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Storied history: But clearly it's a blow for BBDO, which made Pepsi "the choice of a new generation" and has worked with the brand since 1960. In its heyday, under the guidance of the late great creative Phil Dusenberry, BBDO made Pepsi a pop-culture icon with Super Bowl-style extravaganzas and celebrity endorsement deals featuring the likes of Michael Jackson, Madonna, Ray Charles, Cindy Crawford and more.It is the creative agency for a host of brands in the Pepsi family, including Pepsi, Diet Pepsi, Diet Pepsi Max, Aquafina, Mountain Dew, Diet Mountain Dew, Sierra Mist and Amp, which according to TNS Media Intelligence figures were collectively supported with $300 million in measured media last year (one-third of that was brand Pepsi, which received $100 million). The firm also handles Starbucks-branded beverages that are a part of the North American Coffee Partnership.
BBDO referred calls for comment to PepsiCo.
Talk has heated up in recent weeks about the beverage giant reaching out to BBDO siblings -- especially TBWA/Chiat/Day -- for ideas on marketing its beverage brands, calling into question one of the industry's legendary relationships. Several holding-company insiders said movement of some BBDO business wouldn't come as a surprise, given that Pepsi has shaken up its roster already. This year, the company purged Omnicom's Element 79 of some $440 million in brands, including Gatorade and Tropicana, citing the need for "new creative thinking" in the face of declining market share. All those accounts were parceled out among Omnicom shops such as TBWA/Chiat/Day; Goodby, Silverstein & Partners; Arnell Group; and BBDO's Juniper Park.
Tough climate:
While in the past Coke was Pepsi's archrival, this time around it appears the economy is the enemy. "It's clear this business is not performing where we would like it to be, in large part because the economic slowdown continues to pressure the North American liquid-refreshment beverage category," Ms. Nooyi said during a call with investors last week. "It is our belief that, especially in this economic downturn, we should be investing in the category to get consumers to stay with and some to return to the packaged-liquid-refreshment beverage category and to our brands in particular." The funding will come from Pepsi's "Productivity for Growth" program, which involves cutting 3,300 positions, as well as closing of six plants.
"While we can't control the macroeconomic situation, we can enhance PepsiCo's operating agility," Ms. Nooyi said in a statement.
Even so, some analysts said the economy could end up Pepsi's friend. "Economic downturns, like this one we're going through, force consumers to rethink many of their patterns, so this may be a great opportunity for the category to reintroduce itself to consumers with different propositions," said Carlos Laboy, an analyst with Credit Suisse.
Reversing the tide: Mr. Laboy, however, said advertising and marketing will have a long way to go to counter marketers' years of pushing volume, which has commoditized the carbonated-soft-drink business, sacrificed brand value and made the category a focus for "obesity crusaders."
"You're not going to fix this with a new logo or can or graphics, or ad campaign," he said. "This requires a major, comprehensive approach to the category and a refocusing to optimally capture the value of the brand at every beverage occasion, rather than have the discourse be ... how much volume can we pump out into the marketplace," said Mr. Laboy. "You go to McDonald's, and you get upgraded from a bucket to a barrel for a nickel. ... The perception of what a [soft drink] is worth is obliterated."
A brief history of Pepsi and BBDO advertising:
1961: One of the first taglines: "Now it's Pepsi for those who think young."1963: Hip, postwar baby boomers unite through the "Come alive! You're in the Pepsi Generation" campaign.
1969: Civil rights, the social revolution and the Vietnam War inspire "You've got a lot to live. Pepsi's got a lot to give." In 1973, this morphs into "Join the Pepsi people, feelin' free."
1975: Pepsi reigns as the King of Pop in the Pepsi Challenge.
1984: Michael Jackson helps usher in "Pepsi. The choice of a new generation." A year later celebrities such as Tina Turner, Gloria Estefan and Michael J. Fox come onboard to promote Pepsi.
1990: Ray Charles sings "You got the right one baby" for Diet Pepsi.
1991: Cindy Crawford stars in the "New look. Same great taste" campaign.
1995: Pepsi introduces "Nothing else is a Pepsi" and wins top honors at Cannes.
2001: Britney Spears launches the wildly popular "Joy of Pepsi" campaign.
2002: Cindy Crawford returns in an updated take on her original TV spot.
2005: Sean "Diddy" Combs popularizes the Diet Pepsi truck in the "Light. Crisp. Refreshing" campaign.
2008: Narcoleptics channel the Roxbury guys from "Saturday Night Live" ("What Is Love?") with one sip of "Wake up people" Diet Pepsi Max.

