A Look At PepsiCo's Recent Open Innovation Efforts: #CSReport2015

by Yannig Roth

PepsiCo products, including 22 brands that generate more than $1 billion each in annual sales, are consumed one billion times a day in more than 200 countries around the world.

In this post, let me present some “PepsiCo” branded open innovation initiatives. I will end with a short reference to the companies’ other open innovation efforts, which apply to many of its brands (Pepsi, Gatorade, Doritos, Quaker etc.), and by linking to the “The State of Crowdsourcing in 2015” report, which shares some important insights about the state of crowdsourcing, and how it is used for marketing and innovation by leading companies (like PepsiCo). Anyone is invited to join the discussion below in the comment section, and by using the #CSreport2015 hashtag on social media.

PepsiCo’s First “PepsiCo 10” Competition in the USA

In June 2010, in partnership with Mashable and Highland Capital Partners, PepsiCo announced PepsiCo10, a competition that looked to match startups in fields like social media, communications, technology and mobile marketing with industry mentors and PepsiCo brands. The company was looking for companies that had ready to use technologies, and that would be piloted by one of its brands.

With the inaugural PepsiCo10, we are creating a new conduit for digital R&D within PepsiCo and for the industry broadly—an important endeavor as we continue to seek innovative and meaningful ways to connect with our consumers and to transform communications into a business driver,” said B. Bonin Bough, Director of Digital and Social Media at PepsiCo. PepsiCo10 was not a contest, but an open Request For Proposals (RFP), as Mashable noted.

Ten companies were chosen, and among the winners were Location Based Experimental Marketing, Mobile Marketing, Social Media Marketing and Digital Video and Gaming companies. Announced in September, the PepsiCo 10 were AisleBuyer (a mobile shopping platform), TableTop Media (an order and payment system for restaurants), MyCypher (a mobile platform that turned mobiles phone into microphones), Zazu (a smart alarm clock), BreakoutBand (a social music platform), FanFeedr (a personalized sports feed platform), Evil Genius Designs (a mobile game for guests waiting in lines), Miso (a mobile platform that allows users to ‘check-in’ to television shows), MotiveCast (a mobile gaming solution to engage and reward consumers) and Tongal (a video crowdsourcing platform).

Josh Karpf, PepsiCo’s Director of Digital Media, told Forbes that one example outcome of this inaugural PepsiCo10 was a contest launched by Brisk Tea on Tongal, an online crowdsourcing platform. “We connected Tongal with Brisk Tea, [asking] the Tongal community that to “Develop a piece of video content that is about a Brisk idea in 60 seconds or less.” We received ideas from 1,500 Tongal users from all 50 states and from 51 countries in about eight days’ time. This community came up with great content on behalf of our brand in about one week’s time. The speed was really impressive.

This community came up with great content on behalf of our brand in about one week. The speed was really impressive.

Today, while it was the only Brisk project on the platform, Tongal has worked with other PepsiCo brands. You can read about some other results of the first PepsiCo10 initiative here.

PepsiCo’s Second “PepsiCo 10” Competition in Europe

In June 2011, PepsiCo expanded its program PepsiCo10, launched in 2010 in the U.S., to Europe. The initiative was again aimed at discovering emerging and innovative small media and technology companies with ready-to-go products or service technologies in the areas of Social Media and/or community-based marketing, Mobile marketing, Place-based technology, Digital video, and Gaming or learning.

PepsiCo would partner with ten chosen companies to execute pilot programs with PepsiCo UK brands, awarding them GBP 10,000 (US$ 16,375) each. The project was launched together with venture capital outfit Highland Capital Partners, OMD and technical publications Wired and Mashable.

PepsiCo received more than 130 submissions, which spanned a diverse range of entries by companies from across Europe – from Russia to Spain, to the UK (with applications focusing on social media technologies being the most popular, closely followed by mobile marketing technologies). Among these participants, 10 winners were announced in September, comprising a wide range of companies, from ParcelGenie, an application that allowed consumers to gift products through social media, to TVTak which brought the ability to check-in and serve up brand content to accompany TV advertisements.

