PepsiCo, Inc. (PEP): Would You Drive a Fiat Designed By a Crowd?

Would you consider driving a sportscar designed by a crowd, eating a potato chip in the favorite flavor of a Wisconsin mom, or using detergent designed by college kids? Corporate America thinks you will and might even have fun helping them design their ads and products.

It’s called crowdsourcing, and more big companies are using the strategy than ever.

PepsiCo, Inc. (NYSE:PEP)

Crowd sourcing your halftime entertainment
Since 2005 PepsiCo, Inc. (NYSE:PEPhas run an advertising design competition where consumers compete to have their ad run during the most coveted air time on TV: the Super Bowl.

It’s a big gamble for a company to take. While the Super Bowl isn’t the end-all be-all of advertising, it is darn close as the biggest and most visible annual opportunity to engage the most people in the shortest time. Over 71% of Americans 18 and over watched last year’s Super Bowl, which is 111 million Americans all told.

For PepsiCo, Inc. (NYSE:PEP), the tactic has paid off. The ads have yielded some very funny results for the company’s Doritos chips, as well as accolades from the press. The company’s consumer-designed ads have consistently appeared in the top five list of the USA Today Ad Meter rankings. In 2011 the winner received up to $1 million for hitting a top rank on the USA Today Ad meter, along with a guaranteed contract to produce two more ads.

Wirelessweek.com likens the PepsiCo Super Bowl campaigns to “the ultimate trust fall,” with decided pros and cons to big stakes crowdsourcing.


Source: wirelessweek.com

At the 2013 Super Bowl, 20% of ads were crowd sourced, and many tied to Twitter and Facebook Inc (NASDAQ:FB) social media campaigns. Expect an even larger percentage for 2014.

Of course, letting your customers do your creative work doesn’t always pay off.

Rival The Coca-Cola Company (NYSE:KO) has also queried crowds for advertising ideas — but with mixed results. For example, last year’s “Mirage” campaign — with a confusing scenario of  showgirls, cowboys, and others traipsing across a desert to be the first to reach a giant bottle of Coke — was generally regarded as not very successful. One blunder was that Coca-Cola premiered the the spot on YouTube weeks before the big game.

That gave PepsiCo, Inc. (NYSE:PEP) the chance to respond with its own Internet-only Pepsi Next parody of the Mirage campaign — just in time for the Super Bowl. PepsiCo’s ad went on to get more views than the Coca-Cola original.


Pepsi Next parody

Source: Pepsi, YouTube

Giving crowds a say in product development
Advertising isn’t the only area where companies are asking customers to pitch in; crowd sourcing is also being used in product development.

One of the most recent examples was a competition for the newest flavor of PepsiCo, Inc. (NYSE:PEP)’s Lay’s potato chips. A Wisconsin mom of three won $1 million for her flavor choice, Cheesy Garlic Bread.

The Procter & Gamble Company (NYSE:PG) is running a competition with a $20,000 prize for designing packaging for its Tide PODS detergent. Part of the challenge is for the design to appeal to young adults in emerging markets — not an easy task, even for marketing and design pros.

However, the ultimate “trust fall” winner must go to Fiat, which used crowd sourcing to design the Fiat Mio Concept Car, the first ever crowdsourced car.

More than 17,000 people participated generating 11,000 ideas. We’ll leave it to you to decide if it looks like it was designed by a committee of strangers:


Source: Fiat Mio website

The article Would You Drive a Fiat Designed By a Crowd? originally appeared on Fool.com.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, PepsiCo, and Procter & Gamble. The Motley Fool owns shares of Coca-Cola and PepsiCo.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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