What to Know About Coca-Cola's Upcoming Creative and Media Review

Four major advertising holding companies and thousands of smaller shops around the world are awaiting their fate as part of the Coca-Cola Company’s global marketing and media review. The potential impact of the outcome, which should be announced within the next couple weeks, could completely change the industry landscape due to the size of the contract. Smaller Coke businesses such as Costa, Oasis and Innocent Drinks are expected to continue to be allowed to choose their own destinies. The Coca-Cola Company spent $2.78 billion on advertising in 2020, down from $4.25 billion in 2019 and $4.11 billion in 2018, according to its annual reports. Following C-Suite Shuffle, AB InBev Announces Global Media Review The massive scale of the review has led people connected to both sides of the pitch to describe it as “a mess” and have admitted that they haven’t been certain of the desired outcome. The merging of the reviews has resulted in a feeling among those familiar with the proceedings that Coca-Cola has been figuring it out as it goes. Despite the scale, there has been little to come out of the process—such are the nerves around loose lips potentially sinking advertising ships. This is too big for these networks to gamble their chances. There are theories as to who might have won what, but the ultimate truth is no one external to the process really knows how things will play out. The Coca-Cola Company is changing In recent years, company sales have decreased, sliding from $44.3 billion in 2015 to $33 billion in 2020. Part of this decline is due to Coca-Cola turning its company-owned bottling plants into independent franchisees. While the transition removes revenue, it also lowers costs. The pandemic has also hurt the company’s top-line growth, as government restrictions around the globe forced restaurants, movie theaters and sports stadiums to either close or operate at limited capacity following the outbreak. Speaking on an investor call for Coke’s Q3 results, chief executive James Quincy outlined that changes were being made across the board to turn around its fortunes. That includes its marketing review, which he said would start to bring “a structural amount of change next year in the way we interact in our marketing and enabling spend in ecosystems.” Amid the rise of health and wellness, an increasing number of shoppers are looking for alternatives to sugary drinks. To meet this shift in consumer demand, Coca-Cola has been pouring resources into beverages better positioned for the future, such as Smartwater, Aha sparkling water and a revamped Coca-Cola Zero Sugar. Global CMO Manuel "Manolo" Arroyo has given all three product lines a major marketing push this year. In Oct. 2020, Coca-Cola announced plans to reduce its portfolio of 400 brands by half. The news came after the company said it would discontinue underperforming products such as Odwalla smoothies, Zico coconut water and Tab diet soda. This spring, Coke confirmed it intended to phase out Coca-Cola Energy in the U.S. and Canada due to disappointing sales just a year and a half after introducing the beverage to compete against category leaders Monster and Red Bull. “Their parent brand portfolio strategy of selling one Coca-Cola brand with multiple product access points, has helped to address the product relevance issues," explained Daniel Binns, CEO Interbrand, North America and global director of partnerships. "That said, with sustainably-aware Gen Z and Gen Alpha consumers continuing to shun single-use plastic and artificial ingredients there continues to be a need for radical product innovation." In a similar vein, it now wants to streamline its agency partnerships too. Curing a bloated agency roster In total, around 4,000 agencies around the world have some part of Coca-Cola’s advertising business following the move to localize and hire experts in the field. The company now aims to dial that back to less than 1,400, which will be marshaled by the main winners of this review. It's a similar strategy to a decade ago when Naked Communications held the responsibility of intermediary, a system that is said to have worked well at that time when Coca-Cola had around 440 agency relationships. “One fundamental truth is that no one agency will be good at everything, everywhere,” one source with knowledge of the process told Adweek as to why it’s important to Coca-Cola to retain local independent shops. The business also employed Sarah Armstrong, now at Google, who led worldwide agency operations across 200 countries, including media agency management. Currently four holding companies remain in the fight, IPG, WPP, Publicis and Denstu, with IPG and WPP having the most to lose in the review. Two of the four are expected to be the winners rather than one overarching victor, with the split said to be somewhere around 70% for the lead holding company and 30% for the secondary holding group. Omnicom is not involved due to its long-standing relationship with PepsiCo, and Accenture bowed out in the previous stage for not yet being able to offer a full geographic footprint in places such as Mexico and Russia. Geography and scale are vital components to winning. Despite that, it still has agency relationships with the company. Accenture's Droga5 London has done recent work for Diet Coke. A clean slate for the current players Coke’s media accounts are currently split between MediaCom, Starcom, UM and Carat, while creative is most notably held by W+K, Anomaly and McCann—the advertising agency that is arguably most synonymous with the red Coca-Cola brand after 65 years together. Meanwhile, the relationship with MediaCom, which spans 19 territories worldwide, has been in place for almost 20 years. But one former marketer has said they do not think sentiment will go far in this decision, and that it is a clean slate for all the players this time. According to some close to the process with this review, Coke will be focused on creating a roster of digital content shops to win the next generation of consumers. Coca-Cola has spent about $2 billion on paid media from July 2020 to June 2021, according to COMvergence, with 35% of that on digital media. In the previous three years, the company spent $1.7 billion in 2020, $2.6 billion in 2019 and $2.5 billion in 2018. Dentsu CEO Wendy Clark knows the company better than most. She was global head of integrated marketing and communications for 7 years before moving to DDB in 2015. Dentsu is the only network that can claim to have a deep-rooted understanding of the Asian market, which will be another major selling point. In early October, Clark explained to Adweek the significance of being on the Coca-Cola roster, “They push you and make you better. They drive an innovation agenda and they move the bar for the industry." It should not go unnoticed that in the U.K. its creative agency Dentsu McGarryBowen has released its first work for Halloween with more in the pipeline for the main brand. BETC Paris is also on the creative roster for the Coca-Cola brand which won work last year and will continue to work on the account regardless of the main review's outcome. That roster has been producing the work for the new Coca-Cola global platform titled “Real Magic,” which follows 2016’s “Taste the Feeling” and 2009’s “Open Happiness.” Coca-Cola Debuts First New Global Brand Position in More Than 5 Years