Online Adspend Enjoying the Position and Trend

Advertising expenditure levels in the UK will continue to fall until mid-2010 at the earliest, while the internet will overtake television in terms of ad revenues generated this year, a forecast from Warc and the Advertising Association predicts.

The first two quarters of 2009 yielded year-on-year reductions in adspend of 18.8% and 19.0% respectively in the UK at constant prices, with totals set to slide by 13.5% in Q3, and 9.7% in Q4.

Similarly, the opening six months of next year will witness media budgets decrease by a further 3.5%, with the market returning to growth in the period from July to September 2010.

Overall, UK adspend will diminish by 15.3% this year, from £14.13 billion in 2008 to £11.97bn in 2009, and by a further 1.1%, to £11.83bn, in 2010.

Television will post a decline of 16.2% this year, and follow this up with a significantly smaller contraction, of 1.3%, over the following 12 months, to a total of £2.71bn.

National newspapers will also be down by 17.4% this year and 3.3% next, to £1.28bn, with consumer magazines' ad sales plummeting 18.3% in 2009, and slipping 1.4% in 2010, to £509 million.

Radio will post successive decreases of 16.1% and 0.8%, while outdoor will see revenues tumble 17.2% in 2009, but increase by 1.4% in 2010.

The internet, including paid-for search, will enjoy a modest improvement of 0.7% this year, and expand by 4.7% at the end of the decade, to a value of £3.03 billion, seeing the medium overtake television.

By sector, financial services will make the largest cut backs in 2009, at 23.8%, with consumables down 11.9%, durables by 17.4%, and retail by 3%.

Coca-Cola adopts aggressive Digital Marketing

Coca-Cola, the US soft drinks giant, will adopt a "far more aggressive digital presence" as it seeks to respond to "dramatic changes" in consumer behaviour, according to Joseph Tripodi, the company's chief marketing and commercial officer.

"One of the things we're talking about now is how we evolve as a marketing entity around the world. We're pushing for a far more aggressive digital presence," Tripodi said.

This will include moving beyond traditional marketing techniques, and developing material that will positively engage its target audience.

"What we're going for more and more will be developing compelling content. Some will be consumer-generated, some of it we'll buy, some of it we'll create ourselves. The idea is to flex that content out over different digital endpoints," he said.

One of the Atlanta-based firm's primary innovations in this area to date has been establishing platforms that allow its customers to exchange the "points" they accrue when buying its brands for a range of products.

This initiative is known as My Coke Rewards in the US and CokeZone in the UK, and offers a variety of valuable information to the beverage maker about its customers.

"With My Coke Rewards we have 13 million names. With that kind of database you can build relationships with consumers that are very different from the ones you gain through TV ads," Tripdoi said.

Moreover, once web users become involved in this sort of programme, it means "you start evolve your thinking about how to engage them, beyond giving away T-shirts," he continued.

The American corporation recently announced a new competition, called the Sounds of Coca-Cola, asking people to submit videos in which they replicate the noises they associate with opening, pouring and drinking Coke.

To enter, participants need to visit Facebook, the social network, to find out the details, and then use an "app" to upload their entry, with the best efforts possibly going on to feature in an ad campaign.

Katie Bayne, chief marketing officer of Coca-Cola North America, said "we know there's nothing quite like drinking a Coca-Cola, so if people share their interpretations of how that sounds, have fun and make us thirsty, we may put them in a Coca-Cola commercial."

Similarly, at a Mobile Marketing Forum event this month, Hinde Pagani, Coca-Cola's senior mobile marketing manager, global interactive marketing, indicated this channel would be of increased importance going forward.

"Consumers are changing. Audiences are changing dramatically, especially the younger ones. They live with technology, using it to consume more media, generate more conversations and befriend more brands than ever," she said.

"Mobile is at the centre of this media revolution. For us it is critical to understand this new device, to interact with teens and youth where they spend their time and deliver engaging and compelling brand experiences. So we add mobile to the marketing mix in pretty much all of our markets."

Earlier this year, Coca-Cola launched an iPhone application, the Magic Coke Bottle, which answers "questions about life, love and the universe."

Mercedes Spending maximum on Digital Marketing in UK

Mercedes-Benz, the luxury automaker, currently directs around half of its marketing budget in the UK to digital media, an approach it has adopted in response to changing behaviour among consumers in the country.

