Major Changes at PepsiCo as Marketing Department Reorganizes

Jill Beraud Leaving as Brad Jakeman Joins, Simon Lowden Gets New Role

PepsiCo is undergoing a major transformation in its beverage marketing ranks.

The company is restructuring its marketing department to include three new marketing roles, with an eye toward embracing a more global approach. The three executives, expected to be two external candidates and one internal candidate, will take on various duties handled by Jill Beraud, chief marketing officer-PepsiCo Beverages America. Ms. Beraud has chosen to leave the company amid the restructuring, according to executives close to PepsiCo.

Brad Jakeman, who gaming giant Activision Blizzard confirmed today had left his role as exec VP-CMO, will be taking on the role of head marketer for the Pepsi trademark globally. According to executives familiar with the matter, his new role will involve responsibility for Pepsi, Diet Pepsi and Pepsi Max, primarily, though he will also be working on the company's other soft-drink brands, such as Mtn Dew and Sierra Mist.

A second executive is expected to be the global chief marketer for beverage brands, not including carbonated soft drinks, Gatorade or Tropicana. That would leave brands such as SoBe, Aquafina and Propel. Simon Lowden, who currently has a chief marketer role for Pepsi International, is said to be taking on the role of CMO for the U.S. beverages business.

According to the executives, PepsiCo plans to announce the moves in the coming weeks. It's most likely that all three executives will report to Massimo d'Amore, CEO-PepsiCo Beverages America, in some fashion. A PepsiCo spokesman declined to comment.

The moves position PepsiCo to embrace more global ad executions, a key differentiator between it and rival Coca-Cola. In the last several years, Coca-Cola has embraced a more global approach, for example, in 2008 running Olympic-themed ads from Wieden & Kennedy in at least 25 countries, while 150 countries used some element of the Olympic campaign. And, most recently, Fanta launched a campaign in 190 countries. Coca-Cola has also trimmed its global agency roster from 82 creative agencies to a number in the 30s.

PepsiCo, by comparison, executes in a more local or regional fashion. For example, while its new logo rolled out in the U.S. in late 2008, the company continued to run ads featuring the old logo six months later overseas. BBDO handles Pepsi outside of the U.S., while TBWA/Chiat/Day handles it stateside. OMD handles media globally. A PepsiCo spokesman declined to comment on what any potential restructuring could mean for its agencies.

Pepsi and Diet Pepsi have both been losing ground. In 2010, Pepsi's share of the soft-drink market fell 0.4%, allowing Diet Coke to move past it as the second biggest soft drink brand in the U.S. Diet Pepsi saw its share fall 0.3% last year, according to Beverage Digest. Other brands, including Mtn Dew and SoBe have been strong performers, however. Still, acknowledging the need for an increased marketing presence, PepsiCo announced this spring that it would ramp up ad spending across its beverage portfolio by 30% this year. That will include new ads for Pepsi, Diet Pepsi and Gatorade. The company is also sinking $60 million into its sponsorship and integration with "X Factor," the Simon Cowell-created music competition that is meant to compete with "American Idol," which is sponsored by Coke.

Ms. Beraud was brought in as the global CMO for PepsiCo in late 2008 but was shifted in mid-2009 to head marketing for the beverages division when Dave Burwick departed. It's not clear where Ms. Beraud will be headed. She joined PepsiCo from Limited Brands, parent of Victoria's Secret, where she spent 13 years. Ms. Beraud was named an Ad Age Woman to Watch in 2009. At the time, she called the global CMO role exciting and intriguing, noting that she had admired PepsiCo from afar for years.

Study: Standing by Tiger Helped Nike's Bottom Line

Marketer Lost Customers, but Losses Would Have Been Worse if It Had Abandoned Golfer

CHICAGO (AdAge.com) -- Nike's decision to stick with Tiger Woods through his messy sex scandal may have paid off -- at least in terms of golf-ball sales, university researchers have concluded.

Nike lost 105,000 golf-ball customers in the six months after the golfer's philandering went public. But the losses would have been even greater had they ditched him and would have cost the company $1.6 million in profits, according to the study released Thursday by Carnegie Mellon University's Tepper School of Business.

