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Pepsi's CMO reveals how the company is shaking up its advertising, demanding more flexibility from its agencies, and prioritizing e-commerce and data amid the pandemic

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  • Business Insider is launching a regular series where we talk to chief marketing officers about how they are confronting challenges from data-driven marketing to in-housing.
  • For the first installment, we talked to PepsiCo's Greg Lyons about how the company was adapting to the new reality of marketing through a pandemic. 
  • He said that Pepsi was investing in data and e-commerce in the long-term and moving marketing budgets toward operations in the short-term.
  • Click here for more BI Prime stories.
The ad industry is going through a massive transformation, which has been accelerated by the coronavirus pandemic.
To chart out how companies are navigating through these challenges, Business Insider is launching a regular series where chief marketing officers take us through how they are using data, taking work in-house, creating new models with their agencies and tweaking their campaigns.
In the first installment, Greg Lyons, CMO at PepsiCo Beverages North America, discussed how Pepsi was investing in data and e-commerce in the long-term and shifting marketing budgets to operations in the short-term.
The following interview has been edited and condensed for clarity.
Tanya Dua: How has the pandemic changed the way you operate?
Greg Lyons: We're making more end-to-end decisions as a business, and less decisions as a marketing department in a silo. Decisions that was sometimes take weeks or months to make, we're making much more quickly now. The business is changing so fast, we've created some special projects to make us stronger coming out of this, and we're moving people around more than before to make sure that everyone's working on something that's valuable to the organization.

E-commerce is a big long-term focus for Pepsi

Dua: Can you share some of these projects?
Lyons: We saw that more people were buying food and beverages online than before so we shifted some of our marketing investment into e-commerce. E-commerce is a big growth platform for us, and [the pandemic] has probably accelerated that shift by three to five years. I'm talking the pure plays, like Amazon and Instacart, but also the click-and-collects like Walmart.com and Kroger.
Dua: Is Frito-Lay's e-commerce website Snacks.com that just launched part of that investment?

Lyons: We're trying to learn if product bundles make sense. And if they do, then do morning bundles, which have got a whole bunch of different PepsiCo products in them, make sense? I view it mostly as something small as opposed to a big new business opportunity for us.
Dua: How has your use of data changed?
Lyons: We've got first-party data for well over 25 million households, and we're trying to use that to make informed decisions in our marketing. Earlier, we'd have a code under the cap, and you could register your name to win a cool prize, and we'd have a database where we'd capture that data for the Pepsi brand. We'd do a different promotion on Doritos around gaming and capture that, and have data there. We weren't sharing that data across all the brands.
Over the last five years, we've become much more proactive in trying to get consumers' data in one usable data set. We're asking them if they want to hear from us and honoring that, making sure that it's robust enough so we understand how often people want to hear from us, what's important to them, and which brands they interact with the most. We're overlaying on top this idea of really understanding consumers not just as a data point but as humans.

Pepsi has changed its marketing and the scope of work for its agencies in the face of the pandemic

Dua: In a survey called "The Empathy Imperative," Pepsi found 80% of customers say it's important that brands revise the tone or style of their advertising and communications during this time. How are you doing that?

Lyons: We had an ongoing summer campaign planned called "#Summergram," which was about people going outside and enjoying summer with their friends and family. It would be tone-deaf right now if you got a bottle of Pepsi that said "Suns out, Buns out." So we've culled that. We also had some advertising that showed people enjoying themselves at basketball games, and that wasn't the right thing to show either. Instead, we're doing other types of marketing.

Dua: Like what?
Lyons: We partnered with the Global Citizen Festival on their "One World Together" event with Lady Gaga, and tried to help them however we could, whether it was designing the logo for the event or artist outreach, production or generating awareness. We partnered with John Krasinski on his show "Some Good News," helping Guy Fieri help restaurant workers. We donated $3 million and became part of that show, and gave some people something to feel good about — in an authentic way — because Pepsi is part of a lot of restaurant experiences and we want to help those restaurants and those employees.
Dua: How has that impacted your marketing budget?

Lyons: It's very important to not go dark during this time. We made the decision to pause a fair amount of our media in the second quarter to help make sure that our business operations, our employees on our frontline, were safe. We took some of our marketing money and invested a little bit more in our operations. We've also increased their [operations staff] pay a little bit. We're still marketing our brands, but we've simplified our calendar. We think the ROI is going to be higher when the country reopens, so we're trying to keep as much flexibility with our marketing money as we possibly can in the third and fourth quarters.
Dua: How has that flexibility impacted your relationship with your agencies? 

Lyons:
It's very difficult to be an agency right now, as a lot of clients are cutting their spend. We're trying to be understanding of what they're going through. We're trying to be as transparent with them as possible as to where we're going to need their help. Depending on the agency, what they are working on, and how our plans have changed, we've changed scopes of work. We have not changed our payment terms. We need flexibility because things could change. If we have a big second wave [of the pandemic], our plans will probably be different than if we have a balanced recovery.
Dua: Do you think in-housing will accelerate as a result of the coronavirus?

Lyons: We've had some in-house creative capabilities for a while, and we used that team to create some of the awareness-building tactics that we did for the Global Citizen partnership. That being said, I do not think it accelerates in-housing. We need both agency partners that bring fresh thinking, real expertise in creative, and broad perspective across lots of brands and the industry, as well as in-house creative that can do things very quickly and be a creative resource for us.

Dua: What's your stance on blacklisting news during the crisis?

Lyons: During this pandemic, we have decided not to advertise on hard news, because we feel that it's depressing right now. But I would not call that blacklisting — we've just chosen not to do that for the time being.
SEE ALSO: How Frito-Lay built its new, direct-to-consumer website Snacks.com in just 30 days amid the coronavirus pandemic
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Source
https://www.businessinsider.com/pepsi-cmo-greg-lyons-on-marketing-investment-changes-during-coronavirus-2020-5

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