Anders Sundt Jensen, its vice president for brand communications, said digital is responsible for a higher share of its outlay in Britain than elsewhere in Europe, where this figure is typically well under 40%.

One of the key strategies adopted by the German firm has been to establish an in-house team with an expert understanding of how channels like the internet can best be utilised for commercial means.

"We don't have normal marketers just doing online ads, or just putting our TV ads online. For example, we have a whole department at our headquarters in Germany just doing digital marketing," Jensen argued.

A major challenge for brands using the web, however, is identifying which portals will offer a return on investment, and those that are unlikely to provide long-term payback.

"Two years ago there was so much hype around Second Life, and where is that today? The hype can make it hard to see what really is great and where to invest online," he argued.

Speaking at the same event as Jensen, Bernhard Glock, who will soon leave his role as Procter & Gamble's vice president of global media and communications, emphasised that privacy was a key issue.

"There are many areas where digital can lead the way. But there are also areas where it can be very dangerous. Experiment, but be very careful. Of all media in our research, digital is the least trusted, and word of mouth the most trusted."

"Even though social media is word of mouth, it's dangerous if you don't respect people's privacy, especially kids. We need to be very careful otherwise we'll be beaten by the regulator," he added.

Harvard Business Review highlighting October 2009 Issues

Coke Beat the Competition in Best Brands List of 2009

It has been a tough year, but the brands topping the 2009 list of Best Global Brands have managed to weather the storm admirably. Here, find out more about the strategies of all 100 brands on the list, from Campbell's, slipping in at No. 100, to this year's No. 1, Coca-Cola.