The scandal hurt Wood's ability to attract customers, but "it wasn't so bad it eroded all his endorsement effect," said Timothy Derdenger, assistant professor of economics and strategy and a study co-author.

"So they did make the correct decision to stand by Tiger," he said.

But the study also illuminates how the downfall of one endorser can drag down an entire industry. Some people simply stopped playing golf in reaction to the scandal, leading to a loss of $7.5 million in profits for all golf-ball companies, researchers concluded.

The study -- which used advance techniques to isolate Tiger's endorsement effect on consumer behavior -- found that Nike gained 4.5 million golf ball customers and $60 million in profit since 2000, when Woods first endorsed the golf balls. Researchers did not look at Nike's other Tiger-endorsed products, but concluded that if Nike got similar returns across product lines, the company has more than recouped the estimated $200 million in endorsement fees it has paid the golfer in the past 10 years.

Still, golf ball sales trends -- used partly because data was readily available -- are not necessarily a good measuring stick for the Wood's many endorsement deals, many of which ended in the wake of the scandal.

Woods brought value to golf equipment because his game is highly respected, even post scandal -- although his on-course struggles of late might dampen even that effect.

By contrast, other non-golf brands were "using the goodwill of association and positive image associated with Tiger to sell products that Tiger really had no role in developing," said Marc Ganis, president of SportsCorp, a Chicago-based sports business consulting firm.

That goodwill, of course, faded after Tiger's affairs came to light, and endorsers were "better off [moving on to] positive-imaged athletes," Mr. Ganis said.

The companies dropping Woods include Gatorade, AT&T and Accenture, costing the golfer an estimated $22 million.

Inside Gatorade's Social Media 'Mission Control'

Team Conducts Thousands of One-to-One Conversations Via Facebook and Twitter

NEW YORK (AdAge.com) -- In a room crammed with flat-screen monitors, Gatorade monitors social media and deduces what its customers want and what's next -- or should be next -- for the multibillion-dollar beverage brand.

Launched in April, Gatorade Mission Control is credited with engaging consumers and informing the brand's strategy. The team has had more than 2,000 one-on-one conversations with consumers, while the brand's likes on Facebook have skyrocketed to 1.2 million, reaching the 1 million milestone a full five months ahead of schedule. Mission Control is credited with increasing mentions of G Series Pro, a subset of the G Series, by 9% on Facebook and Twitter.

Carla Hassan, senior director-consumer engagement, also said the brand has been able to reshape the conversation. Since the launch of G-Series and Mission Control, discussions about sports performance have jumped to nearly 60% from 35% in April. Gatorade is particularly proud of that stat, as it has been working to recast itself as a sports-performance innovator, rather than just a sports drink.

Four full-time staffers monitor the center, while executives, such as Chief Marketing Officer Sarah Robb O'Hagan and Ms. Hassan drop in frequently. Gatorade's agencies, including VML, Fleishman-Hillard and OMD, are also heavily involved in the effort. Mentions of the brand on Facebook and Twitter are monitored, as are online conversations surrounding Gatorade, its competitors and broader topics like sports or hydration.

Here, we talk to Ms. Hassan about Mission Control and get a brief tour of the space.

NIGEL SYLVESTER AND GATORADE GO ALL DAY :: "THE AFTERNOON EPISODE"

Shouts out to Teyana Taylor and Va$htie

NIGEL SYLVESTER X GATORADE :: GO ALL DAY

Gatorade Go All Day the night episode - More BMX Videos

GATORADE EVOLVES

Tonight, Gatorade will introduce its G Series product line to consumers with a 60-second spot, "Gatorade Has Evolved," from TBWA/Chiat/Day, Los Angeles. Then, the brand team will collectively hold its breath and hope for the best -- or at least something better than the head-scratching and sales slides that came after the "What Is G?" introduction. Here it is:

The spot, breaking during the NBA playoffs, will set the stage for the most massive overhaul in the brand's history, as it shifts to a lineup that includes products for before, during and after activity. (Also notable, you can see the word "Gatorade" a few times -- if only on some of the old-timey bottles.) Whether that message will resonate with key targets -- the G Series' core target is the 13- to 17-year-old high-school athlete, while G Series Pro's target is the 16- to 24-year-old who is in the business of being athletic -- or simply puzzle them has yet to be seen.