Another winner, Slingshot, which was a software program that allowed consumers to place items in an online shopping basket via Facebook or a mobile device, teamed with Doritos on a pilot to drive online sales through a Facebook page integration. The initiative resulted in an impressive 49% conversion rate — meaning that nearly half of consumers who put an item in their digital shopping basket actually purchased the product.

As PepsiCo’s global director of digital and social media, Bonin Bough, explained, the work from the PepsiCo10 winners was used as an ‘engine of change’ across the PepsiCo business. Bough said technology was the “new driver of creativity” in marketing. “We are seeing a creative renaissance driven by digital, which is creating a new canvas for brands to communicate through,” he added.

Technology is the new driver of creativity in marketing, which is creating a new canvas for brands to communicate through.

PepsiCo’s Third “PepsiCo 10” Competition in Brazil

In September 2012, after making investments in U.S. and European digital media start-ups for the past two years through the PepsiCo10 program, the company announced during Social Media Week São Paulo that it expanded the program into Brazil for its third season. It announced that it would select innovative digital technology projects in four submission categories (Entertainment, Mobile, Retail, and a newly introduced Sustainability vertical) and pair them with its brands.

It was originally planned to launch it in India as well, but for some reason (which I couldn’t find!) it was dropped. Brazil was an important market for PepsiCo – and an attractive one for an open innovation initiative such as PepsiCo10, “due to its creativity and to its fast-growing, heavily engaged online population,TNW noted. The five startups would win the possibility to work on a marketing project with a PepsiCo brand, and to receive an all-expenses paid trip to New York City. “It’s not just about selecting the next cool app. It really starts with business objectives and finding partners that can help us,” Josh Karpf, PepsiCo’s digital lead, said to Adweek.

It’s not just about selecting the next cool app. It really starts with business objectives and finding partners that can help.

In December, among more than 300 submissions from across 22 states in Brazil, five technologies and business ideas were announced as winners: Checkout10 (a consumer loyalty and engagement program), Qranio (an online gaming platform), WWR (a program to reward young adults in return for engagement on social projects), Gatorade Kart (an idea for a mobile station for hydration beverages for amateur athletes) and Leve Consciência (a campaign idea that focuses on recycling plastic).

These five winners had the opportunity to activate pilot marketing programs with some of PepsiCo s leading brands in Brazil, among them Toddy, Doritos, Ruffles, Pepsi and Quaker. They also visited New York City to meet with PepsiCo brand marketers and network with U.S.-based digital influencers.

In 2013 and 2014, PepsiCo10 was stopped. Again, I couldn’t find a reason for that. I did find some interesting insights about the termination of Pepsi’s Refresh Project, a (quite) similar initiative, launched in 2010, and meant to award $20 million in grants to individuals, businesses and non-profits that had a positive impact on their communities. In early 2012, Pepsi abandoned it due to declining market share and falling to third place behind Coke and Diet Coke. In other words: due to loss of impact on the bottom line.

Pepsi abandoned the Refresh Project due to declining market share and falling behind Coke and Diet Coke.

On MediaPost, Craig Bida said that “although innovative (crowd-sourced voting) and relevant (tapping into increasing consumer appetite for cause), the Pepsi Refresh Project was flawed from the outset.” For a deeper discussion on the topic, read AdAge’s great A Teaching Moment: Professors Evaluate Pepsi Refresh Project article.

Was it the same for PepsiCo10? Your input in the below discussion section would be very welcome. But this doesn’t mean that PepsiCo completely abandoned open innovation and crowdsourcing, and here’s why.

A Series of Product Ideation Contests on eYeka

In October and November 2014, PepsiCo Mexico Foods launched three innovation on eYeka to get new product ideas in predefined key areas:

  • The “Break To Reset” contest asked for totally new snack ideas “designed specially to help working adults have a break, clear their mind, refuel, regain a positive attitude and get on with their day.” Winners came from Russia, Argentina and the UK, you can see the results announcement (not the winning ideas, though) here.
  • The “Munching Partner” contest was meant to get new ideas for snacks “that will help working men and women get through long working hours.” Winners came from Mexico, Russia, and Romania, you can see the results announcement (not the winning ideas, though) here.
  • The “Friends and Couples” contest was asking for innovative ideas of “new snacks that will help adults succeed whenever they host a social reunion.” Winners came from Spain, Russia, and Germany, you can see the results announcement (not the winning ideas, though) here.

Beatriz Martínez, the Director of Innovation at PepsiCo Mexico Foods, gave a very positive feedback to the participants: “We were really excited to receive all your product and concept proposals. All the team was amazed by all your INCREDIBLE work. We hope you will had fun in participating on this brief, we are looking forward to work with you again sometime!” The results were kept confidential to the public, and the winning ideas were used to feed the company’s innovation pipeline.

We were really excited to receive all these product and concept proposals, the team was amazed by all your INCREDIBLE work. (Beatriz Martínez, Director of Innovation, PepsiCo Mexico Foods)

But these three open innovation contests, while being the only ones to be “branded” by PepsiCo, were by far not the only ones launched by the leading FMCG company on eYeka, the below image shows a bunch of thumbnails that all represent a particular contest launched on eYeka. Click on the image to find out more:

Numerous PepsiCo brands have launched innovation contests on eYeka (click to see more)And beyond eYeka, PepsiCo’s brands has launched a variety of other contests in the last years, like the pioneering Crash The Super Bowl advertising contest sponsored by Doritos, or the Pepsi Refresh Project mentionned earlier. The company is experimenting in many ways how consumer creativity can be leveraged to the best of its marketing and innovation interest.

Conclusion: Organizations become more mature in their utilization of crowdsourcing

The above examples illustrate how companies evolve in their utilization of crowdsourcing as tools to implement open innovation. From an annual competition with a strong geographical focus, organized by the company itself, PepsiCo has evolved to using a global crowdsourcing platform to get consumer ideas on strategic innovation projects. While it is just a set of examples that may not reflect the company’s explicit strategy, it is nevertheless a good illustration of the growing usage of crowdsourcing platforms for innovation.

These examples are a good illustration of the growing usage of crowdsourcing platforms

In the “The State of Crowdsourcing in 2015” trend report which we just released, we find that this shift is really happening. Looking at data from the crowdsourcing timeline, we find that the Best Global Brands are three times more likely to use crowdsourcing platforms (76% of all initiatives in 2014) than websites and social media (24%) for their crowdsourcing efforts. Here’s the figure:

The role of these platforms is to transform the business objective into a compelling creative brief, to then broadcast this brief on its platform, to moderate and curate incoming submissions and taking care of intellectual property transfer. There are many crowdsourcing platforms on the market today, a subset of which are working with companies like PepsiCo.

The Best Global Brands are three times more likely to use platforms than websites and social media for their crowdsourcing.

For more insights into crowdsourcing, its evolution, or the platforms that facilitate it, don’t hesitate to go download the full report on our website. You can also read a preview version on Slideshare. What do you think about the above? Join the discussion below in the comment section, and by using the #CSreport2015 hashtag on social media.

Download our crowdsourcing trend report now:

Click to download the "The state of crowdsourcing in 2015" report on eYeka


Download our crowdsourcing trend report now:

Click to download the "The state of crowdsourcing in 2015" report on eYeka144908

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Yannig Roth

Yannig Roth is currently Marketing Manager at eYeka and PhD student at University Paris1 Panthéon-Sorbonne in Paris (France). His main research interests are creative crowdsourcing and community co-creation. Yannig regularly blogs at yannigroth.com and tweets under @YannigRoth

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