1. Coca-Cola
   In a hard year for fizzy drink makers, Coke gained luster. Credit the über-successful Coke Zero, a no-cal beverage with a more macho image than Diet Coke.
2. IBM
   IBM has strived to make itself more broadly relevant by focusing on clean air and water, more efficient health care, and mass transportation.
3. Microsoft
   For the first time, Microsoft's sales slipped. Yet it also began forcefully taking on its rivals, launching the Bing search engine and advertising hard against Apple.
4. General Electric
   GE painted itself green with its "ecomagination" crusade. Now it aims to color itself healthy by pushing health-care solutions in underserved markets.
5. Nokia
   Nokia continues to lag in smartphones, but its reputation for robust construction, ease of use, and low-key style has helped it dominate mass-market handsets.
6. McDonald's
   The downturn heightened the appeal of McDonald's low-priced fare, particularly in Britain and France, while new McCafé coffee drinks have perked up sales.
7. Google
   Its new free services are pushing it beyond search. But with trustbusters on the prowl, Google faces a challenge in maintaining a cuddly brand image.
8. Toyota
   The automaker lost money in 2008 and likely will again in '09. But deep pockets and newly focused management mean this titan should revive when the economy does.
9. Intel
   Intel paid a $1.45 billion antitrust fine in Europe, but that hasn't slowed the chipmaker's push into new markets, including smartphones and home electronics.
10. Disney
    Falling attendance at its parks and sliding DVD sales are hurting. But the Mouse House continues to invest in its future, including buying Marvel for $4 billion.
11. Hewlett-Packard
    HP extended its lead over Dell and weathered the economic downturn better than most tech companies, thanks to its acquisition of services provider EDS.
12. Mercedes-Benz
    Although Mercedes' sales have plunged, the engineering icon has maintained its premium image with new fuel-efficient models. It needs to add small cars to the lineup.
13. Gillette
    Brisk-selling high-end razors have boosted sales. But to extend its reach to more buyers, Gillette will have to innovate at the lower end of the market, too.
14. Cisco
    The battle to rebrand itself as more than a maker of Web plumbing continues. By acquiring the Flip video camera, Cisco aims to be more consumer-focused.
15. BMW
    It has demonstrated that buyers will pay a premium for a chic, sporty compact. BMW is also benefiting from an early investment in more efficient engines.
16. Louis Vuitton
    The world's preeminent luxury brand has enjoyed a sales rebound in Europe this year, while continuing to tap new wealth in Asia and the Middle East.
17. Marlboro
    As marketing restrictions tighten at home, the cigarette giant continues to push hard in emerging markets from Asia to Russia and win over millions of smokers.
18. Honda
    Despite slumping global sales, Honda's lineup of gas sippers and a profitable motorbike business have helped the automaker navigate the recession.
19. Samsung
    It has overtaken Sony as the top TV brand and emerged as the only credible challenger to Nokia in mobile phones. To expand its appeal, Samsung is opening an app store.
20. Apple
    Mac sales have slowed, but Apple continues to prosper thanks to the iPhone, now in its third generation, and an app store that rivals are rushing to copy.
21. H&M
    As many retailers suffer from the global recession, H&M has been expanding and luring value-conscious consumers with its affordable-yet-stylish apparel.
22. American Express
    Hurt by accounts gone bad, the aspirational card company is bolstering loyalty programs and reviewing its card portfolio to get rid of riskier account holders.
23. Pepsi
    It got a brand facelift with a new logo and sleeker packaging, but Pepsi was not immune to the tough climate for carbonated beverages, particularly in the U.S.
24. Oracle
    Amid shrinking demand for corporate software, Oracle has stepped up face-to-face meetings—dinners, seminars—between its executives and customers.
25. Nescafe
    Nestlé's flagship is playing to consumers' new aversion to pricey designer coffee. It also is catering to the health-conscious with new drinks.
26. Nike
    Battling to control costs and keep rivals at bay, Nike continued amid the recession to spend money on innovation, including a line of eco-friendly sports gear.
27. SAP
    It remains the leader in providing software to automate HR and other internal corporate functions. But SAP's new line of Web-based software has disappointed.
28. Ikea
    The home goods giant is flourishing as recession-scarred consumers continue to snap up its stylish-yet-affordable designs, offsetting stumbles in Russia.
29. Sony
    It has lost billions on TVs and game consoles. But Sony's software is improving: The latest e-book Reader allows users to tap Google Books and local libraries.
30. Budweiser
    Squeezed at home by premium brews on one side and discount ones on the other, the beer maker is growing strongly in emerging markets like Vietnam.
31. UPS
    The global downturn hit the shipping giant hard. UPS has upped its marketing budget to $200 million and is building a new hub in China.
32. HSBC
    The worldwide credit crisis slammed its U.S. retail businesses. The world's second-largest bank is now trying to extricate itself from those bad bets.
33. Canon
    Corporate cutbacks hurt its office machine and chipmaking businesses. To rev up sales, Canon is preparing new products with more network-friendly features.
34. Kellogg's
