Coke's Biggest Gift... Pepsi

There are certain things in life that move us. They drive us to act and express our opinions passionately. Some of those things make sense and can align for social good. Those who want to give their time helping the less fortunate, e.g. doctors without borders; or, when someone uncovers a harmful practice and dedicates time to making us all safer despite the costs. Then there are things that it probably doesn't make sense to feel passionate about. These things are easy to get upset about, like your sports team trading a player, a store no longer carrying an item you liked or raising the price of another, and so on. These matter, but they don't really impact our ability to get what we want and to live a healthy and productive life. Perhaps more importantly, focusing on them doesn't aid our overall growth, which could be why I certainly specialize in obsessing about this latter category of items. So, while some people figure out how crops can grow more efficiently in harsher cliamtes for less cost and at a lower carbon footprint, I sit obsessing over soda, literally, i.e. PepsiCo's decision to switch to a new logo.

Every Generation Refreshes The World
Here is one of the Pepsi commercials that played during the 2009 Super Bowl. It is arguably the most ambitious of their slots (with others focusing on specific products, such as Pepsi Max), as it used iconic imagery and to the chagrin of purist Bob Dylan fans, puts one of his legendary songs to a product. UPS has done this to a lesser extent with "Such Great Heights" by The Postal Service, but the irony of using a song by The Postal Service for a UPS commercial more than makes up for any association that now happens when hearing the song. As for the real postal service, the USPS doing that with Steve Miller's "Fly Like an Eagle," I'm not quite so forgiving. Or, again, chalk it up to hyper-sensitivity. 

The images used in the ad above don't make sense with the product. It's not about whether you can explain it. The point is that you don't even have to explain it. You get it. You like it. Look at Bud Light and Coke commercials. They tug at some emotion, all without getting the brain involved.

For the non-Pepsi aficionados, here are the pepsi logos over time.

Interestingly, and especially if we narrow the options to the modern era - say 1962 and beyond - I bet most people would actually like the look of the new logo better than many of the predecessors. And, the company uses the new logo in lieu of the letter "o" or zero in a wide running offline ad campaign in which the soda company's name doesn't even appear. Here is an amalgomation of several uses:
<print ad>

You will see these ads running everywhere from the subway to sporting events. The campaign and use of the logo led one designer to comment, "When I first saw this Pepsi ad in The New York Times I felt good about the direction the new Pepsi branding was taking. It felt fresh, fun, optimistic, uncomplicated. It was timely and seemed to be hitting the right cords."

Breathtaking 
Doing any amount of research into Pepsi's decision to "refresh everything," especially their logo, invariably points to a design study done by the Arnell Group, named "Breathtaking." Knowing nothing about design studies, it's hard for a direct response guy, by experience at least, to have a frame of reference by which to evaluate the 27 page document. One thing is clear, from the very first section it speaks in a language not often used at companies in the performance marketing space. You can see it now, a landing page mockup or email creative mockup under the heading, "BREAKING THE CODE FOR INNOVATION - From Convention to Innovation." The answer to the question not asked is that you will not see that, nor will you see the following in a performance oriented company - "BREATHTAKING is a strategy based on the evolution of 5000+ years of shared ideas in design philosophy creating an authentic Constitution of Design." 

Regarding the PDF, you could take a more direct approach and write what Fast Company author Aaron Perry Zuker wrote in "Pepsi Logo Design Brief: Branding Lunacy to the Max." He begins, "A leaked pdf outlines the thinking behind the controversial new Pepsi logo. It may be one of the most ridiculous things ever perpetrated by somebody calling himself a designer." He adds, "The presentation, by the Arnell Group (also responsible for the botched design of the Tropicana orange juice carton) contains visual representations of and comparisons with the following: the golden ratio, the Mona Lisa, the Parthenon, the Gutenberg Bible, the earth and its magnetic fields, and the solar system/universe. None of these things have anything to do with soda. Zucker writes, "Every page of this document is more ridiculous than the last ending with a pseudo-scientific explanation of how Pepsi's new branding identity will manifest it's own gravitational pull."  Perhaps then, the only thing truly Breathtaking about Breathtaking is its purported multi-muliti million dollar price tag.

Says firm namesake Peter Arnell in an Adage interview, though, "When I did the Pepsi logo, I told Pepsi that I wanted to go to Asia, to China and Japan, for a month and tuck myself away and just design it and study it and create it," and "There was a lot of research, a lot of consumer data points ... and dialogue that I had with the folks at Pepsi, consumers and retailers. We knew what we were doing." Look, I can diagram the chemical composition of manure and how it degrades to nourish the Earth, but that doesn't mean it don't stink. Explanation and rationalization are reactive forces. Emotion is proactive. I don't see any emotional connection in Breathtaking, outside of the feelings the word itself articulates, only intellectual fornication.

