PEPSICO. MEDIA DECISIONS EVALUATION February 3, 2011 Where’s Waldo Media, LLP
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Meet Where’s Waldo………………………………………………………………………………………………………………. 3 Introduc2on ……………………………………………………………………………………………………………………………..4 The Situa2on ………………………………………………………………………………………………………………………….5 PepsiCo Finances ………………………………………………………………………………………………………………………5 Compe..on …………………..…………………………………………………………………………………………………………6 Technology…………………………………………………………………………………………………………………...…………..7 Decisions………………………………………………………………………………………………………………………………. 8 Super Bowl Pepsi Max……………………………………………………………………………………………………………..11 Super Bowl Lipton………………………………………………………………………………………………………………….14 The Daily…………………………………………………………………………………………………………………………………16 Conclusion ……………………………………………………………………………………………………………………………25 Appendix……………………………………………………………………………………………………………………………….A1
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MEET WHERE’S WALD . We here at Where’s Waldo LLP are proud, loyal, and intelligent souls who know where and how to dive into the world of media and uncover the secrets hidden throughout the media realm. As experienced hiders and seekers ourselves, we have acquired the ability to seek out all the hidden information out there and compile it into full proof plans for over 25 years. Currently we are excited to be the soul media group hunting for smart investments for the PepsiCo company. We know that we are a perfect match for Pepsi, since we both have a love for young, smart, and crazy hip individuals (aka ourselves). Kevin Ward, Cassandra Webb, Helana Zhang, Sarah Wiese, Mmii Ubani, and Patrick White are the brilliant founders of this agency, and continue to influence all of its decisions. We strive to bring a bright future to our clients by finding the un-findable solutions – the Waldo’s of the advertising world!
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INTR DUCTION PepsiCo is a 46 year-old, $43 Billion brand with a diverse arsenal of snack and beverage products. In the past five years, PepsiCo has seen a shifting soft drink market, with consumers moving towards healthier beverage consumption, and a more streamlined way of consuming media. Throughout the years, PepsiCo has prided itself in its ability to adapt and hone in on the “now” of the pop-American consumer, introducing and adjusting products and promotions to fit consumers’ needs. In 2007, PepsiCo expanded its soft-drink collection to include Pepsi-Max. With shifting media consumption, Pepsi introduced the consumer-generated social media-based Pepsi Refresh campaign. In 2011, Pepsi made two substantial investments, re-introducing themselves into the Superbowl in a big way after a 2010 hiadus, spending nearly $12 Million on advertising alone for the event, and parterning with Rupert Murdoch and NewsCorp for a revolutionary digital publication iPad app and website, The Daily.
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THE SITUATI N PEPSICO. FINANCES Beverage Market Share 2.8%
2.7%
The Coca-Cola Company PepsiCo, Inc.
4.9%
16.6%
42.7%
30.3%
Dr. Pepper Snapple Group Cott Corp.
Annual Revenue: $43,232,000,000 Earnings: $5,797,000,000 Advertising Expenditures: $1,700,000,000 • % of Annual Revenue: 3.9%
National Beverage All Others
*Base on reports from 2009
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COMPETITION As seen in the PepsiCo 2010 Proxy Statement, PepsiCo derived a total revenue of $43.2 billion in 2009, with 37 percent being their total beverage revenue. Their biggest compeKtor, in the beverage market, is The Coca-‐ Cola Company, which had a total revenue of $31 billion. The Coca-‐Cola Company’s products include Coke USA, Diet Coke, and Coke Zero. Coca-‐Cola launched Coke Zero in 2007, and then, seeing a significant shiS in societal health issues, PepsiCo decided to introduce their new product, PepsiMax, in 2008. In 2009, Coke Zero gained $1.7 billion in sales in 68 countries. One of the major media outlets Coca-‐Cola used to promote Coke Zero, was the Super Bowl. The Coke Zero Super Bowl ad in 2009 remade thecompany's classic "Mean Joe Greene" commercial with Pi]sburgh Steeler Troy Polamalu. In 2010, one of Coca-‐Cola’s biggest media outlets was through their ExpediKon206 social media campaign. During this campaign, three “happiness ambassadors” traveled to all 206 countries where Coca-‐Cola is sold, and their mission was to seek out “what makes people happy” around the world. Through this whole campaign, they shared their experiences through blog posts, tweets, videos, interviews, and pictures. This campaign generated 650 million impressions. Though PepsiCo has a lower revenue than The Coca-‐Cola Company, in the soS drink market, these decisions to invest in the iPad and Super Bowl will clearly resonate in the minds of two large audiences, both of which will include our target market.