    Easing commodity costs and higher prices boosted the cereal maker's profits, while new products like Special K Crackers and Jumbo Rice Krispies kept private-label rivals at bay.
35. Dell
    It is continuing its overhaul by moving aggressively into retail and sharpening its design chops, but Dell needs to cut costs if it is to compete with HP and others.
36. Citi
    Mismanagement and bad bets on risk at home have sullied Citi's reputation around the world, though its international business remains profitable.
37. JPMorgan
    It is capitalizing on its position as one of the strongest financial institutions. The acquisition of Washington Mutual eventually should give JP broader reach in the U.S.
38. Goldman Sachs
    It proved that when the chips are down in finance, those that lose the least become the new winners. Now, Goldman is under fire over its outsize profits.
39. Nintendo
    Its Wii and portable DS gaming consoles still outsell rivals'. But the company isn't recession-proof: Annual profits could fall for the first time in four years.
40. Thomson Reuters
    Since the merger, Thomson's strength in less cyclical areas such as legal information has helped balance Reuters' heavy dependence on financial services.
41. Gucci
    The storied luxury goods maker has held up better than many rivals, thanks in part to an aggressive push in emerging markets, especially brand-obsessed China.
42. Philips
    The conglomerate has continued a transition from low-margin electronics maker to a leading player in health care, lighting, and high-end consumer gadgets.
43. Amazon
    The e-tail titan prospered by continuing to offer low prices and superb customer service in hard times. It risks losing focus by expanding into e-books and apparel.
44. L'Oreal
    The world's leading cosmetics and mass-market beauty brand continues to reinforce its sales in emerging markets, particularly Brazil, India, China, and Poland.
45. Accenture
    The firm launched an ad campaign after the crash positioning itself as "the partner of choice" in uncertain times. That didn't stop corporations from cutting consultants.
46. eBay
    Once the symbol of yard-sale-style online auctions, the Web site is increasingly selling new products from wholesalers and liquidators. GM is even selling cars.
47. Siemens
    A bribery scandal hurt, but the electronics maker has moved on and aims to exploit its engineering prowess in green energy and mass transportation.
48. Heinz
    The ketchup king now derives more than 60% of its sales overseas and plans to boost marketing spending to fend off the threat from private-label products.
49. Ford
    It deftly separated its brand from the troubles of its Detroit siblings. But as Ford rolls out a risky "one model for all markets" strategy, it faces a newly minted GM.
50. Zara
    Zara is benefiting from a strong appetite for fashionable but affordable clothing. It spends relatively little on advertising, relying on word of mouth to drive sales.
51. Wrigley
    The maker of gums like Orbit and Extra is getting traction by pushing the health benefits of chewing its brands.
52. Colgate
    Despite the global slowdown, Colgate's oral, personal, and home-care categories grew robustly this year, while the brand gained share at home and abroad.
53. AXA
    The insurer is trying to project stability (new slogan: Profits have slumped but not as much as some analysts expected
54. MTV
    Pinched by sliding ratings among young adults and a drop in advertising, MTV is revamping its programming, including more animation and documentary series.
55. Volkswagen
    With its lineup of fuel-efficient cars and strong positions in China and Brazil, VW has held up better than the industry as a whole. It has work to do in the U.S.
56. Xerox
    Amid a dismal year for office equipment, Xerox forged ahead with new eco-friendly technologies and continued its move beyond hardware into services.
57. Morgan Stanley
    While trading operations have revived earnings, the brokerage business remains under siege. The firm won't regain its footing until the economy rebounds.
58. Nestle
    With a nearly $2 billion R&D budget, Nestlé has moved into healthier fare—from nutritionally enriched baby food to probiotics that protect the skin from the sun.
59. Chanel
    Sales of its perfumes and apparel have suffered in the downturn, but the legendary Paris fashion house says it expects to eke out sales growth in '09.
60. Danone
    The world leader in fresh dairy products looks poised for increased global reach after raising $4.3 billion—its first capital increase in 22 years.
61. KFC
    The launch of its grilled chicken meal was a PR mess due to a coupon shortage, but the new, healthier product helped turn around KFC's declining U.S. sales.
62. Adidas
    Sales are declining, but thanks to strength in soccer balls, shoes, and apparel, Adidas will likely rebound in 2010 as the World Cup in South Africa approaches.
63. BlackBerry
    No brand has a bigger global presence in smartphones than BlackBerry. It certainly doesn't hurt that the U.S. President wears one on his belt.
64. Yahoo!
    After fending off Microsoft's advances, Yahoo cut a search deal with the software giant. It was needed but showed the limits of Yahoo's tech prowess.
65. Audi
    It has suffered less than other luxury car brands, thanks to its foothold in China and lower exposure to the U.S. market. Sharing parts with VW helped Audi's margins.
66. Caterpillar
    Construction may be quiet in the U.S., but in building sites, mine pits, and farm fields in China and India, Caterpillar's big yellow machines are multiplying fast.
67. Avon
    Amid a tough global economy and battle for sales, Avon has been expanding its direct-sales army—often by recruiting people laid off from other industries.
