Pepsi, Yahoo Launch Joint Marketing Campaign

Pepsi-Cola Co. is teaming up with Yahoo Inc. in a multimedia marketing campaign that’s designed to boost slow soda sales as well as polish the Internet portal’s image among teens and young adults.

In a deal to be announced today, Pepsi will slap Yahoo’s highly recognizable logo on 1.5 billion bottles of Pepsi soft drinks as well as on television and radio spots and on in-store displays in convenience stores. Yahoo will provide computerized systems that enable consumers who buy 20-ounce Pepsi and Mountain Dew bottles to instantly redeem points printed inside bottle tops.

Neither company would disclose how much it is spending on the campaign. Observers said the pairing of a soft drink company with an Internet powerhouse is designed to appeal to free-spending younger consumers who have grown up on computers, marketing experts say. It also could help Pepsi cut costs associated with distributing merchandise to be awarded in the promotion, which will run from August through December.

“The ultimate challenge for Pepsi and Coke is to see if they can find enough bandwidth to actually pump beverages into consumers’ homes over the Internet,” quipped John Sicher, editor of Beverage Digest, a Bedford Hills, N.Y.-based newsletter. “Short of doing that, these are the kinds of creative approaches to marketing that they need to try.”

Pepsi marketing executive Dave Burwick described the promotion as “far and away the largest-ever offline-online promotion we’ve ever promoted with any online partner.”

The Yahoo program builds upon the existing “Pepsi Stuff” give-away promotion that the soft drink company introduced in 1996 to reward its most loyal customers. In the past, consumers had to clip coupons and mail them to a fulfillment center, which sent the merchandise. Yahoo’s back-shop involvement will enable consumers to immediately redeem points and, Berwick said, will cut Pepsi’s distribution costs.

The Pepsi promotion is one of several real-world marketing relationships that Yahoo, the Santa Clara-based Internet and communications company, has crafted. Last year, Yahoo paired with Kmart Corp. to create Bluelight.com, an e-commerce site that offers free Internet access.

Deals with established real-world marketers help Yahoo “break through the clutter out there,” said Anil Singh, Yahoo’s chief sales and marketing officer. Singh said the Pepsi promotion will help Yahoo reach young consumers “through distribution channels we’ve never been seen in before.”

In a related announcement, Purchase, N.Y.-based Pepsi said it would dust off the Pepsi Challenge, a marketing campaign that last ran in the U.S. in 1983. The new version of the old campaign will use sluggers Ken Griffey Jr. and Sammy Sosa to urge consumers to conduct taste tests that put its products alongside those from arch-rival Coca-Cola Co.

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More Market Fizz

Coca-Cola and Pepsis top brands lost market share in 1999, while Cadbury Schweppes Dr Pepper gained and its Seven Up brand held steady.

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1999 % change

Top 10 brands market share over 1998

1. Coke Classic 20.3% --0.3%

2. Pepsi-Cola 13.8 --0.4

3. Diet Coke 8.5 --0.1

4. Mountain Dew 7.1 +0.4

5. Sprite 6.8 +0.4

6. Dr Pepper 6.3 +0.2

7. Diet Pepsi 5.1 --0.3

8. Seven Up 2.1 0.0

9. Diet Coke, caffeine-free 1.8 0.0

10. Barq’s Root Beer 1.1 +0.1

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Source: Beverage Digest