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TECHNOLOGY The dynamics of technology are moving towards speed, efficiency, and convenience, all of which are seen through the proliferation of the Internet and the up and coming Apple iPad. With one million sold in the first 28 days, it began with sales twice as fast as the iPhone. Millenial Media reported that in quarter three of 2010, there was a 316% growth in iPad revenue and 94% growth in the number of iPad advertisers. Similarly, Harris Interactive reported that although 1 in 300 Americans own an iPad today, an estimated 1 in 5 will own one by 2014. The astonishing development and availability of the Internet has also grown throughout the years, as seen by the increasing brand searches and website traffic during the Super Bowl. As audiences are watching the game, they are also visiting the official website, clicking through to social media, and entering into unperceivable conversations with brands featured on the Super Bowl. After the game is over, these brands continue to gain impressions as people continue to watch the ads and transform some into memorable viral sensations.
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L KING AT OUR DECISI NS 8
The Super Bowl & The Daily Pepsi Co has planned two large media buys for 2011. The first is a Pepsi Max and Doritos promotion, Crash the Super Bowl, featuring user generated advertisements. Along with the promotion, Pepsi Co bought a 7th Super Bowl spot for Lipton Brisk. In addition to the promotion, Pepsi Co is an inaugural advertiser for a new iPad app, The Daily. The Daily is a first-of-its-kind publication backed by News Corp. that is set to launch in early February.
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THE SUPERB WL 10
Is the Super Bowl worth such a high investment? BUZZ A History of Success and A Stage Set for a Big Hit •
Doritos’ Crash the Super Bowl campaign has consistently produced ads that have ranked within the top 5 spots of the USA Today Ad Meter. 1 With last years consumer created Doritos’ ad captivating 116+ million viewers during its 4th quarter run time, the most watched ad of all time, the ad was able to catapult Doritos to being the most talked about brand coming out of the game, accumulating 10 million YouTube video hits since its initial air. 2
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Pepsi Max’s 2008 “What is Love” Super Bowl commercial was the 7th most recalled advertisement after the Super Bowl.3
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This year’s Super Bowl matches two teams attempting to claim the title of “America’s Team,” the Pittsburgh Steelers and the Green Bay Packers.4 This matchup, along with positive growth in Super Bowl viewership, averaging 4.25% over the past 5 years and last year’s recording breaking 106+ million viewers2, has set the stage for potentially never before seen viewership this year.
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Crash the Super Bowl has already gained momentum with its online voting system. The top ten entries have accumulated over 6.1 million5 views 2 days before the voting closes.
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Along with purchasing a large number of :30 Super Bowl spots, Pepsi has been building awareness for its upcoming presence, running a heavy proliferation of ads in recent weeks as well as purchasing the high profile sponsorship title, “Official Sponsor of the NFL.”
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SALES A Captive Target Audience •
The Super Bowl is the only time of the year where there is both a captive and captivated audience6 where half the audience tunes in not to watch the scheduled programming, but to watch the commercials.2 • More than half the audience is male, with a large percentage being from the 18-34 age bracket,2 which makes it one of the largest venues to speak to Pepsi Max’s target market of young males. Necessary to Remain Competitive
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Up until now, PepsiMax’s number one competitor, Coke Zero has been far and away out performing the Pepsi Max brand in the US.
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In 2009, Coca-Cola’s annual advertising expenditures were nearly $1.1 billion more than PepsiCo.7 It is important for Pepsi to take full advantage of the stage it has set for itself this year.
Strong Marketing Will Lead to Stronger Sales • After revealing PepsiMax’s aggressive marketing campaign, sales within the product category are now projected to rise 20% in the next 5 years to 1.2 billion.8 If this year’s heavy Super Bowl presence is as successful as it has the potential to be, this benchmark could be reached in half the time and even exceed current projections. • These sales projections can be reached with the boost expected from the Super Bowl, but more importantly “it’s the follow up that determines success or failure.”6
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CONS Inefficient Expenditure • The astronomical cost of one :30 commercial spot in the Super Bowl is incredibly inefficient when compared to the price versus number of impressions. The cost for 1000 impressions in this year’s super bowl could be more than $30, which compared to an average Sunday night prime time regular season game which costs about $12-$15 per 1000 impressions, is twice as expensive. Pre-Game Buzz does not Guarantee Success •
Last year showed the controversial ad supporting pro-life paid for by conservative organization Focus on the Family starring Tim Tebow & his mother. The ad had all the ingredients for success: a well respected super star college athlete, a hot American political topic, and a sizeable chunk – 33% - of the buzz leading up to the game. But all these factors did not lead to a successful ad, as it was the least watched ad of the entire game, with 20% less viewership than the top rated Doritos ad.10
Pepsi Max Has Been a Weak Brand in the US Market • Pepsi Max has been seriously underperforming in the North American Market. With Sales dropping 6.8% from 2008 to 2009 along with an overall industry contraction of 2.3% over the same time11. Given Coke Zero’s dominating market share and an aggressive marketing campaign, PepsiCo could might find it difficult to acquire an adequate share of voice.