68. Rolex
    Fancy watches aren't selling like they used to. But to maintain brand integrity over the long haul, Rolex has discouraged its dealers from lowering prices.
69. Hyundai
    Encouraged by a weak won and the improving quality of its cars, Hyundai poured money into marketing and boosted global market share to a record 5%.
70. Hermes
    Leather goods are holding up relatively well in the recession, especially in Asia where new stores are opening, helping the fashion house boost sales this year.
71. Kleenex
    It's doing well overseas, but private labels spell trouble at home. The brand is fighting back with technology; one example is Kleenex Facial Tissue with Lotion.
72. UBS
    UBS brought in a new CEO to clean house but is still struggling with the legacy of huge credit-crunch losses and revelations it helped U.S. clients evade taxes.
73. Harley-Davidson
    A hog is the ultimate discretionary buy, not ideal in these times. And as boomers age, Gen Y isn't picking up the slack. Harley is pinning its hopes on Asia.
74. Porsche
    A takeover struggle with VW hurt Porsche's image, and sales plunged amid the downturn. But the company still enjoys a reputation for fast, sexy, reliable cars.
75. Panasonic
    Its TV and digital camera units are struggling. Acquiring Sanyo Electric gives Panasonic more green products, from solar panels to batteries for electric cars.
76. Tiffany & Co.
    A strong dollar and weak economy slammed U.S. sales. But Tiffany continues to open stores, and a $93,000 diamond-encrusted cell phone attests to the brand's ambition.
77. Cartier
    Cartier's loyal high-end customers, particularly those living in China and the Middle East, have softened somewhat a consumer pullback elsewhere.
78. Gap
    Sales fell because Gap failed to lure enough shoppers to its low-priced apparel. Featuring its four divisions on one Web site also could confuse consumers.
79. Pizza Hut
    Sluggish sales in the U.S. have prompted the pizza chain to turn to China and India for growth as it expands its menu with new dishes like pasta and wings.
80. Johnson & Johnson
    J&J has long been perceived as comforting and trustworthy—ideal positioning for hard times. Its sponsorship of the 2008 Olympics boosted its global visibility.
81. Allianz
    The insurer preserved a reputation for financial solidity by avoiding the worst of the crisis. Allianz is poised to grow as it moves into markets like India and China.
82. Moet & Chandon
    Consumers switching to cheaper champagne and sparkling wines have hurt. With fewer marketing dollars, the brand is doing things like film festival sponsorship.
83. BP
    The oil giant has brought new projects online, mollified Russian partners, and focused green energy efforts on a few businesses such as wind power in the U.S.
84. Smirnoff
    Tony beverages suffered as consumers cut back on boozing, but Smirnoff held its own with cheaper libations and premade cocktails.
85. Duracell
    Beset by private labels, new ads invoke a heritage of safety, trust, and performance. Duracell is also innovating, including a battery charger that works in a car.
86. Nivea
    Sales fell in the U.S. and Europe as consumers switched to generic skin-care products. Nivea is using its brand strength to win loyalty in emerging markets.
87. Prada
    Armed with fresh capital, the only fashion label with a movie named after it is opening stores around the globe.
88. Ferrari
    Ferrari sales typically have held up in good times and bad. This recession is no exception, prompting the carmaker to open new stores and launch new models.
89. Armani
    Despite offering fashion at various price points, Armani has so far avoided hurting its brand. Now it is developing a chain of luxury hotels and resorts.
90. Starbucks
    Hit by the recession and facing competition from McDonald's, the coffee chain is making its food healthier, lowering some prices, and introducing, yes, instant coffee.
91. Lancome
    Thanks to such innovations as a "vibrating power mascara," plus a handful of celebrity endorsements, the cosmetics giant has regained some of its luster.
92. Shell
    Its reputation restored after a scandal over misrepresenting oil reserves, the company is cutting layers of management to match lower oil prices and profits.
93. Burger King
    Cheeky ads and the Whopper Bar, which offers customized burgers, bolstered BK's appeal. To maintain momentum next year, its ad budget will rise 25%.
94. Visa
    The company is poised to capitalize on a growing global shift from high-cost credit cards to debit cards. Visa already dominates the U.S. debit-card market.
95. Adobe
    Designers of ads and Web sites swear by its software, which includes Flash and Photoshop. But tough times have hurt sales of Adobe's latest products.
96. Lexus
    The recession and stiff competition from European rivals hurt Lexus, which is hoping its emphasis on hybrid models will differentiate it from the pack.
97. Puma
    The sneaker maker is accelerating a push into fashion by, for example, joining with British designer Alexander McQueen in an attempt to compete with Adidas.
98. Burberry
    Like many luxury brands, it is looking for new customers in emerging markets, including Bahrain. Burberry also opened a new headquarters in New York City.
99. Polo Ralph Lauren
    Sales have slumped, but an elegant new Web site and increasing emphasis on reaching younger consumers have helped the apparel maker beat expectations.
100. Campbell's
     The 140-year-old company has found success by pitching its soups as cheap, nutritious meals. It aims to expand its offerings in Russia next year.

