PepsiStuff Snuffed

By now I’m sure most of you have seen Pepsi’s commercial featuring one of the hottest singers (and my crush since 1998), Justin Timberlake, that aired during the Superbowl in February. What you might not be aware of is the trouble that this commercial has instigated for Pepsi in the ensuing months. No, Justin didn’t rip off any articles of clothing à la Janet Jackson at Superbowl XXXVIII. PepsiCo is the only one to blame for this gaffe.

Pepsi’s commercial starring Justin was the launch of a new U.S. national marketing campaign, Pepsi Stuff. The gist of the campaign is for customers to collect codes from Pepsi products, needing a total of 5 codes to earn 1 free MP3. Pepsi has shipped out to stores a total of 5 billion drink containers that include codes, making this campaign worth $1 billion and Amazon’s

largest-ever marketing partnership.

The campaign is an obvious effort by Pepsi to tap into a new marketing channel – digital sales. The partnership with Amazon seemed to have a lot of potential for both companies involved, but what Pepsi didn’t anticipate is the backlash they have received from their traditional bricks-and-mortar retailers.

Wal-Mart and Target compete directly with Amazon’s media and electronic business while Amazon’s growing grocery business competes with major supermarkets. As one can imagine, they weren’t excited to promote one of their biggest competitors in their own store!

Since their reaction, major changes have been done to the packaging of Pepsi’s products.

“…Amazon’s name has been banished from the front of Pepsi bottles carrying the promotion – rendering it invisible in supermarket aisles to passing shoppers. Similarly, Amazon’s logo is on the back of the cardboard multi-pack cartons of cans that are stacked on the shelves of mass discounters and supermarkets, next to the product’s bar code and nutritional information.”[1]

Pepsi is not alone in facing such a dilemma.

“Jeff Smith, retail consultant at Accenture, argues the tensions reflect underlying challenges for Pepsi and other brands in adapting the traditional way they communicate with retailers to accommodate new digital selling and marketing channels.”[2]

Evidently, it isn’t as straightforward as one would hope to cross marketing channels and capitalize on the latest trends in digital media. Other brands need to learn from PepsiCo’s mistakes and consider the effect on their largest distribution channel before getting overexcited about new opportunities.

So can traditional brands be successful in the digital selling channel? I believe it’s possible, but only if they partner with their traditional retailer that has the online service they want to exploit. Lest we forget, Wal-Mart does have its own music download service.

[1] “Retailers Clash with Pepsi Over Free Music” FT.Com. March 16, 2008. http://www.ft.com/cms/s/0/eba1f64e-f388-11dc-b6bc-0000779fd2ac.html?nclick_check=1

[2] ibid.

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