A Behavioral Economist Explains Branding
It's easy to join in with those who have mocked the Breathtaking study and its narcissistic grandeur and outworldly price tag in an era of discretion. The study, though, could still be a hoax, and its authenticity aside, plays no contributing role in the real issue. What initially bothered me the most is not so much the changes and reasoning behind the change as much trying to properly articulate the reason why the change is ineffective and thus, ultimately a waste of money. An answer to why this change will not succeed and/or cost way to much in order to potentially succeed, comes from an unlikely source, behavioral economist Dan Ariely, known among researchers for his groundbreaking work and now outside of academia for his best seller "Predictably Irrational." (If you haven't read the book, I can't stress the importance of doing so.) Because many lack the time to read and because copying passages from a book is not an effective use of time, we've found the next better thing - a transcript of an audio interview. This one was between Dan and Scott Schroeder, principal of rabble+rouser.

First a primer in the field of behavioral economics, as explained by Dan:

In standard economics people start by assuming that people are rational. And then you say, “OK, so what are the consequences of this assumption?”In behavioral economics, we don’t assume that people are rational, we actually observe people. And in some sense the standard economics view is more generous to people because it says people are rational and wonderful and so on. Behavioral economics perspective says people are mistaken. While behavioral economics is more morbid from the prospective of looking at human rationality, it’s also more hopeful, I think, in the sense that it tells you that you can build, actually, a better world. If we understand where people fall short, you can also think about how we improve things.

The Coke / Pepsi Challenge is a classic marketing experiment, confusing because each company has can get the results they want. But how? Here is Dan:

So Pepsi used the Pepsi challenge and they found that people liked Pepsi; and then Coke did the Coke challenge and they found that people liked Coke. Well, if you look deeper into that you’ll see that Pepsi was doing blind taste testing. So people took two white cups and tried them out and said I like the one on the right or I like the one on the left. When Coke did their tasting it was not blind—you could see which one was Coke and which was Pepsi. Could that be the difference? Well, it turns out it is. When people drink Coke and they know it’s Coke, they like Coke better. When they drink Coke and Pepsi and they don’t know which is which, they like Pepsi better.

As he says, that last part is the story of New Coke.

What happened with New Coke is a very nice story because Coke went ahead and did a really systematic study of all the different concentration on this brown formula with sugar and so on and they varied it systematically and they got a lot of people to try and taste all of these things and they found out the final winning equation, which was sweeter than the original Coke and, in fact, it was much closer to Pepsi than Coke. And then they put it in a Coke can and people hated it.

Branding as looked at in the world of behavioral economics excites me because it makes the world more observable, more like the world of direct response.

If It's Not The Taste, What Is It?
Unbeknownst to me and most people, scientists can test quite a few things these days, including brand preferences - not just what people like but why. Drawing from interview with Dan, which too is described in the book, he explains a modern day twist on the Coke/Pepsi challenge now that we understand the impact that knowing which one you're drinking has.

Dan says:

In the experiment that I’m going to describe to you next, the Coke Pepsi challenge was taken to new heights and new costs. So this was a study using an FMRI (Functional Magnetic Resonance Imaging) machine. Basically, what this machine does is this: as you’re lying in this FMRI, and as you see things and taste things and think, there are pictures taken of the blood flow in your brain that tells you which part of the brain is working and which part of the brain is not working. When you drink brown sugary stuff, the pleasure center of your brain gets activated—this is something called the nucleus accumbens—this is part of our emotional brain; it’s a part of the brain that we share with the rest of the animal kingdom. It’s a very primitive, ancient part of our existence. And it doesn’t really matter. You can’t tell the difference from Coke and Pepsi, at that level, as to how the brain reacts to pleasure of this liquid.

Most of the people in the sample declared to love Coke more than Pepsi. Now I’m sure that there are some people that do the opposite, but these people like Coke more than Pepsi and the frontal part of the brain, the place just above your eyes, was more activated when they drank Coke and knew it was Coke. The front part of the brain for these people reacted more for Coke than for Pepsi. Now this is a part of the brain that’s in charge of higher order association, hypothesis, higher cognition, metaphor association and so on. But interestingly enough, it has a dopamine receptor. Dopamine is one of the chemicals produced in the brain. It has a projection from the front part of the brain to the nucleus accumbens, to the pleasure center of the brain. And basically what was happening is that the higher order association actually created greater pleasure. Not because of the liquid but because of the association.

