Would you shop for a soft drink online? Seems like a silly question. Of all the products for sales in the Universe, bottles and cans of sweet, carbonated liquid are probably the last things shoppers will want to buy on the Internet. Even frozen food has more potential. But soft drinks? They're cheap. They require no research to purchase. They are available on practically every street corner in the world. So why is Pepsi-Cola Co. trying so hard online? While many traditional advertisers have dabbled in the Net, Pepsi has a range of programs on the virtual air, from music sites to banner ads to Internet sweepstakes. Though only about 3 percent of its estimated $400 million soft drink ad budget goes online, that belies the emphasis the company places on the Web. "This medium is here to stay, and we buy that," says John Vail, director of digital media and marketing for Pepsi-Cola.

One reason: Despite the difficulties in measuring online ad performance, Pepsi has crafted deals that already show benefits. In a barter arrangement with Yahoo! Inc.) Pepsi plastered the portal's logo on 1.5 billion cans. In return, Yahoo took the cola company's already established loyalty program, Pepsi Stuff, to new heights. A co- branded web site, PepsiStuff.com let consumers collect points from bottle caps. The points were redeemable on the 'Web site for prizes everything from electronic goods to concert tickets.

The results were considerable. Three million consumers logged on and registered at the PepsiStuff site, giving the cola company detailed consumer data that normally must be paid for in market research or gleaned from focus groups. Information that once took months to obtain could now be had in days. What's more, Vail was able to tweak the program while it was in progress, maintaining the right inventory of the most popular prizes. "Instead of lagtime data, we had real- time and we could react to it," says Vail. Sales volume rose 5 percent during the online promotion and the cost was about one-fifth what it had been 'as a mail-in project.

Pepsi has no intention of slowing its Internet rush. The 'Web is the medium of choice for Pepsi's prime demographic audience, those under 25. "They are going to where their customer hangs out and flashing their name," says Tom Pirko, a beverage consultant for Santa Barbara-based Bevmark Ic. "This is aimed at flipping the next generation. For Pepsi, the Internet is serious. It's not a toy." For consumer Shane Erstad, 29, that's good news. Intrigued by the prizes and the ability to collect the points online, he became devoted to Mountain Dew and a fan of the Pepsi Stuff site. Even now that the game has ended, he hasn't cut back. "I hope they repeat the promotion," he says. He can count on it, and much more. For Pepsi knows that its E-commerce marketing strategies are a work in progress. Pepsi's online marketing road has been long and bumpy.

On February 29, 1996, the company launched Pepsi World, a Web site of sponsored content designed to attract the youthful consumer. Sports and music news was mixed with online games and animation. A seven figure publicity budget

backed the debut. But it quickly became clear through focus groups and traffic numbers that Pepsi hadn't reached its target. Eyeballs were too fleeting, visitors too fickle. By the summer of 1997, Vail revamped the site to be less of a sports news digest and more of a vehicle to promote Pepsi-sponsored athletes, such as NASCAR driver Jeff Gordon.

Going forward, Pepsi plans to expand on its Web site-centric E-commerce marketing efforts. Although banner ads and other more traditional ad buys have had some success, it's the creation of engaging Pepsi Web sites that has given the brand the most traction online. For example, Vail would like to bring a virtual experience to many other Pepsi promotions, such as Choose Your Music, a current in-store create-your-own-CD promotion at participating music outlets. "We're looking ahead to the next evolution," says Vail.

Case Study Questions

1. What are the major business benefits of Pepsi's online marketing efforts?

2. Do you approve of Pepsi's "Web-centric" E-commerce marketing strategy? Why or why not:

3. Visit www.pepsistuff.com or other Pepsi websites. What else could Pepsi do to improve its web-based marketing efforts? Explain.