How Pepsi Lost Its Facebook War With Coke

Last Updated Apr 19, 2011 10:11 PM EDT

Here's a statistic that tells you all you need to know about how badly Pepsi's war with Coke is going:
  • No. of Facebook "likes":
  • Pepsi 3.6 million
  • Coke 25.2 million.
Coca-Cola's Facebook dominance -- it has seven times the number of Facebook fans than Pepsi -- comes despite a concerted social media effort from the marketers at PepsiCo (PEP), who have recently labored under the belief that social media, rather than traditional media, was the way to go.

Coca-Cola (KO), meanwhile, stuck to its guns. It continued to advertise on the Super Bowl when Pepsi did not, for instance. The real-life result came in mid-March, when annual sales showed Diet Coke overtook Pepsi for the first time, taking Pepsi's No.2 spot:
  • 2010 cola sales:
  • Coca-Cola: 1.6 billion cases
  • Diet Coke: 927 million cases
  • Pepsi: 892 million cases
For the record, Diet Pepsi is less popular than any of those three brands plus Mountain Dew, Dr Pepper, and Sprite.

The story of how this happened is a warning to advertisers about the damage that management and brand churn can do to your business.

Inside Pepsi: A new generation... and another... and another...
In 2009, I described the comical level of turnover among brand managers and ad agencies at Pepsi. There were six different senior marketing personnel moves between 2007 and 2009, and the ad account bounced between three different agencies. Since then, global chief marketing officer Jill Beraud appears to have become CMO/joint ventures, and Ad Age reports that a new CMO, Lauren Hobart, left in January.

On the ad agency side, Pepsi asked the Arnell Group to redesign its logo and packaging. The effort was widely ridiculed when a bombastic internal document filled with pop-culture pyschobabble ("Going back-to-the-roots moves the brand forward as it changes the trajectory of the future") was leaked. The redesign itself was harmless -- the new cans are sleek and modern -- but it was a symptom of what was happening at company HQ: too much change, none of it demanded by consumers.

It's not limited to Pepsi; needless change was also happening on Gatorade, which we're now supposed to refer to as "G."

In a nod to how confused Pepsi drinkers have become, the company launched Pepsi Throwback, a retro can just like the ones sold in the 1970s and 1980s. The company ought to be terrified that Pepsi Throwback -- an idea that has only minimal marketing since its 2009 launch -- is now more popular than Diet Pepsi on Facebook:
That's how bad it is for Pepsi. Its own fans prefer the brand's nostalgia to one of its main brand extensions.

Related:

Comments

Market Data

Market News

Stock Watchlist