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WHAT?
PepsiCo’s aggressive media strategies and online success leading up to this year’s Super Bowl and unprecedented success with consumer generated ads over the past five years, has set the stage for PepsiMax and Doritos to have as much if not more success with their target consumers on Sunday’s game and beyond. Although there is a possibility of failure, the potential to drive sales and turn around the PepsiMax brand as well as stay competitive with Coca-Cola, is worth the risk and the money.
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Would one of PepsiCo’s brands other than Lipton Brisk better serve that spot? •
Recent studies show a trend in the beverage market falling away from soda and sports drinks in favor of “healthier options” such as ready to drink tea.
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RTD Tea is growing at a rate of 1.2% and is currently the fastest growing beverage market to date, with 3% share of the beverage and soft drink market Brisk itself is growing at a rate of 16.3%, and with Pepsi’s beverage market accounting for 25% of its total revenue, Lipton has a viable marketability for the PepsiCo arsenal.
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PEP Share of Revenue
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THE DAILY 15
Will adver2sing on The Daily produce enough impressions to outweigh ad costs? MARKETABILITY A Proven Track Record and Room for Growth •
2011 first quarter results show that Apple’s sales have increased through every product with Mac sales increasing 23% compared to this time last year and iPhone sales increasing 86% compared to this time last year.
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3 million iPads were sold during the first 80 on the market, and 7.33 million iPads were sold during Q4 of 2010. If these trends continue, the iPad’s growth is undeniable.
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The Daily will cost NewsCorp only $2M annually to produce, allowing for cheaper advertising media placement costs.
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If the Daily is a success, Pepsi’s brand will be linked with the ushering in of this new technology and print content revolution.
(top) chart showing Apple’s increasing sales; (bottom) chart showing iPad sales trajectory
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INDUSTRY SHIFT Paradigm Movement in Print and Advertising •
Currently, the magazine/publishing industry is operating with a defunct pricing model. With digital prices being equal-to-or-higher than their print counterparts, they are instilling a “pay more for less” sour taste in the minds of consumers, and sales are reflecting the public opinion of these large publishing conglomerates capitalizing on the new technology.
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Magazine subscripKons and sales took a steep dive in the fourth quarter of 2010 in such publicaKons as GQ, Vanity Fair and Wired. Wired Magazine averaged 31,000 sales monthly, but that fell in October and November, with sales coming in at 22,000 and 23,000, respecKvely
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Mekanism is currently handling all of PepsiCo’s digital/ interactive production needs. An AdAge A-List agency, PepsiCo’s partnership with Mekanism gives them a strong development team with a successful track record for the interactive environment.
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The Daily will need to achieve a circulation of 800,000 readers to become economically viable, assuring an easy way to gain a profit from Pepsi’s assumed initial investment.
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CONS Radical New Technology & Potential Steep Price Tags •
As of right now, the only way to gauge success on the Daily is to pay outside sources (Medialets) for metric services, an additional cost to any production needs.
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There is no verifiable evidence that The Daily will be successful given the tumultuous environment surrounding Apple’s app production. PepsiCo needs to be cautious when thinking about the percentage of iPad users who will actually subscribe to The Daily.
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Current digital subscription/paid content advertising on the iPad is costing investors upwards of $200,000 depending on ad length. Time Magazine and WSJ both reported ad costs for their subscriptions being between $200,000 and $400,000 on the iPad.
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WHAT?
PepsiCo’s investment into The Daily is risky due to the unfamiliarity with an app featuring a conglomerate of publications. However, the break-even point of 800,000 readers to gain profitability is achievable considering the immense amount of press surrounding the launch and the iPad’s sales growth since its release. As publications further evolve to fit this new digital environment, the iPad will only be used more for reading what was once, solely offline content.
