused in certain market which it wants to penetrate or

increase market share, instead of a global effort to dilute its focus.
2. Connect the marketing program with the essence of its products,
instead of letting people vote freely. E.g. specifically sponsor
music/sports initiatives.
3. Limit the campaign period for each season, so as to utilize
company resources effectively.
4. Explore both traditional and digital marketing channels to get more
attention.