PepsiCo reveals its toughest content marketing lessons

On the eve of The Drum’s UK premier of the YouTube documentary about its widening pool of digital stars, Micozzi said a core challenge of the platform was to ensure that users not “only come for the content but stick around for the conversation”.

“With that guiding thought we’re looking at how we get those solid returns we used to get on TV to the new platforms we’ve stepped up in,” he added.

Content is king, but expertise rules

PepsiCo has been doing content marketing for decades - the inclusion of special zero-G Pepsi cans on the Space Shuttle Challenger in 1985 was converted into a “Space Can” campaign - but it is no longer enough to just create great content.

Success comes from creating scalable content that moves between the borders of personality, broadcast, digital stars and audiences that have never been more fluid. Unable to adapt to the paradigm shift on its own, PepsCo has tasked Facebook with creating media products that can specifically help drive some of the video that lives on YouTube.

“It’s not only Facebook we’re partnering with because we’re trying to create an ecosystem rather than look at each platform independently,” revealed Micozzi. “We’re working with [ad tech company] Unruly, we’ve looked at [video ad platform] Videology and have tweaked some of OMD’s own programmatic buying to get that integration.”

The investments form the backbone of the next phase of the company’s marketing. Now that it knows how to connect with consumers in a cool, contemporary way, PepsiCo wants to see whether social media lifts short-term sales in the same way TV did.

Can social media play the same sales role as TV?

Content marketing, when done the right way, combines the “science of targeting” with real art, said Micozzi. There is a global project underway at PepsiCo to track the return-on-investment of its targeting with the intention of justifying bigger budgets for the channels in the future. In the UK, it is partnering with Nielsen to fuel its understanding and is introducing econometrics modelling to the marketing spend for Pepsi Max, Walkers and Doritos.

“I’m trying to see if social platforms can play the role that TV used to play,” Micozzi said. “I can tell you that by shifting from the TV-led model to digital content that my return-on-investment has gone up 43 per cent. Some of that was the paid portion and some of it was the earned portion but I couldn’t tell you exactly how much each is.

He means that when Pepsi Max launches a video and it gets 12 million views like its “Loop the Loop” post (see above) did last year, the business does a simple calculation whereby it measures how much of the views it paid for and consequently has a rough guide on how much is earned.

It’s a rudimentary measure yet it has provided an accurate rating of the performance of its content, claimed Micozzi. “We can probably do a lot more work to figure out how much earned media we’re getting and where it’s coming from to the decimal. The question whether it is worth it or is it good enough for approximation. We’ve got enough at the moment to inform the choices that we make.”

The company’s confidence is stoked by a “mobile digital playbook” it has created to bridge the gap between its virtual channels and store shelves.

Clicks and mortar meet up

How can social media help the omnichannel challenge? For PepsiCo, the answer lies in the realisation that mobile is now the glue between online and physical retail.

Influencer-led campaigns with real-time activations mix the best of social with the best of hyper targeting to create new ways to reach out to shoppers with anything from general product information to location-specific deals, said Micozzi.

Pepsi Max is exploring the possibilities in the UK through its ties to biggest on-premise supplier KFC. It is using augmented reality technology to let people scan their drinks from their mobile in order to receive in-store entertainment.

“It’s been a big education journey to get [our suppliers heads] around the [technology],” added Micozzi. “We’ve landed programmes with a whole bunch of customers like Tesco, Odeon and KFC and we’re now stretching our lets to build better programmes for them. It should allow us to be more effective because we’ll be bringing better quality content through more effective programmes.”

The plan is backed by PepsiCo’s renewed focus on the retail frontline that sees it introduce more technology in store, from digital overlays on displays to e-commerce activations. PepsiCo outlined its vision for a more seamless retail experience in its last earnings call in January when it said it was leveraging store level insights to execute custom assortment, custom marketing and custom displays.

How to drive programmatic conversions in a mobile world

While it’s not yet ready to pull programmatic trading in-house, PepsiCo is looking to exert more control over its own programming as it seeks global support to help scale its offering. Targeting innovations are being primed with partners OMD and Unruly for later this year that the business believes will enable it to respond to consumers in the same way they respond to brands; in real-time and in a non-linear path.

“It’s going to be yes to more programmatic for PepsiCo [this year],” said Micozzi. For an FMCG business like PepsiCo, serving online videos this way represents a more effective advertising channel than banners at a time when pressure is growing to hit quarterly sales targets.

“The thing I’m really keen on with programmatic is that it helps us better retarget content and will drive costs down, he added.

On the subject of effectiveness through programmatic trading, Micozzi downplayed wider industry concerns about viewability. The advent of automated advertising has magnified concern from many brands over the accountability of their media spend and caused them to question whether the right people are actually seeing their ads.

“When we started this journey, I asked how do we know if anybody sees your ad when it runs on TV. How do you know the target viewer is not in the kitchen making a cup of tea? Nielsen tells me I’ve served an ad. My media agency tells me I’ve served an ad but I’m not really sure,” he added.

“I’m not really sure about the interim metric. If return on investment goes up and brand equity goes up then the model works. I think the day our return on investment stops going up or our brand equity stops growing then I think we need to go back and look at things.”

It is still early days for programmatic video and with more premium inventory opening up everyday, PepsiCo plans to be at the forefront of developments.

Exposure vs revenue on YouTube

PepsiCo has a conundrum to solve. Its Pepsi Max brand in the UK has pioneered a shift from TV to digital in the business and now it wants to know whether it’s possible to have cake and eat it when it comes to exposure and revenue.

Micozzi feels that one hand feeds the other and is consequently steering Pepsi Max’s strategy to prioritise relevancy with people rather than cost-effectiveness in the belief that sales will grow.

“We turned to the digital space two years ago because we were looking for ways to level the playing field against Coke,” revealed Micozzi. Coke could “easily outspend us”, he continued and so the company worked with Google to tip the scales in its favour.

“The power of earned conversation and ultimately things like campaign fame to drive earned conversation were what we hypothesised would close the gap for us,” he said. “If Coke can spend four times what we can on traditional media on a per video basis then we get up to seven times more than Coke [through digital].”

With a template in place that leans heavily on YouTube’s patented “Hero, Hub, Hygiene” content strategy, PepsiCo is exploring personalised video. It follows the successful launch of the company’s first pan-European video last November that saw a post for Pepsi Max localised by language and text at scale.

“That’s the future for us,” predicted Micozzi. “Our [Pepsi max] brand is becoming an entertainment platform. The solid returns that you were getting through broadcast have eroded over time and so we’re jumping ahead of the game to get on to the next big thing.”

The next big thing for PepsiCo also involves a new kind of celebrity. These stars clock millions of eyeballs each week on their own content outside of the studio and network systems on sites like YouTube and Vine. Working with the likes of YouTube sensation and parkour athlete Damien Walters requires giving up some control, admitted Micozzi, and yet is emblematic of the potent potential of fans becoming creators in their own right.