March 4, 2021

Advertising: Pepsi Takes Active Role in ‘X Factor’

“The X Factor,” a British export that will make its United States premiere on Fox on Sept. 21, is the long-awaited competitor to “American Idol” and the new home for Mr. Cowell. The show will also be a marketing centerpiece for its lead sponsor, PepsiCo, whose eternal nemesis, Coca-Cola, is the longtime sponsor of “American Idol.”

As with Coke’s branding on “Idol,” Pepsi’s logos will be a regular sight on “The X Factor,” seen on the judges’ drinking cups, in banner ads and elsewhere. But Pepsi, which is spending up to $60 million for the sponsorship, is also playing an unusually active role in the show itself, and its connection to the show will continue even after the season ends in December.

Adding a sweetener of its own to the $5 million recording contract offered as the top prize on “The X Factor,” Pepsi will have the winner star in a commercial to be shown during the Super Bowl on Feb. 5.

“It’s been the most collaborative relationship I’ve ever had with a sponsor,” said Mr. Cowell, the show’s creator. “From Day 1, they just bought into what we’d planned for the show, and almost became like producers. As we developed the show, we consulted with them in all the decisions, and they came and presented to us their own marketing ideas.”


For Pepsi, “The X Factor” represents a dual marketing opportunity. Through its ads on the show and next year’s Super Bowl commercial, the company will return to its tradition of big, splashy pop music commercials, its bread and butter for much of the last three decades. At the same time, it will step up its recent emphasis on digital and social media.

Frank Cooper, the global consumer engagement officer, PepsiCo Beverages, said that using pop stars in commercials worked well for a time but that the company now wants to have a more active role in the projects it sponsors and in the careers of the musicians it works with.

“Historically our approach, from Michael Jackson in the ’80s through Britney Spears in 2001, was really an approach of borrowed equity,” Mr. Cooper said. “The ‘X Factor’ relationship is more about what role a brand can play in an entertainment platform beyond simple sponsorship.”

The Super Bowl ad — for which the winning contestant will not be paid — will be regularly invoked on the show as one of the ultimate prizes, and Pepsi’s presence on the air is also to include features like a “Pepsi Challenge,” in which viewers choose the songs that contestants will sing. After the winner is chosen, customers will be able to vote online for some of the elements in the Super Bowl ad.

Pepsi’s online promotions for “The X Factor” have already started. In each city where auditions were being taped, the company invited in a handful of popular local Twitter users. They were found using Klout, a company that ranks Twitter accounts by their level of influence. Pepsi will also run game promotions, like having viewers take a picture of a can of soda with their smartphones for bonus content, said Shiv Singh, the global head of digital for PepsiCo Beverages.

“You have to have a can in your hand to do that, so it helps our business,” Mr. Singh said.


Combining a big old-fashioned media campaign with smaller-scale online activity may also be a chance for Pepsi to satisfy analysts who have been skeptical of the company’s unorthodox recent marketing.

Last year, Pepsi did not run a Super Bowl ad, for the first time in 23 years, but instead it put $20 million toward a charitable online campaign, the Pepsi Refresh Project. And its TV ad spending has declined significantly in recent years. In 2006, Pepsi spent $249 million to advertise its carbonated beverages on television, compared with $264 million for Coke. But in 2010, Pepsi’s spending had come down 45 percent to $136 million, while Coke’s had come down only 23 percent to $203 million, according to Nielsen.

The cola war dealt Pepsi a setback this year. Beverage Digest, a trade publication, reported in March that Diet Coke had surpassed Pepsi as the second-most-popular soda in the United States, with Coke at No. 1.

“The results would suggest that swinging the pendulum all the way to nontraditional media has not worked for them,” said Ali Dibadj, an analyst at Sanford C. Bernstein Company who studies beverages and household products.

This year, Pepsi returned to the Super Bowl and said it would increase the television budget for advertising its beverages by 30 percent.

“Our hope, and our intention, is to find the right balance in spending between TV and digital,” said Mr. Cooper, whose other projects have included Green Label Sound, a record label financed by Mountain Dew, a PepsiCo brand, which releases online tracks by underground rock bands and pays for all the recording and marketing expenses.

The goal for the show, Mr. Cooper said, was also to test the boundaries of the role of a sponsor by becoming as closely integrated within the show as possible.

“When people are sitting on the couch looking at the TV,” he said, “you will see that the actual elements of the song they are singing have been filtered by, shaped by and ultimately brought to you by Pepsi.”

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