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How can we ensure that ads placed on The Daily are relevant to users and will drive sales as much or more than current media vehicles? IT’S IN THEIR HANDS The Right Target With the Right Technology •
With the use of creative approaches and digital 3-D graphics, The Daily offers PepsiCo a better way to digitally communicate with consumers than traditional webbased advertising, making ads more appealing and relevant.
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Plain and simple, consumers using the iPad and drinking PepsiMax™ are male, tech-savvy, on-the-go urbanites. They hate waiting and they are always connected. Print for these consumers is quickly becoming an obsolete medium and they are shifting their information consumption to the digital sphere for its primacy, versatility, and frequent updates.
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CONS Lack of Tech Backup & The Unknown •
Traditional print sales have taken a sharp dive and have no current signs of bouncing back. It is obvious that ads placed in traditional print publications as we know today will soon become obsolete, thus making our advertising irrelevant to and unviewed by consumers.
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Google does not currently cache in-app data, thus making it impossible for users to traditionally search or ‘stumble-upon’ The Daily’s content.
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PepsiCo’s current advertising regime has provided them with the number-one spot in Soft Drink purchases in the world, with a $43B revenue. The additional cost of The Daily may yield a lackluster return.
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Spending so much on an unknown and unprecedented media outlet such as The Daily may appear frivolous to the public given the nation’s recent economic standing and attitude towards large corporations.
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chart of declining print sales over past 3 years
WHAT?
PepsiCo’s choice to advertise on The Daily will allow Pepsi to more relevantly target their male-focused consumer base in a digitizing print publication market, and counteract the quickly declining print publication impressions. The Daily lacks social-sharing functionality and Google does not currently keep track of any in-app data, thus making ad relevance and sales-driving a difficult task.
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Is The Daily simply too much too soon? A READY MARKET Consumers Have Their iPads Ready… • 61% of iPad users already read magazines and publications on their tablets. •
The Daily offers a cheaper subscription service at weekly and annual pay rates, $.99 and $39.95 respectively.
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There is currently no app that offers an interactive way for consumers to view news/publication content.
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Journalists are aware that print content is quickly being cast into the digital, so The Daily could quickly become the vehicle of choice for many print publications around the world.
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The Daily has the potential to usher in a new App Store pay structure for consumer’s favorite traditional print publications looking to take their content digital: subscriptions – a cheaper alternative to the now $250/ year payrate for digital magazines.
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THE REPUTATION Large Print Powerhouse & Steep Investments
Pictures from The Daily’s public unveiling at the Guggenheim museum in New York City.
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By targeting the tech-savvy early adopters, an educated, risk-oriented group, they will be a strong force in pushing The Daily and its content along and eventually helping increase PepsiCo’s number of impressions and ultimately, sales.
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The Daily has the reputation and financial backing of NewsCorp (insert numbers) a successful business as one of the top media sellers in the world a with a solid world-wide presence, sales, and reputation despite recent crumbling print prices.
News Corp. is said to have invested $30 million into this venture, a stiff investment for something considering the risks, suggesting a strong marketability of The Daily that Pepsi simply cannot predict.
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CONS The Anti-Digital Resistance and Lack of Assurance
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86% of iPad users would prefer to see advertising in exchange for free content; meaning less than 15% would be willing to pay for an app.
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There is evidence that suggests consumers are simply not ready to consolidate their newspapers and various publications into one centralized, digital platform.
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Given the competitive and quickly evolving nature of the App World, there is no reassurance that another company could overshadow The Daily in months to come.
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This is a hefty investment in a part of technology that has no previous market success history
WHAT?
The Daily provides Pepsi with the opportunity to reach their target consumers in a quickly-adopted medium that is sure to have some effect on the print publication industry as it is currently known. With NewsCorp’s hefty initial investment and positive reputation, PepsiCo can be assured that they are not being taken advantage of, but they must remain vigilant of the success of their ads on this technology as well as maintain an eye on the current print market given the resistance for both paid content and digital publications all-together.
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IN CLOSING… 24
Here at Where’s Waldo Media we are very confident in the decisions we have made for PepsiCo this year. We have fully researched and understand the current market condiKons in the beverage sector. We are also aware of Pepsi’s current strengths and weaknesses in strategy, as well as which products are failing and succeeding in the market. We believe that by inserKng ads in this years Super Bowl we will generate buzz, web traffic, and a boost sales. We will measure our efforts by tracking our Facebook hits, web traffic on CrashtheSuperBowl.com, views on YouTube and our Nielson raKngs. We are confident we will score highly on all accounts.
