Pepsico will redirect ad spend back to flagship brands

Pepsico plans fizzy drinks marketing blast

PepsiCo will “double down” on marketing fizzy drink brands like Pepsi and Gatorade this year after much of 2017 was focused on pushing its new range of healthier products.

The snacks company reported flat revenues for the fourth quarter yesterday (13 February) but its drinks division in the US – which accounts for a third of its business – performed the worst, falling 3%.

Its Lifewtr bottled water brand, which launched in 2016, was the focus of its advertising efforts last year, with bosses putting the product front and center of the big budget Super Bowl ad campaign.

However, indicating where it hopes growth will come from this year, Pepsi, Mountain Dew and Doritos products fronted its Super Bowl marketing this year.

“For 2018, we have increased advertising behind the big brands, and we expect that to have a positive impact,” said Hugh Johnston, chief financial officer.

“But like most advertising campaigns, that will take several quarters to fully realize the impact. So, we expect sequential improvement in each of the quarters.”

This will also be reflected in in-store marketing, where Johnston added that its “big brands” will be more visible both on the shelf and on the perimeter of the floor.

For Pepsi, the company is planning the launch of a new ‘Generations’ campaign while it will also up budgets for the launch of Mountain Dew Ice.

“As we invest more behind advertising and marketing, behind the big brands of Pepsi and Gatorade and Dew, I think you'll see improved performance from us,” continued Johnston.

This focus on pumping a greater portion of ad budgets into in-store marketing echoes sentiments made by follow FMCG company Unilever earlier this month.

Its chief financial officer said that its level of brand and marketing investment was flat last year, but by diverting work through its in-house advertising agency U-Studio and "eliminating waste in those areas where we have over-saturated traditional media channels,” it saved €250m. This will be reinvested, with increased media and in-store spend in the second half of the year.

Potentially stunting its marketing blitz is the ongoing hunt for a replacement for top marketer Brad Jakeman, who departed the company last October to set up his own consultancy.

Jakeman, who also oversaw its in-house content creation arm Creative League Studio, was behind the widely-criticised ad for Pepsi featuring Kendall Jenner.

Despite the search for Jakeman's successor, Pepsico also plans to “step up” investment in digital capability, data analytics and e-commerce.

“The strength of new capabilities in e-commerce, research and development, social and digital marketing and design has helped us connect with consumers in new ways,” he added.

“We are leveraging big data and predictive analytics to sharpen real-time marketing messages, dynamic merchandising and tailored offers. And we're increasingly collaborating with retail customers to make e-commerce a point of differentiation.”

Its e-commerce business is delivering revenue to the tune of $1bn each year, it said.

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