PepsiCo: Night of the long … bubbles

With a rip, twist and a curl best described PepsiCo‘s portfolio as it now does with their review of its roster of agencies following some major open heat surgery at PepsiCo, ripping out 65% of their agencies potentially saving gobs of filthy luca, with Omnicom agencies untouched to enjoy the spoils. That’s a lot of relationships, hard work, and trust that must have taken some serious heavy lifting. Here’s how Ad Age defined the situation. No doubt we’ll see other big firms attempt the same.

PepsiCo’s‘s North America beverage division has completed the downsizing of its agency roster, eliminating many of the smaller shops on its roster.

A spokeswoman confirmed the beverage group is now working with about 50 agencies, after letting various contracts expire. She said the moves are intended to strengthen the company’s relationships with Omnicom Group, the ad-holding company with which Pepsi has long been aligned.

Various executives close to the company said the cuts were largely focused on weeding out smaller specialty shops that had been layered in over the years — a move which is counter to recent trends. Several large marketers, such as Kraft and Unilever, have increasingly entrusted smaller shops with bits and pieces of their brand portfolios.

Simon Lowden, chief marketing officer at PepsiCo’s Beverages, in February told Ad Age that in the past two to three years, the number of agencies the company works with has ballooned.

“It’s grown because the agenda has gotten more complex and busier,” Mr. Lowden said at the time. But “when we look back on things, the vast majority of the work is still done by our core agencies.”

The spokeswoman identified those “core” agencies as Omnicom Group networks TBWA/Chiat/Day, BBDO and DDB, as well as Omnicom shop TracyLocke and Genesco, a sports-marketing agency with ties to TracyLocke. She added that an agency with a contract that was allowed to expire could be called on again down the road, if an opportunity arose where that agency was the right fit.

In all, about 100 shops, or 65% of the division’s total number of partner agencies, were removed from the roster. Interpublic Group of Cos.’s Huge, which did project work related to the Refresh Project, for example, is no longer working with the brand. MDC Partners’ Anomaly, which had been slated to handle the relaunch of Pure Leaf, a premium tea brand, stopped working with PepsiCo’s months ago, according to an agency spokesman.

Independent Ruder Finn is no longer working with the beverage division, though a spokesman says it continues to handle a corporate recycling initiative. One Omnicom shop that’s not benefiting from the moves is Porter Novelli. The agency, which said it has handled projects for the Pepsi nutrition group, is no longer working with the beverage division.

But certain non-Omnicom shops, such as Dentsu’s Firstborn, WPP‘s VML, Interpublic’s Weber Shandwick and independent Olson PR appear to have either retained or added work to their existing PepsiCo’s business. PepsiCo declined to name any of the agencies that were eliminated.

Mr. Lowden called the approach “need-based,” noting that the roster wasn’t pared based on a goal to have a certain number of agencies on each brand. Instead, various brand teams were told to focus on partnerships and programs aligned with the company’s business objectives.

The consolidation, which was announced during an investor meeting earlier this year, was billed as a bid to increase efficiency and shift into brand-building money allocated for things such as agency fees. The company has also said it will spend an extra $500 million to $600 million to advertise its brands this year, with a focus on North America.

Contributing: Alexandra Bruell, Kunur Patel

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Author: Dean Crutchfield

In an award-winning career spanning two decades, Dean Crutchfield has created, built and re-invigorated some of the world's most iconic brands.

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