PepsiCo is preparing the international rollout of an in-house media optimization tool called ROI Engine, an initiative that has helped trim millions of dollars of waste from its online media spend in the U.S.
The CPG giant started the initiative in North America 14 months ago to measure digital ad campaigns across all of its brand and marketing channels. Next year, the company plans to bring ROI Engine to its top 20 markets globally and hire talent in its European and Asian hubs.
“Our objective, across this entire exercise, is through this data, how do we build more transparency into our buying and execution process,” Shyam Venugopal, vp of global media and consumer data at PepsiCo said.
Given the fragmentation of both media consumption and distribution channels, the goal of bringing measurement in-house is to make marketing more transparent and efficient while also increasing sales performance.
PepsiCo’s total U.S. annual ad spend reportedly exceeds $1.7 billion, and although the CPG brand declined to share details of the exact savings generated by ROI Engine, a spokesperson said it has reduced expenditures by several million dollars. This has been achieved by using ROI Engine’s generated insights to improve the accuracy of its targeting and reallocating spend from lower-performing media to higher-performing outlets.
“We don’t need 100% accuracy to have large effect, right? We just have to know certain things are having a bigger or smaller impact than other things to be able to see the big business returns,” Michal Geller, PepsiCo’s svp of global ecommerce marketing, said.
Building an in-house measurement unit is an expensive task that requires heavy investments in engineering and mostly, people. Cosmetics brand Coty tried taking media buying in-house after its earlier purchase of digital outfit Beamly, but had to reverse course after four years. Simply put, the gulf in cultures and priorities between the cosmetics giant and the digital outfit was too vast at the time.
Given PepsiCo’s previous investments in ecommerce, the company is transitioning to a point where there are interesting career paths in technology and data science, according to Geller.
“What we’re finding is … what [employees] really like about PepsiCo is the scale, that the problems that they’re working on are really massive and have a massive impact, and that’s been a great way to both attract and retain that type of talent,” he said.
The PepsiCo spokesperson said the current team for ROI Engine in North America is small, but final global head count is expected to be in the dozens.
More data means more agile campaigns
Brands are putting more value on data, especially as they invest more in programmatic tools that often obfuscate their digital investments. A May report from ISBA and PricewaterhouseCoopers found that publishers only receive 51% of digital ad spend, and 15% of that spend gets lost as it passes through ad tech’s middlemen.
Data is also becoming more important as the coronavirus pandemic puts an emphasis on flexibility and agility. Marketers now want to quickly optimize campaigns and reallocate spend based on shifting consumer habits and other market forces.
“The old measurement techniques were primarily running either at a national level, or across a handful of brands, or maybe about once a year … which essentially meant you had more than a couple of quarters lag to decisions that you were learning from and making,” Venugopal said. “The big emphasis was, ‘How do we reduce the lag time around decision making?’”