For its part, Gatorade believes that athletes will embrace the new approach. Sarah Robb-O'Hagan, chief marketing officer at Gatorade, recently told Ad Age that "the average consumer is already consuming during the before-and-after occasion." But getting them to shill out cash for three separate beverages might be another thing entirely.

The brand plans to follow the first spot with a second 60-second spot, "Before, During, After" in early May. Three 15-second spots are planned to highlight each product in the G Series.

WHAT'S A SPORT? GATORADE REDEFINES TO BROADEN TARGET

NEW YORK (AdAge.com) -- The pressure is on Gatorade to perform this year, following a tough 2009 that had analysts, beverage industry watchers and the ad industry believing the granddaddy of sports drinks had lost its mojo.

NEW LINES: G-series drinks cater to pre-, during- and post-activity. The turnaround hinges on a new campaign, an overhauled product lineup including before and after workout drinks, and a broadened definition of sports to include things such as surfing and acrobatics to lift Gatorade, which saw a 15.5% decline in volume last year. Executives have committed to delivering 4% to 6% revenue growth, following a job-led economic recovery, an ambitious target being watched closely by analysts who want to see signs of a turnaround by year's end. It is also being viewed by some industry insiders as an important moment in the career of Massimo d'Amore, CEO of PepsiCo's Americas Beverages Group.

While Mr. d'Amore manages an entire portfolio of brands -- he's been involved in many of the changes in the beverage division over the past 18 months -- he's said that Gatorade has gotten a lot of his "focus and attention." The bets Gatorade is making are high-profile, given it is the leader in the sports drink category and PepsiCo's fourth-largest brand worldwide. And its clear Mr. d'Amore has been intimately involved in the development and execution of the multi-year effort.

"The success of G is closely tied to the future of Massimo's career at PepsiCo," said one executive familiar with the company.

PepsiCo chose not to comment on outsiders' views of the company. But at a recent investor meeting, CEO Indra Nooyi expressed confidence in the direction of Gatorade and Mr. d'Amore.

Waiting for results

This year, 12 products -- some new, some repackaged -- are hitting store shelves; new distribution deals with GNC and Whole Foods have been struck; the target consumer has been tweaked to include action sports, surfers and dancers; and teens are receiving plenty of attention.

Analysts and industry watchers who have been privy to PepsiCo's pitch say it makes sense. But they're still looking for results, and fast.

The first proof point will be a campaign set to launch later this month. While last year's campaign was focused on image, this year's push will need to focus on educating consumers about the changes to the product lineup.

Two new lines, G Series and G Series Pro, offer athletes solutions for pre-, during- and post-activity. Gatorade believes the pre- and post-workout market is sizable and will provide incremental buying occasions, even as some are questioning why consumers would toss three different products in their gym bags.

"The average consumer is already consuming during the before-and-after occasion," said Sarah Robb-O'Hagan, chief marketing officer at Gatorade. "Different consumers have different nutritional needs on game day vs. training days. What we've seen as we've developed these products is different consumers mixing and matching their own regime to meet their needs."

Attracting teens

The G Series' core target is the 13- to 17-year-old high-school athlete, while G Series Pro's target is the 16- to 24-year-old who is in the business of being athletic, whether as an elite athlete or personal trainer.

Capturing the teen consumer has been identified as a priority for the brand, with Ms. Robb-O'Hagan, conceding that teens thought the brand was dated. Last year's shift to G was meant to grab their attention. With that accomplished, she said, the brand has been working with teens to test and promote the new products. Through May, a mobile locker room is making its way to high schools, showcasing the G Series products.

"What we're focusing on this year, from a marketing standpoint, is making sure that the high-school athlete understands the G Series, understands the three-part series," she said. "If we land that strongly with the teen consumers, we have a lot of opportunity."

