‘Every state is different’: Inside Pepsi’s regional approach to increasing its advertising

PepsiCo is taking a regional approach to increasing advertising back to normal spending levels. In areas of the country where the stay at home order has already been lifted, the beverage and snack giant is starting to up its media spending on digital and other lower funnel advertising, said PepsiCo CMO Greg Lyons.  

Like many other major marketers, PepsiCo initially reduced how much it was spending on advertising. During the company’s first quarter earnings call last month, chief financial officer Hugh Johnston said that PepsiCo was “reducing nonessential advertising and marketing spend[ing] to reflect the realities of the current environment.” 

Now that states like Texas and Georgia are lifting the stay at home order, the company is starting to spend more on advertising in those areas. In the regions already opening up, PepsiCo’s increase in advertising will focus on digital media and other lower funnel advertising.

“It’s really important not to be dark at this time,” said Lyons. “We believe we’ll have a stronger ROI in the parts of the country that open up sooner. So we’re going to take a more regional approach as every state is in a different place.” 

One example of this approach is a recent regional campaign that PepsiCo debuted earlier in May focused on the Southeast in the U.S., “Stronger Together,” which aimed to support healthcare workers. The company asked locals of the region to send in stories of local heroes that would be part of a 30-second spot.

Lyons declined to say how much PepsiCo has increased its advertising budget in those regions or say when PepsiCo advertising will return to normal. In 2019, PepsiCo spent $880.5 million on media, according to Kantar, which doesn’t track social spending. “The goal is to get back to normal spending levels as soon as it makes sense for us,” said Lyons. “The plan is that when the country opens back up again our spending will be more robust.” 

As marketers across the globe look for ways to stabilize advertising efforts and return to some sense of normal, they have looked to countries that are further along in the recovery from the coronavirus pandemic to get a sense of what’s to come. A similar approach may take place in the U.S. as different states are also in different stages of the recovery which makes a regional approach to marketing more attractive, according to agency executives.

“When budgets are less than what they typically are, marketers become more surgical and deliberate in their targeting,” said Matt Hofherr, chief strategy officer and co-founder at ad agency Muhtayzik Hoffer, of the regional approach to advertising that some marketers may take in the coming months. 

Going into coronavirus lockdowns, there was consensus across the U.S. but coming out looks “so different,” said Gavin Jones, co-head of strategy at ad agency Venables Bell & Partners. The agency is exploring regional advertising strategies for its clients that it will likely employ later this summer. The approach will change not only the media mix but also the messaging for those brands. “We are trying to explore how you lean into different environments but it’s still so unknown.” 

Aside from a regional approach to advertising, PepsiCo is also emphasizing ecommerce with the introduction of PantryShop.com and Snacks.com to navigate this crisis. Doing so has already changed the marketing mix. “We have shifted some of our marketing mix quickly to lower funnel [advertising for] ecommerce as we saw that channel accelerate quickly through this,” said Lyons.

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