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Life’s a Virtual Beach for Pepsi

Apr 23, 2007  •  Post A Comment

Rather than simply selling 30-second spots, cable networks have been known to work harder for marketing dollars by extending buys with special sponsorship arrangements, product placement and multiplatform sponsorships.

Now cable is moving advertising into the virtual world.

Pepsi, a sponsor of MTV since the music channel launched, has been one of the charter sponsors of Virtual Laguna Beach, an online world where consumers can experience the people and places they’ve seen on the popular show and mingle with other (mostly young) fans.

For Pepsi, the virtual world is simply another world to conquer. Online users have been using virtual money to buy virtual cans of Pepsi and virtually consume them. They’ve also been wearing Pepsi T-shirts and buying other Pepsi gear.

“When we decided to do this, it was actually before the phenomenon of virtual worlds took hold,” said John Vail, director of the interactive marketing group at PepsiCola North America. “It was nice to be there at what we think of as the inflection point and with a partner that has assets that consumers understand and content that we felt good to associate with.”

Virtual world advertising was one of the out-there ideas Pepsi’s media buying agency OMD was hoping for when it signed a $300 million deal with MTV Networks during the 2006 upfront.

The deal, the first by MTV to include all of MTVN’s digital assets, was designed to put clients on TV, broadband, VOD, podcasts and wireless platforms. By signing on in this way, OMD expected to get first crack at many of MTV’s best ideas for about 30 of its clients, including Cingular Wireless and Nissan as well as Pepsi.

MTVN has been criticized for being slow to expand its youth brands into the online space. The complaint, along with allowing News Corp. to outbid it for social networking site MySpace.com, helped lead to the ouster of longtime MTV leader Tom Freston as CEO of MTV parent Viacom. He was replaced last year by Philippe Dauman, who has pledged to expand the MTV brands into cyberspace at light speed.

But from OMD’s perspective, MTV has been coming up with ideas, including online ideas, for some time.

“In return for us bringing dollars to the table, MTV needed to bring ideas to the table,” said Jennifer Goordineer, group director on the Pepsi account at OMD, describing last year’s upfront deal. “And I think that definitely helped move the needle on things.”

She said Pepsi has “always had a special relationship with MTV anyway,” and that “historically, being good partners with each other, I think, definitely helps MTV bring Pepsi-specific ideas to the table as well.”

Before “Laguna Beach,” Pepsi was a big sponsor of MTV’s “Video Music Awards.” Pepsi was the first sponsor the music channel allowed to put its brand on one of its awards, the Pepsi Viewers Choice Award in 1996. That also marked the first time MTV allowed viewers to interact online by voting for the winner of that trophy, Ms. Goordineer said.

With “Laguna Beach,” Pepsi was involved with product placement and was a sponsor of the release of the season-two DVD. Buyers of the DVD were able to use a special code to view exclusive online material from the show. That material was sponsored by Pepsi.

Pepsi and MTV have been close over the years because Pepsi’s target audience is “the young millennials,” the demographic segments of people 12 to 24 and 12 to 34.

“MTV usually has a pretty good read on what they’re interested in and the next wave of popular things that are coming out,” Ms. Goordineer said. After the online promotions with the VMAs and the “Laguna Beach” DVD, “The next generation of that became this virtual world,” she said.

Since Virtual Laguna Beach launched last year, Pepsi has had a chance to see how users choose to interact with the brand. “It’s almost like real-time research,” Ms. Goordineer said.

In Virtual Laguna Beach, “People actually spent their virtual money not just to buy cans of Pepsi, but to consume them,” she said. Pepsi was being chatted about; it was even a hub around which clubs were formed, by people who associate Pepsi with things young and cool — just what Pepsi wants.

One club’s tagline was, “If you’re cool and you drink Pepsi and you’re sexy, come join our club,” Ms. Goordineer said. “Another club’s pitch was, ‘If you love sitting by the fire, cliff-diving, going to the beach or just want to watch the sunset drinking a Pepsi, join our club.'”

And people were buying Pepsi gear, products the company had begun selling in the real world just before Virtual Laguna Beach launched.

“You’d see someone with a Pepsi shirt on and the conversation would be, ‘Hey, where did you get that cool Pepsi shirt?’ Pepsi sort of took on a life of its own in this virtual world,” she said. They also had conversations about where the vending machines were, or how to get a Pepsi hoverboard (some cool people in Virtual Laguna Beach travel by hoverboard).

“Ultimately, the biggest compliment is there are thousands of our target audience in their virtual world with our packages as part of their badge, which is fabulous,” said Mr. Vail.

Ms. Goordineer said MTV is keeping the results of Virtual Laguna Beach proprietary, but had shared them with clients like Pepsi.

“The numbers were staggering. We were pretty amazed when they did tell us how many people actually purchased, how many people consumed, how many people were talking and screen grabs of what they were saying about Pepsi,” she said.

But did virtual marketing transfer to the real world, where Pepsi is wet, not electronic? Selling virtual T-shirts is great, but “having an opportunity for people to be actually decked out with our Pepsi globe is more fabulous,” Mr. Vail said. “What the future may hold would be maybe some tie-in: If you love it on your avatar, maybe you’d love it in real life. As the worlds converge and merge, that would be an interesting proposition someday in the future.”

Ms. Goordineer added, “A lot of these kids talk to their friends about what they’re doing online and send people online as well. It also lets us know what kids are thinking in the real world as well.”

In the real world of marketing, return on investment is a big deal. But with the virtual world somewhat new and experimental, “ROI is sort of relative to what you’re really looking for. Initially it’s just looking to create buzz and see how people would actually interact with a soda. I think we’ve seen that it’s successful,” she said. “It’s not like people just go walking by that vending machine and not buy a soda. It’s kind of funny. Who would think you would spend virtual money on buying a virtual soda? It sounds silly, but they do. And I think the numbers were a little staggering, because we thought it would be a handful of people, but it was a lot of people who were doing this.”

When the new season of the TV show “Laguna Beach” starts, there will be changes in Virtual Laguna Beach to reflect them. Until then, Virtual Laguna Beach should keep some viewers involved and encourage them to tune in to the show.

Pepsi is likely to be back as well. “I don’t think there’s anything that’s sending us screaming away from something like this,” Ms. Goordineer said. However, she added, “A lot of things have to play out in the marketplace” before another big upfront deal like last year’s gets inked.