Gatorade is also expanding its idea of who is an athlete, looking to surfers, gymnasts and skateboarders. In the past, the brand has focused on traditional sports and leaned more male than female.

 

What goes hand-in-hand with that is the elimination of lifestyle users, those who boosted the brand in the earlier part of the decade. "Gatorade did such a great job with its marketing that it attracted consumers who were drinking it because it was cool, not for exercise rehydration," said John Sicher, editor and publisher of Beverage Digest. "Gatorade lost a lot of that volume last year. It should be able to grow from a new base as it engages and re-engages consumers who want an exercise-hydration beverage."

Growth potential

And, despite competition from brands outside the category such as Vitaminwater, Gatorade and the sports-drink category in general both have growth potential, Mr. Sicher said. According to Beverage Digest, the sports drink category was worth $7.5 billion in 2008. Sports-drink volume had been tracking up 17% between 2004 and 2009, according to Beverage Marketing Corp., but fell 12.3% between 2008 and 2009.

But can Gatorade return to its glory days, the days of iconic marketing campaigns such as "Be like Mike"?

"Gatorade's glory days were about athletics, but it was also a lifestyle beverage. What they're saying is it shouldn't go back to that," said Mr. Faucher. "All the line extensions, that's not the way it's supposed to be going forward. That means you're simply not going to get it to grow the way it did."

Execs argue that there is still plenty of room for growth, however. The brand's research shows that it has 27% penetration among the 68 million performance athletes it has traditionally focused on, and just 12% penetration among the 55 million fitness athletes it is now setting its sites on.

"We're segmenting to grow," Ms. Robb-O'Hagan said. "Instead of focusing on only one hydration product, we're really starting to segment it down and meet different needs for different athletes."

GATORADE PARTS WAYS WITH TIGER...

NEW YORK (AdAge.com) -- Seems Gatorade was less than impressed with Tiger Woods' public apology.

The sports-drink giant has dropped Mr. Woods, who in a televised news conference last week publicly apologized for his transgressions after details of his numerous marital infidelities surfaced following a one-car accident he was involved in on Thanksgiving night. The beverage brand is the third sponsor to walk away from the embattled golfer, who also said he was staying off the links.

APTiger Woods was Gatorade's first golf endorser. -->"We no longer see a role for Tiger in our marketing efforts and have ended our relationship," said a Gatorade spokeswoman. "We wish him all the best."

Gatorade first brought on Mr. Woods in 2007. He was the beverage brand's first golf endorser, and the deal was reportedly worth $100 million over five years. "Gatorade has been part of my game plan for years, whether I'm training or competing, so this is an ideal match," Mr. Woods said at the time.

Late last year, Gatorade decided to discontinue the Tiger Focus line of beverages, a decision it said was made before the scandal erupted in December. The company said at the time that it had ditched the line to make room for "our planned series of innovative products in 2010."
The Tiger line had not been performing well, with volume down 34% in the first 10 months of 2009, according to Beverage Digest figures.

The Gatorade spokeswoman said the brand's partnership with the Tiger Woods Foundation will continue.

Accenture and AT&T have also dropped Mr. Woods. With Gatorade now out of the picture, Procter & Gamble's Gillette brand is one of a handful of major corporate sponsors still standing by their man, even though the brand has scaled back on advertising that utilized Mr. Woods. On his personal website, tigerwoods.com, Mr. Woods lists his official sponsors as Nike, EA Sports, Gillette Champions, Tag Heuer, Golf Digest, NetJets, Upper Deck and TLC Laser Eye Centers.

GATORADE SUPERBOWL XLIV COMMERCIAL: NARRATED BY COMMON

12 begin the second season
12 tribes converge
12 plead
12 hang on every word
12 grind themselves for the struggle
12 take the field
but 12 become 8

8 collide
8 pay the toll
8 perform something selfless, relentless, beautiful
but 8 become 4

4 catch their breath
4 clear their heads
4 pick up the pieces
4 recover
4 try to be better, play harder
but 4 become 2

2 will emerge
2 will clash
2 will battle
and while 2 show us the heart, hustle and soul of the game

1 will be remembered