Dive Brief:
- PepsiCo launched a new, state-of-the-art content studio in Manhattan where the company plans to produce both branded and brand-agnostic content via its internal production arm, Creators League. The ultimate goal is for PepsiCo's content creation endeavors to offset the costs of the branded marketing budget.
- The company already signed a deal to co-create branded and unbranded content with music, pop culture, and health and wellness themes with AOL's Partner Studios. These will then be distributed on AOL and Microsoft properties. PepsiCo is also creating a coming-of-age feature film with The Firm, a management and production company, and hip-hop artist Tip "T.I." Harris.
- "The holy grail for me is to leverage the incredible power of our brands and their equities to essentially fund their own marketing," Brad Jakeman, president of PepsiCo's global beverage group, told Ad Age.
Dive Insight:
With Creators League and its new studio, PepsiCo is taking the leap from what's familiar for food and beverage brands in entertainment media — namely commercials and product placement in movies and TV shows — and into a relatively untested territory for the industry. It's a new way to view content and marketing: as a revenue driver rather than just an expense, where the company's products don't always have to be front and center.
Manufacturers industrywide have been looking for ways to cut costs, which includes trimming marketing budgets. But the industry hasn't always considered additional revenue generators that boost the top line instead. And few things are as ubiquitous today as entertainment and content, so it's a viable option for manufacturers if there's capital to invest in such a massive operation.
At the same time, PepsiCo is able to reduce certain costs associated with its traditional branded marketing because now a lot of that content can be created in-house. This arrangement eliminates overhead expenses normally paid to production agencies, though operating the studio comes with its own costs.
PepsiCo is also networking with celebrities in a way that supports their projects rather than just hiring them as brand spokespeople. This could earn PepsiCo increased visibility and credibility via social media channels. Indirect brand mentions from influencers are another marketing strategy manufacturers can pursue that might better appeal to millennials and other consumers who balk at traditional advertising.