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By invesKng in The Daily, we are confident that we will be able to spark and conKnue conversaKon for PepsiMax begun by the proliferaKon of adverKsing during the Super Bowl. We have discovered key insights into the new media consumers’ habits with publicaKon consumpKon as well as the numerous strengths and unknown variable weaknesses surrounding the Daily. We believe that by invesKng in new, innovate ad space on The Daily we can effecKvely reach our target market, produce a top-‐of-‐mind awareness among a majority of our demographic, and obtain substanKal market share in this new and growing beverage category. Measuring the success of these ads will be crucial throughout The Daily’s infancy given its unprecedented nature; thus, careful partnerships and metric-‐monitoring with Medialets will remain a top priority as we move forward with this media investment.
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APPENDIX 1. http://www.pepsico.com/PressRelease/Doritos-and-Pepsi-MAX-Reveal-Ten-Consumer-CreatedCommercials-Vying-for-5-Millio01032011.html 2. www.nielsen.com 3. www.tvadviews.com 4. http://espn.go.com/blog/nfcnorth/post/_/id/23675/page/espntexas/xlv-americas-team 5. www.crashthesuperbowl.com 6. http://news.cnet.com/8301-10787_3-10152978-60.html 7. www.redbooks.com 8. www.trefis.coom/company?article=22384# 9. http://www.nxtbook.com/nxtbooks/idealmedia/bw0410/#/28 10. h]p://brandmix.blogspot.com/2010/05/brands-‐with-‐problems-‐apple-‐bu]erfinger.html 11. h]p://adage.com/superbowl/arKcle?arKcle_id=148201 12. h]p://techcrunch.com/2011/01/13/news-‐corps-‐the-‐daily-‐ipad-‐newspaper-‐delayed-‐by-‐weeks-‐not-‐ months/ 13. h]p://www.crainsnewyork.com/arKcle/20110117/FREE/110119882# 14. h]p://www.mobilemarketer.com/cms/news/commerce/6476.htm 15. h]p://www.electronista.com/arKcles/11/01/13/publicaKon.may.be.heavy.on.photos.shared.media/ 16. h]p://www.electronista.com/arKcles/11/01/17/news.corp.to.skip.iad.for.ipad.news.source/ 17. h]p://www.investors.com/NewsAndAnalysis/ArKcle.aspx?id=549060&p=4
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18. http://en.wikipedia.org/wiki/News_Corporation 19. h]p://www.rcrwireless.com/arKcle/20110127/BSS_OSS/110129957/apple-‐and-‐news-‐corp-‐to-‐launch-‐ daily-‐for-‐ipad-‐feb-‐2-‐in-‐ny 20. h]p://www.thedailystar.net/newDesign/news-‐details.php?nid=116355 21. h]p://www.markeKngcharts.com/television/americans-‐trust-‐soS-‐drink-‐adverKsing-‐11969/ 22. h]p://www.zdnet.com/blog/gadgetreviews/is-‐a-‐digital-‐magazine-‐storefront-‐for-‐the-‐ipad-‐on-‐the-‐way/ 21581 23. h]p://www.wwd.com/media-‐news/fashion-‐memopad/memo-‐pad-‐magazines-‐not-‐that-‐app-‐y-‐3409693 24. h]p://www.wwd.com/media-‐news/fashion-‐memopad/memo-‐pad-‐magazines-‐not-‐that-‐app-‐y-‐3409693 25. h]p://www.appleinsider.com/arKcles/11/01/27/ apple_and_news_corp_to_hold_feb_2nd_event_to_launch_the_daily.html 26. h]p://www.which.co.uk/news/2011/01/apple-‐to-‐launch-‐ipad-‐only-‐digital-‐newspaper-‐-‐243605/ 27. h]p://www.ongo.com/how-‐it-‐works.php 28. h]p://www.editorsweblog.org/newsrooms_and_journalism/2011/01/media_links_of_the_day_115.php 29. h]p://voices.washingtonpost.com/fasterforward/2011/02/the_daily_launch_what_we_know.html 30. h]p://www.foxnews.com/scitech/2011/01/31/things-‐want-‐ipad-‐newspaper-‐daily/ 31. h]p://www.wwd.com/media-‐news/fashion-‐memopad/memo-‐pad-‐magazines-‐not-‐that-‐app-‐y-‐3409693
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