It’s clear that Coke, for this population that was tested, has an advantage that will be very hard for Pepsi to overcome. Because it’s one thing to control what’s in the drink, it’s another thing to control what’s in peoples mind. And if you’re saying that the final outcome is a
combination of what’s in people’s minds and what’s in the drink, you have a very hard barrier to pass that. Partially because it’s not a deliberately thoughtful process.

Put another way, this time from BrandingEye "I know it’s Pepsi because of the circle with the  red, white and blue brand colors but again, what is the brand message I’m supposed to get? In my opinion the new color fields within the circle don’t have any clear meaning or project any particular feeling." And, "We all know how tough it must be getting an iconic brand logo approved through the layers of corporate bureaucracy but still it’s a pity when you look at the new Pepsi logo thinking about the many millions spent on its rebranding and how little it speaks to you."

Fakevertisers Are Better Branders?
Performance marketing doesn't imply an inability to understand the power of brand or a similar inability to design in a way that evokes a connection to a product. Performance marketers lack the vocabulary and concepts used by brand experts, but they understand the psychological nature of the message and having a message cause action. In the case of Pepsi's new logo, would anyone at the company say that they don't want to new design and the campaigns they run to do anything but increase the quantity of their products consumed? Back to BrandingEye who felt a positive reaction to the logo and even the effect of the print ads, calling them "optimistic" and "hitting the right cords." The crux of the issue comes from his next statement, "Then I saw the packaging in a supermarket." That's what happened to me except I found nothing but dissonance in the entire process - from the TV spot, to the print campaign, to the in-store experience.

As we said above, "It's not about whether you can explain it. The point is that you don't even have to explain it." That's what fakevertisers get. They cheat in how they do it, like the person who starts the marathon on the last mile, but their short-cuts don't imply a compelling grasp of the fundamentals. Just look at this fakevertising site:

It's all about expectation setting. At the risk of abusing Ariely references, "The way you expect something to function, it will function this way." "...Our body is very, very active in the process of predicting the future and preparing for it. And if you think something will be better, it will be better. And if you think it will be worse, it will be worse."

Evolution and Advertising

I'd imagine some of our "think it will be better and it is" attitude this has something to do with our development over time. There is a field of study called Evolutionary Psychology, which "attempts to explain psychological traits as adaptations, that is, as the functional products of natural selection or sexual selection." Evolutionary psychologists "hypothesize, for example, that humans have inherited special mental capacities for acquiring language, making it nearly automatic, while inheriting no capacity specifically for reading and writing." They "see those behaviors and emotions that are nearly universal, such as fear of spiders and snakes, as more likely to reflect evolved adaptations." The layman definition might read something to the effect that we as people act in certain ways as a holdover to our more primal days. We act in certain ways that we don't understand and may not make intuitive sense today but have helped us survive for tens of thousands of years. So, while there isn't a discipline called Evolutionary Advertising, we could apply what we see with behavioral economics and evolutionary psychology to advise people not to go against the grain.

Pepsi has erred, because it tries to retrain us to think a certain way. Retraining works for new concepts that don’t have a pre-existing emotional connection. The classic example is Starubucks who trained to buy expensive coffee, but they didn't it from scratch, as opposed to being an existing brand with established and significant positive brand equity. It's why Duncan Donuts will win a blind taste but struggle to lure over Starbucks customers regardless of the taste. It can taste better but not be better in people’s minds. Thinking again to Pepsi, I would surmise they failed in the re-brand, because in addition to trying to retrain us, we can use the learnings from behavioral economics to explain why. Instead of using the frontal portion of our brain responsible from higher order association to increase our perception of the brands pleasure, they have activated another part of the brain that is creating dissonance and reducing the expected pleasure that comes from interacting with brand and the product.

Instead of spending millions on a new brand by finding an explanation for a question on one asked, in the future I wouldn’t be surprised to see some of that money go towards scientific testing. It’s one thing to ask people whether they like a new logo or for a company to come up with a story for the new logo that intellectually makes sense, but neither of them can provide concrete direction for how such designs will impact behavior. While not intuitive and in some ways antithetical to the notion of creativity, for those who can afford it, why not test design changes in a controlled setting, e.g. the FMRI? That way you can analyze not what only people say but how it truly makes them feel. One day such a discipline will probably exist and no longer be confined to the world of academia or those with significant spending power.

Comments

[Joel Gross]

Jay,

Great article! I am so tired of the old-school marketers who try to pull the wool over their clients eyes and BS them into paying them enormous sums of money for cheesy work. As a fellow performance marketer, its good to see someone finally calling these cheats out on their scams.

[Mike]

Great post Jay.