The 400 Million Dollar Decision

Welcome to AdHacker, 103.9 WLEN’s new blog all about advertising.  We hope that you will visit this page often as we explore the intricate idiosyncrasies of advertising and marketing.

We’re going to kick off the new year with a classic example of the difference between advertising and exposure.  Pepsi learned the lesson to the tune of over $20 Million.  Pepsi decided to eliminate traditional media for a shot at the big rewards of social.

“Pepsi substantially abandoned its long-standing commitment to traditional advertising in favor of social media. It canceled its annual Super Bowl advertising. It diverted tens of millions of dollars from traditional advertising to create the "*Pepsi Refresh Project*." *Pepsi Refresh* was an online social media initiative in which Pepsi gave out 20 million dollars. They also spent many millions more in support of this initiative.”

After making this transition from traditional to digital, the current fad in advertising, the results came in:

“The results are now in. It has been a disaster.**Last week, *The Wall Street Journal* reported that Pepsi-Cola and Diet Pepsi had each lost about 5% of their market share in the past year.**If my calculations are correct, for the Pepsi-Cola brand alone this represents a loss of over $350 million. For both brands, the loss is probably something in the neighborhood of 400 million to half-a-billion dollars.**For the first time ever Pepsi-Cola has dropped from its traditional position as the number two soft drink in America to number three (behind Diet Coke.)”

These are excerpts from the article, which you can view in full here:

As marketers we all understand the need for branding, however, we also need to invite people to do business with us on a daily basis.  A delicate balance between brand marketing and call to action advertising is critical to grow our businesses.  Each year the average attrition rate for customer loss for any business is 20%.  Therefore, in order to just maintain market share we need to grow current customer tickets or generate new customers to the tune of 20%.  For growth we have to exceed that.

As you review your advertising budgets for 2018, consider the mistake of Pepsi. Traditional advertising is here to stay, but connecting your traditional with your digital advertising has never been more important.

Stay tuned for more from AdHacker -- a blog designed to help local businesses grow.


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