Rethinking Digital Advertising

Brands are most often at the mercy of Silicon Valley and Madison Avenue in digital advertising, beholden to the major agencies and advertising technology companies to build their brands online as well as to provide the measurement of their campaigns’ success. Yet brands are frequently unsatisfied with the performance of their advertising technology solutions as well as their inability to make big ideas blend seamlessly with the ever-growing volume of big data. Although brands are steadily increasing their investments in online advertising and in existing advertising technology tools, a significant number of

Major brand CMOs have in recent studies stated that digital advertising still presented many barriers to deeper investment, such as uncertain measurement standards, the complexity of the media-buying process and the inability to customize solutions easily to meet brand objectives. A radical solution is to create a training ground for new, untested ideas in digital marketing and put them through their paces, allowing startups in advertising technology and digital marketing to compete on the basis of performance and long-term merit. PepsiCo10 attempts to do just that, expanding PepsiCo’s two-year-old technology startup incubator program from the U.S. and then Europe to Brazil and India this year. While this approach is a novel turn for a major brand such as PepsiCo, the relevance to advertising technology as a whole is a much larger story .

Silicon Valley’s sheen as the world’s largest incubator of bright ideas will endure in perpetuity, but the idea of brands building their own advertising technology providers from the startup stage is a new one. It is perhaps a future challenge to the old order, which has allowed major agencies and the caprice of Silicon Valley’s biggest investors to prescribe the course and the speed of brand-focused advertising technology development. Brands would naturally, if given the chance, develop advertising technology that is performance and branding-oriented. The ability to carve nascent technology to best serve brand objectives is a concept that goes to the heart of what digital advertising is supposed to do; drive results and foster connections between the brand and the consumer, while providing data-rich insights.

Joshua Karpf, PepsiCo’s Director of Digital Media, believes that the company’s PepsiCo10 project is significant for the digital advertising landscape as a whole, as it is an attempt to bring the brand closer to the best new ideas before they hit a cluttered landscape. “What if PepsiCo had spotted Facebook earlier than anyone?,” asked Mr. Karpf in an interview with The Advertising Technology Review. “We want to be the place where new technologies come to breakthrough.” Mr. Karpf stated that being present at the creation of cutting-edge technologies is a competitive advantage that PepsiCo is committed to pursuing globally. The company isn’t attempting to rile either Silicon Valley or Madison Avenue, but rather create a role for itself that perhaps a brand might perform best; as curator of the advertising technology and digital marketing solutions that it might need in the future.

There are several factors that make PepsiCo10 more than a revisiting of that 90′s favorite, FirstTuesday, a venture capital free-for-all which famously help fund some of the decade’s biggest flops and successes. PepsiCo, as a powerful global brand, has the inherent power to turn a plucky startup into a viable competitor in the advertising technology space virtually overnight. The company has a wealth of brands, vast amounts of consumer data to utilize along with the ability to single-handedly launch any new advertising format, for example, that bright-eyed startup crew could imagine, to a world audience. PepsiCo’s digital strategy has been alternately heralded and questioned over the past several years, yet this year the company is boosting its overall advertising budget by more than $600 million, with a particular emphasis on digital marketing. PepsiCo is taking its ad spending seriously, and as a part of that push, it is actively looking for new ways of driving ad performance, optimizing its social media efforts and connecting with new audiences online, globally.

This entails a subtle rethinking of PepsiCo’s role as a brand in digital. Although PepsiCo’s core business is certainly not shifting to technology, the company views itself now as a catalyst for practical innovation in marketing and consumer connections. This requires a deeper look at the way those connections are formed, the way advertising is delivered, and new ways of looking at online marketing. Those future-focused new ideas are percolating in places like Brazil and India, as they are in Silicon Valley and Europe. The significance of PepsiCo’s role as a driver of digital marketing ideation is that it offers a third way, between submission to the shiny new tools of Silicon Valley or the reticence of Madison Avenue to plunge further into the shocking of the new.

Brands don’t necessarily need to be protected or coddled in exploring the digital universe. Advertising technology, as a landscape may indeed be cluttered with mediocrity, but brands savvy enough to create an open door for new ideas to compete based on merit may have found a way to make the landscape evolve into a performance, not PR-driven system out of necessity. PepsiCo, by finding their own new ideas and letting them compete on the world stage can effectively force older, more established companies to think more seriously about performance and innovation simply by default.

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