How game-changing is PepsiCo’s media alliance with InBev?

Cynics see in Anheuser-Busch Inbev’s decision to pool its US media buying resources with those of PepsiCo two wounded warriors propping each other up for support. Firepower is not the issue here; between them they spent $1.15bn on measured media (Kantar) last year.  It is their fighting efficiency which has been under par.

In other words, both parties to the deal feel they are paying the main media far too much and by doubling their negotiating clout they will extract a big dividend.

They may well be right. Media owners, from NBC to Viacom, certainly have reason to be apprehensive. Heretofore, A-B’s media buying performance – which is the responsibility of an inhouse team, Busch Media Group – can best be described as sleepy and would certainly benefit from an infusion of new energy, even if that does come from OMD – which has done an adequate, although hardly effervescent, job for PepsiCo.

The bigger question is where such co-operation might eventually lead. And it’s one for agencies, rather than media owners.

The current PepsiCo/InBev pact began only three months ago as what appeared to be a classic procurement ploy. Indeed, at the time, a PepsiCo spokesman was quoted as saying that “the consortium is not related to media costs or marketing”. Instead it would concern itself with “backroom issues” such as travel, office supplies and computers. As we can now see, the PepsiCo spokesman was not entirely candid, except in one respect. The follow-up media procurement exercise is not targeted at cutting costs so much as spending existing budgets more wisely – on such key events as the annual Super Bowl.

Assuming success in this latest initiative, what efficiencies will the consortium target next? Both companies have been at pains to exclude the possibility of advertising production or agency fees coming into its remit. But as the short history of this joint-venture already demonstrates, client assurances may not stack up to much.

Just as concerning for agencies, this trend might catch on elsewhere. Whatever next in the consolidation game? Coca-Cola and Diageo? General Motors and McDonald’s? Microsoft and Motorola?

Mind you, it’s just as possible that this new-fangled media collaboration will tumble at the first hurdle if, as may happen, Pepsi and InBev end up squabbling over prime-time precedence during the Super Bowl.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: