By Tom Ryan
Pepsi's promotional deal with Amazon's digital music store has come under fire from some traditional bricks-and-mortar retailers who not only sell Pepsi, but also offer CDs and, in some cases, their own digital download services.
Pepsi in early February began offering 1 billion free MP3s through Amazon's new downloadable music service. Free song codes were put on 5 billion bottles of Pepsi shipped out to stores; each free download requires five codes. The promotion was launched with a high-profile television ad featuring pop-star Justin Timberlake during February's Super Bowl.
The deal represented Amazon's biggest-ever marketing partnership with another brand.
According to The Financial Times, however, critics of the deal note that Pepsi's traditional retail partners like Wal-Mart and Target are increasingly selling more and more Pepsi through their expanding supercenters. At the same time, both sell CDs and Wal-Mart, which accounts for 18 percent of Pepsi's sales, recently launched its own MP3 download service. Amazon doesn't sell any soda.
"You have to ask yourself why Pepsi would team up with a company that doesn't sell its products, and risk antagonizing all the people that do sell its products," said a source at one retailer.
In an apparent response to retailers' concerns, The Financial Times noted Pepsi has made the promotion all but invisible at the grocery level. Amazon's name has been banished from the front of Pepsi bottles carrying the promotion. Similarly, Amazon's logo is fairly hidden on the back of cardboard multi-pack cartons of cans that are stacked on the shelves of mass discounters and supermarkets, next to the product's bar code and nutritional information.
The treatment contrasts with a promotion between Pepsi and Apple's iTunes, in which the iTunes name was carried prominently.
Jeff Smith, retail consultant at Accenture, said Pepsi and other brands are being challenged in adapting the traditional way they communicate with retailers to accommodate new digital selling and marketing channels.
"The thing they didn't think about is that anyone selling Pepsi in the general merchandise or electronics business is going to feel that they were promoting a competitor," he said.
Discussion Question: What do you think of the Pepsi/Amazon free MP3 download campaign? Was Pepsi wise or overly-cautious in downplaying its free MP3 download campaign with Amazon at retail?