Pepsi's Big Gamble: Ditching Super Bowl for Social Media

Why Pepsi is pulling out of the big game and what it stands to gain.

December 13, 2009, 12:39 PM

Dec. 23, 2009 — -- This year for the first time in 23 years, Pepsi will not have ads in the Super Bowl telecast. No Cindy Crawford, Britney Spears or Justin Timberlake. Instead it is redirecting the millions it has spent annually to the Internet. Pepsi has chosen to give away over $20 million in a social media play it is calling The Pepsi Refresh Project, debuting in 2010.

In Super Bowl ads from 1999 to 2009, Pepsi spent over $142 million to encourage consumers to drink the Pepsi brand. Pepsi's decision to pull its advertising from the Super Bowl telecast and concentrate on its Social Media strategy to try and create a movement will be the largest and most visible showdown between broadcast media and the Internet to date.

Pepsi represents one of the stalwarts, not just of the Super Bowl advertiser lineup, but of broadcast TV in general. In 2006, spending on brand, Pepsi was at about $150 million. Although brand spending has been decreasing in recent years, Pepsi has continued to spend tens of millions on TV. And the Super Bowl annually has the largest audience of any TV show.

As television viewership has gone down, Internet usage, particularly social media interaction, has increased. The 2009 Super Bowl attracted an impressive 95.4 million viewers (approximately 42.1 percent of U.S. TV homes) and many of those watch the commercials as attentively as the football game. By contrast, in the important 18-34 demographic, a whopping 85 percent use social media (texting, blogging or social networking), and the phenomenal growth of social media has the attention of every major company. This holiday season, Toys "R" Us developed a Facebook page that grew at the astounding rate of between 40,000 and 95,000 fans per day after its late November launch.

'Refreshing' Audience Strategy?

Pepsi is hoping that its social media strategy will garner attention, participation and a deeper connection with its audience that has been missing for some time. The Pepsi Refresh Project will launch on Jan. 13 with a Web site where people can outline their projects to refresh their communities to make a better world.

Visitors to the site can start voting on Feb. 1. Pepsi estimates they will fund thousands of projects spending in excess of $20 million dollars and hopes to start a movement where others will begin funding community projects in the same manner.

This strategy represents a significant risk for Pepsi. Abandoning the Super Bowl opens it up for Coke who has not yet decided whether or not to advertise on the Super Bowl telecast. It comes at a time when carbonated soft drinks as a whole have struggled and Pepsi has not been immune. The brand's sales have been in decline for some years and in 2009 alone, volume declined 6 percent in each of the first three quarters of 2009, net revenue dropped 12 percent in the first quarter and 9 percent in the second and third quarters. On the other hand, if the new strategy gains traction, Pepsi will have increased sales while spending less on the brand than it has in past years and will have a head start on its competition in the new media.

Some industries including automotive in recent years have made the decision to cut broadcast spending in favor of greater spending on the Internet and social media. According to a recent survey conducted by Forrester Research, more than 50 percent of marketers are increasing their spending in social media. Advertisers view social media as important because online they can seek out people who have an affinity for the brand and engage them in a meaningful discourse that lasts longer than 30 seconds. Many times these people pass along information to their friends. Online tools give marketers the ability to track the "pass alongs." Communication can be more frequent and the consumer can share with the advertiser information such as what other information they would like to have and what actions they would like for the marketer to consider.

On Sunday, Feb. 7, Super Bowl XLIV will be played and the National Football League and CBS Sports will pull out all of the stops to put on a sports extravaganza including pre, halftime and post shows with some of the most creative, funny and moving advertising Madison Avenue can muster. Meanwhile, Pepsi will be leading an army of bloggers, texters and tweeters as it attempts to redefine the marketing game. I, for one, want a front row seat to see if Pepsi can increase the pace of change of the use of social media by marketers.

The work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Larry Woodard is president and CEO of Vigilante, a New York-based advertising agency that develops consumer-centric advertising campaigns. He is also chairman of the American Association of Advertising Agencies New York Council and the recipient of many prestigious industry awards, including two O'Toole Awards for Agency of the Year, the London International Award, Gold Effie, Telly, Mobius, Addy's and the Cannes Gold Lion. A blogger and a frequent public speaker, Woodard enjoys discussing the intersection of media, politics, entertainment and technology.