Thursday, September 15, 2011

9301: Why PepsiCo Is Going Nowhere.

Advertising Age reported on a twisted form of diversity in the advertising industry from Omnicom. The global network is notorious for staging faux pitches between sister agencies, essentially ensuring that accounts remain in the fold. One client in particular, PepsiCo, has engaged in quite a bit of Corporate Cultural Collusion with Omnicom, shifting brands like Frito-Lay, Propel Zero, Quaker Oats, Gatorade and Pepsi to various shops within the holding company. Well, PepsiCo just reassigned certain soft drinks to Latino agencies, and the “big winner” is —you guessed it—Omnicom. In other words, even the minorities get to play AOR musical chairs. No wonder PepsiCo products have suffered sales slides in recent years. The damned client keeps partnering with the exact same agencies.

PepsiCo Makes Hispanic Move to Alma DDB, LatinWorks From Dieste

Latino Business Remains Within Omnicom But Soft-Drink Marketer’s Budget Had Plummeted Over the Years

By Laurel Wentz

After 15 years at Omnicom Group-owned Dieste, PepsiCo is moving most of its U.S. Hispanic beverage business to the holding company’s other two Latino shops, Miami-based Alma DDB and LatinWorks in Austin, Texas.

A Pepsi spokeswoman said the company has yet to confirm agency-of-record assignments but had moved to pitching for assignments on a project-by-project basis.

After a pitch against incumbent Dieste, Alma is expected to end up with Pepsi-branded drinks including Pepsi, Diet Pepsi and Pepsi Max, and LatinWorks is likely to get Sierra Mist, SoBe, Aquafina bottled water and apple-flavored soda Manzanita Sol. It’s unclear what, if anything, Dieste will keep on the beverage side. Dieste still has Pepsi’s Frito Lay snack-food account for the Hispanic market but that business has been largely dormant lately.

Pepsi’s U.S. Hispanic media spending has plummeted from the days when the marketer was one of the top 10 Hispanic advertisers. Pepsi used to do big Spanish-language commercials with stars such as Eva Longoria of “Desperate Housewives.” For the last three years, Pepsi hasn’t even appeared in Ad Age’s Hispanic Fact Pack ranking of the top 50 Hispanic advertisers.

Pepsi has made major changes in its multicultural staffing in the last year, bringing in Javier Farfan, whose marketing background ranges from MTV to financial services, in June 2010 as senior director of cultural branding. Mr. Farfan joined Pepsi from Microsoft Corp., where he handled product marketing and strategic partnerships including music marketing campaigns. During his three years at Microsoft, he also acted as the company’s Hispanic spokesperson for product launches and created launch marketing strategy for the U.S. Hispanic market and Latin America.

Before Microsoft, Mr. Farfan spent five years at MTV Networks. As marketing and business development director, he developed the launch campaign for the MTV Tr3s channel targeting young Latinos in the U.S. He joined MTV after three years as VP-marketing at Chase Financial Services.

Back in 2004, PepsiCo was the sixth-biggest Hispanic advertiser, spending nearly $70 million on Hispanic media for its beverage and snacks divisions. Two years later, the company ranked No. 17, spending $58 million, and in 2007, Pepsi was No. 27, with Hispanic media spending totaling $41 million. That was the last year Pepsi was among the top 50 Hispanic advertisers ranked in Ad Age’s annual Hispanic Fact Pack.

In 2010, Pepsi didn’t even rank among the top 100 U.S. Hispanic advertisers, in contrast to Coca-Cola Co. at No. 29, with spending of $38 million. Pepsi spent only $1.3 million on Spanish-language network TV in 2010, compared to Coca Cola at $36 million, according to Kantar Media figures. Following the agency changes, that spending is expected to increase.

Separately, Dallas-based Dieste is building up its field office in New York into a full-service agency, starting with a small creative team. Paco Olavarrieta, a leading U.S. Hispanic creative director, is joining Dieste this month with the interesting title of chief content curator.

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