In case you haven’t heard, Pepsi is going to forego their traditional massive spending during the Super Bowl.  Since 1987 Pepsi has pumped more than $140 million dollars into Super Bowl advertising…and yet still remains the #2 player, behind Coke.  This year, instead they’re going to shift their strategy to a year long marketing platform that’s centered around the Pepsi Refresh Everything site.  Per the WSJ, Pepsi says it will spend 60% more on online ads in 2010 than it did this year. It will be relying largely on Web ads and public relations to market its Pepsi brand because, it says, that’s the best way to reach younger audiences— Pepsi’s primary target—and to keep consumers involved with its brand.”

Wait a second.  So Pepsi is going to invest their money in channels that are better aligned with their target audience?  It really makes me wonder, why this wasn’t being done previously.  But, that’s another story for another day.

Teresa Lindeman of the Pittsburgh Post Gazette does a great job of covering the situation here.  My high level point of view is covered in the article.  In this post, I want to dig a little deeper.   This is huge.  This is game changing.  If you’re in the marketing and advertising business you should be paying serious attention to what Pepsi is doing.  And if you’re in the interactive space (eg digital agency, digital strategist, interactive media planning/buying, etc.) you need to be not only paying attention, you NEED to believe in what Pepsi is doing.  You NEED to root for Pepsi.  Even if you drink Coke or your client is RC Cola, you need to root for Pepsi to succeed.

Why?  Because, what Pepsi is doing has never been done before.  They’ve traded TV (the old, the traditional, the standard) for the web (social, interactive media, social, etc.).  They didn’t augment.  No, this is a straight up trade.  With a straight up trade, we’ll literally be able to look back on this decision and determine if it was a great idea or a bad idea.  If you’re one of those traditional, stodgy, old media supporters you should be concerned.  If you’re a new media, social preaching, the web is where it’s at person, you should be concerned.

If Pepsi succeeds, the infusion of capital and support for interactive will skyrocket.  The wheels will be greased.  The room will be warm.  Brand managers and marketers will be leaning forward and very receptive to all the things they’ve ignored or challenged for years.  Pepsi’s success would prove that interactive can scale, move the needle, be measurable, and drive business objectives.  We won’t be on the outside looking in anymore.  We won’t be struggling to “sell” clients and decision makers on the value of interactive.  People who have for years roadblocked the investment into interactive will come under scrutiny, be replaced, or need to change their tune pretty damn quickly.

But, if Pepsi fails.  If Pepsi misses. If they lose share.  If Pepsi leadership acknowledges this was a mistake.  If any of those things happen, the old guard will have won.  They will be able to point to Pepsi as the case study that proves interactive is a supporting player, not a lead horse.  Budgets will be re-re-allocated back to traditional media.  The traction made by marketers like me with clients will be undone and it will be like starting from ground zero.  CMOs will have no reason to invest in interactive.

This is a pivotal point in the evolution of interactive.  Pepsi’s success or failure will be a measuring stick for years to come.  If you’re tired of churning out FSIs, cutting 30s, and producing seemingly mindless unemotional “hard working” ads you have to believe in Pepsi and be rooting for them to win.

I’ll be watching the game, but I’ll be watching Pepsi even more closely.

I like video games. They’re a release for me. I really enjoy sports game. Be it Football, Baseball, Basketball, Hockey, or Golf (no Soccer) – I play sports games. Over the past 3 years I’ve noticed two trends:

1.  Sports games are getting worse
2. Advertisers are spending more money on in-game advertising

I picked up MLB 2K9 this year, despite a sub par review from IGN. My choices were limited because 2K Sports, the manufacturer of the game, has an exclusive agreement with Major League Baseball. Essentially, if you wanted to play a baseball game this year on the XBOX 360, they were the only choice.

To put it mildly, the game is a disappointment. It doesn’t even meet the basic expectations I had. The one thing that did impress me was the amount of integration Pepsi had in the game. As you can see from this screen shot they are, well, everywhere.

This got me thinking. Television networks price costs for 15/30/60/etc. second spots based on the show. Better shows, that attract more viewers, cost more. This chart does a nice job of showing how this has played out over time.

In some way, the advertiser (in this case Pepsi) is banking on the show being good. If the show explodes, they make out ahead. If the show tanks they lose. So that all makes sense. Let’s take it a step further. When a brand does a sponsorship of a show they are taking a larger risk and on some level engaging in a partnership with the show. The show now has an obligation to the advertiser to deliver the goods. On many levels this is exactly what it’s like for in-game advertising. Pepsi’s sponsorship of the game (that’s really what it is) is a partnership between some combination of Pepsi, Microsoft (XBOX manufacturer), and 2K Sports.

If you’re Pepsi, do you really want to be associated with a game as bad as MLB 2K9? A game that even die hard fans are saying sucks. There words, not mine. Of course not. You want to be associated with with things that are analogous to your company, image, and audience. If I’m Pepsi, I’d be asking for a make good on the ad space. I don’t even know if that exists in the in-game advertising space.

Thanks for hanging in this long. So what’s the point? Simple. Will advertisers have a say in the final quality of video games? Will they be able to demand, on some level, a game that meets the expectations of the fan base? After all if the games continue to be garbage, no one will buy them, which screws up the whole in-game advertising circle of love. No one makes money. No one connects with their consumer. Nobody wins.

If in-game advertising continues to increase (eMarketer says it’s on the massive upswing) game manufacturers will have even more pressure to deliver and quality product. That spells good news to the consumer. The real question, is how long it will take for this to happen. My guess is within the next 3 years.

So Pepsi has an answer for My Coke Rewards. Let’s see if they have the stones to stick it out. Most loyalty programs don’t cross into the black till year 3. The Justin Timberlake ad was fun; I have to admit thought I’d still like to see him say something about a box All Pepsi ads can be seen here.