Modern Investment

diab-pepsi As we TCTers know, Pepsico has been on a special mission to further boost its shareholders’ take from its operations. How do they do this? Why, by boosting and refining their investments, of course.

And what, precisely, does “investment” mean, in our age, at a mature profit demesne such as Pepsico? Marketing, of course.

Per Advertising Age:

Wondering if advertising works? Just ask Pepsico.

PepsiCo declared it would boost advertising spending across key brands, trim agency partners in the North America Beverage division and better leverage its global scale — while cutting costs and enhancing shareholder returns. The company is making progress, according to data from several sources, including PepsiCo’s annual financial report released last week. And importantly, when it comes to marketing, PepsiCo has put its money where its mouth is.

Hugh Johnston, PepsiCo’s chief financial officer, said the company has “absolutely” accomplished what it set out to in 2012 and is seeing improved brand-equity scores and an upward trend in market share.

PepsiCo increased measured-media spending in the U.S. by 24%, or nearly $130 million, in the first three quarters of 2012, compared with the same period in 2011, according to Kantar Media.

PepsiCo reported a 4% drop in full-year profits in part due to increased marketing spending. But fourth-quarter profit rose 17% as the spending kicked in. Pepsi also posted 5% organic revenue growth for the quarter and year.

“We not only stepped up the level of investment in advertising and marketing, but we took steps to improve its efficiency and effectiveness by better leveraging our global scale and driving consistent brand positioning and coordinating advertising, creative and production activities,” said Indra Nooyi, chairman-CEO of PepsiCo, on a call with analysts.

Clearly, all this is something only the magic of the private sector could accomplish. How very lucky we all are!

Age of Wonders

heroes Good news, fellow Earthicans: Our heroic epoch’s leading minds shall never cease their valiant, world-historic labors to solve the great challenges of the perilous times. According to the latest Advertising Age:

Few people would suspect that what’s inside an unmarked building some 30 miles north of New York could change __(a)__, even the entire __(b)__. But that’s what __(c)__’s ambitious, high-energy __(d)__ are promising.

This unassuming office park houses the __(e)__ Lab, and inside are the results of months of intense research. __(f)__ have been working to chart a new course for a __(g)__ that has endured __(h)__, just behind __(i)__.

Over several weeks early this year, Brad Jakeman, president-__(j)__ officer, has walked key __(k)__ constituents around the lab, talking about ideas and showing off mock-ups of new __(l)__ machines, samples of __(m)__ and new __(n)__ concepts. It’s a world where __(o)__ specifically — and the __(p)__ generally — is __(q)__ again.

He insists it’s not a pipe dream.

Answer key:

live_for_now(a) = the way consumers view a soda brand

(b) = cola category

(c) = Pepsi

(d) = marketers

(e) = Beverage

(f) = Pepsi execs

(g) = brand

(h) = an embarrassing slip to the No. 3 soda

(i) = Diet Coke

(j) = global enjoyment and chief creative

(k) = Pepsi

(l) = new vending and fountain

(m) = licensed products

(n) = marketing

(o) = Pepsi

(p) = cola category

(q) = cool

And some dare question the entrepreneurial system!

The Other Waterboarding

How they drink More news from the sick-ass “cause marketing” front:

Over a billion people in the world are lucky if they are able to drink from fetid puddles, and the “water crisis” is projected to continue rapidly worsening.

This, of course, is a consequence of the plague of extreme poverty and rapid consequent population growth that capitalism has created and proven incapable of solving.

So, how do our beloved corporate marketers react when they catch wind of the human consequences?

Listen to Peter Thum explain the transcendent effect:

I spent a lot of time around people who didn’t have access to clean drinking water. Following that, I consulted on a project in the bottled-water industry, and I realized that there was an opportunity to create a brand that people really cared about.

Yes, friends, a worldwide scourge that kills more people than AIDs and engenders untold misery leads, in the corporate capitalist world, to a new marketing opportunity!

And where is this opportunity? Is the main activity of the new “brand” going to be passing out free super-straws like the one above?

Are you kidding? Where’s the cash in that?

what ethos?Instead, what the lucky billion dying of thirst in the Third World are going to get from this new corporate marketing effort is the privilege of having Americans buy Ethos, a new brand of — you guessed it — water bottled in plastic and sold in the US for $1.85!

The basic financial math of this wondrous breakthrough in human care and concern? Mr. Thum and his co-founder of Ethos recently sold their new “brand” to the Starbucks corporation, which has now cut Pepsico in on this “cause marketing” action, for $8 million. Their “goal” — not their promise — is to donate $10 million to some unspecified lucky folks among those billion thirsty beneficiaries by 2010.

Yet, since only a nickel from each sale goes in that fund, that means there must be 200 million new bottles of Ethos sold in order for this “goal” to obtain.

And, even as it increased the cash flows to long-suffering Starbucks and Pepsico shareholders, what would that alleged $10 million provide for 1 billion people? A penny apiece.

Who would ever argue that the co-founders of this jubilee might not deserve their $4-million payments (plus forthcoming dividends from retained shares) for creating such a wondrous, efficient, and eco-friendly arrangement?