NEW YORK — While the amount of labor going through marketers’ in-house agencies has ebbed and flowed over time, modern production demands — particularly the high volume mandated by social media apps like TikTok — are leading some organizations to think beyond an all-or-nothing approach to third-party marketing services partnerships.
PepsiCo in June expanded its relationship with VaynerMedia, a partner of over a decade, by integrating the social-first agency closer with its own teams, with the aim of helping beverage brands under its portfolio, including Pepsi, Mountain Dew and Starry, move faster and stay “culturally fluent.” Rather than in-housing or outsourcing, executives on a panel at Advertising Week New York on Tuesday (Oct. 7) described their latest relationship as one built on “co-sourcing,” an interdependent approach where the 2 firms more closely share business KPIs and are less formal — read: speedier — when it comes to processes like briefing.
PepsiCo ultimately recognized that, for all its talent, scale and legacy, social remained a difficult nut to crack, but additionally an increasingly essential one for reaching content-hungry consumers and propelling sales.
“We understand the brand strategy, we understand creative strategy. We have great creatives and production capabilities,” said Mark Kirkham, who was promoted to CMO of PepsiCo Beverages U.S. earlier this 12 months. “But in a world where the dynamic nature [of marketing], especially in social, is so fast-moving: Do we have now the agility, do we have now the resourcing, do we have now the creative flexibility to understand how algorithms drive how consumers behave? We probably didn’t have that if we were really honest.”
Ramping up marketing production
Kirkham acknowledged that much of selling success today is decided by platform algorithms, making a reliance on experts who understand what takes off in those environments. VaynerMedia argues the social-first evolution is ushering in an era where marketing is finally graded on merit versus raw media-spending power: Good content will gain traction because persons are actually inquisitive about watching it, after which will be amplified by a paid campaign.
“When you post organically on these social platforms, it either gets views or it doesn’t, and there’s loads of brands and agencies here that use working media to amplify organic social to hide that it’s still bad creative,” said Gary Vaynerchuk, co-founder and CEO of VaynerMedia, duirng the panel.
In the time since PepsiCo began its three way partnership with VaynerMedia, the food and beverage giant has began pumping out 3 times as much content, according to Kirkham. Engagement has jumped between 50% and 70%, depending on the brand, and the CMO sees PepsiCo as just getting began.
“What used to take a month takes two or three days,” said Kirkham, explaining that the marketer now not has the time for weeks-long briefs and a dozen-plus rounds of review.
PepsiCo and VayerMedia were confident in making their move thanks to a relationship stretching back around 15 years, to the early days of social as a serious marketing channel (PepsiCo was amongst Vaynerchuk’s first clients). But certainly one of the more convincing proofs of concept for PepsiCo got here, not from its namesake beverage, but Mug Root Beer.
The soft drink has experienced 50% year-over-year growth, supported by social activations that lean into its bulldog mascot (a VaynerMedia worker wears the costume in posts online, Kirkham admitted) and meme culture. Mug is on target to develop into the fourth-largest brand in PepsiCo’s beverages portfolio, according to Kirkham, and is the fastest-growing root beer brand overall.
“We’re actually sitting here because when this model was implemented on Mug Root Beer, it worked,” said Vaynerchuk. “It worked not on shares or … more content created. It worked on sales.”
The ability for social to deliver sales has also been apparent amongst a rising crop of upstart competitors within the better-for-you soda category. PepsiCo acquired the prebiotic soda brand Poppi for nearly $2 billion earlier this 12 months, a deal Vaynerchuk called out for instance of the broader shift in pondering around how to market brands today, with social and influencer savvy seen as invaluable tools for growth.
“The most black-and-white attributable thing happening in business and marketing today is the brands which might be most winning on achieving scaled organic reach on social have a direct correlation to sales,” said Vaynerchuk.
Ensuring cultural fit
PepsiCo and VaynerMedia’s attempt to shake up in-housing might not be feasible for each agency-client relationship. For one thing, Vaynerchuk’s firm is independent, meaning experiments with other ways of working usually are not beholden to a board or the regular churn of quarterly earnings. The agency executive said he can afford to lose money on a bet like his one with PepsiCo in the primary 12 months if it means earning profits in years two and three.
The PepsiCo, VaynerMedia model arrives at a time when brands are exploring quite a lot of latest ways to work with marketing services providers, including bespoke shops that sit with larger agency holding groups, like Coca-Cola’s Open X inside WPP. Others are working with outside help to bolster their very own internal shops.
Beyond any financial considerations, cultures inside external agencies and client teams will be night and day. VaynerMedia is an entrepreneur-owned indie that prides itself on a disruptive mindset while PepsiCo is a global food and beverage corporation answerable for billion-dollar brands (the corporate reports its Q3 results on Oct. 9).
While such tie-ups include the potential for a cultural clash, for PepsiCo and VaynerMedia, the mixing process has been smooth up to now — Kirkham even has a direct line to Vayner through a WhatsApp group chat.
“You literally can’t tell who’s PepsiCo, who’s Vayner once you’re within the room. That is the measure of success,” said Kirkham. “But there’s one thing about winning a pitch versus being inherently integrated right into a business model. We don’t pitch this team. We just ask them to go do great work together.”
Read the total article here