At Amazon Consistent Quality Service Brings Customer Loyalty even in Recession

The world's best-known companies typically spend hundreds of millions of dollars a year on advertising and marketing to build their brands.

Not Amazon.com (AMZN). The giant online retailer has created one of the world's strongest brands by eschewing conventional tactics. Instead of shelling out big bucks for lavish trade shows and TV and magazine ads, Amazon pours money into technology for its Web site, distribution capability, and good deals on shipping. The result: a smooth shopping experience that burnishes the company name. "It is pretty unprecedented that their brand has ascended so quickly without a large marketing budget," says Hayes Roth, chief marketing officer at brand consultant Landor Associates. "It's not about splaying their logo everywhere. They are all about ease of use."

Amazon declined to participate in this story, in part because executives say they don't spend much time on branding. Still, the company had the biggest jump in this year's ranking of the Best Global Brands, rising 13 spots, to No. 43.

One reason is that Amazon has thrived during the recession, even as other retailers have been battered and pushed into bankruptcy. The company's reputation for offering low prices, broad selection, and quality service has resonated with strapped consumers. In the past six months, Amazon reported 16% revenue growth, while most retailers saw sales fall. "By investing back in the user experience, you get high loyalty and repeat usage," says Sebastian Thomas, head of U.S. technology research for RCM Capital Management, an investment firm with a stake in the company.

The performance is something of a vindication for Chief Executive and founder Jeffrey Bezos. After the dot-com bubble burst, critics hammered him for investing so much in technology and physical distribution centers. Some investors called for Bezos to pull back and produce more short-term profits. Now those heavy investments are paying off big time, helping the company sell an ever-widening range of products to more than 94 million customers. Amazon's stock has more than doubled over the past three years, while the Standard & Poor's 500-stock index is off about 20%. "Amazon has taken the long-term perspective," says Thomas. "Things they were criticized for have become essential assets."

There are limits to the Amazon brand. The company hasn't had much luck selling luxury items, and some expansions, such as its shoe site Endless.com, have failed to gain much traction, prompting Amazon's bid for rival Zappos in July. "They have not been successful in all categories," says Citigroup (C) analyst Mark Mahaney.

Such disappointments won't stop Amazon from new experiments, though. The company plans to dabble in conventional marketing this fall, with a national TV ad campaign. But instead of hiring a hotshot ad agency, Amazon started a contest in which anyone could create their own commercial. The company picked five finalists and then asked customers to vote for their favorite. The filmmaker with the highest average customer rating, to be announced on Sept. 21, will get a $10,000 Amazon.com gift card. "I am sure they will get a great deal of press," says Landor's Roth. "They won't have to spend a lot of money on media because they will get everyone else to do it for them."

TRUST Factor Involvement in Building the Brand

David Kiley explores the importance of trust when it comes to the reputation of brands as part of BusinessWeek's Best Global Brands 2009.

Pepsi at # 1 in the Soda Market (23%) & Coke at # 1 in Juice Brand Minute Maid (10.3%) in China

The American Idol-style television show is a big component of the company's brand-building efforts in China. Some 6,000 bands tried out for 10 spots on the show, which was broadcast nationwide and streamed to Pepsi's Web site. The winner, a five-piece combo from Tianjin called Focus Point, got $30,000, a trip to a Los Angeles recording studio, a car, and a role in a Pepsi TV ad.

Worldwide, of course, Pepsi (No. 23 on BusinessWeek 's Best Global Brands survey) remains far behind Coca-Cola (KO) (No. 1). But by at least one important measure, Pepsi is beating its archrival in China. It's the No. 1 cola, with 23% of the soda market, vs. Coke's 22%, according to researcher Euromonitor International. The country "represents our single biggest opportunity today outside the U.S.," says CEO Indra K. Nooyi, who spent 12 days in China this summer.

Pepsi thinks the Internet is key to unlocking that opportunity. In August the company launched the "Pepsi Creative Challenge," soliciting online birthday wishes marking the 60th anniversary of the founding of the People's Republic. Last year a promotion called "Go China," before the Beijing Olympics, encouraged people to send in patriotic slogans and pictures of themselves. Pepsi got 28 million submissions and more than 122 million votes to decide the winners, whose photos and slogans were printed on soda cans. And in 2006, some 28,000 Internet users submitted scripts for a Pepsi TV ad. "Pepsi [in China] is one of the best digital marketers anywhere," says Tom Doctoroff, North Asia director for ad agency JWT.

The promotions are the brainchild of Harry Hui, Pepsi's chief marketing officer for China. The former head of Greater China for Universal Music, Hui is serving as producer of Battle of the Bands and is one of its three judges. "Consumers in China are bombarded with messages, so merely telling them what they should drink or eat might not resonate," Hui says. "Giving them a platform where they can talk back fosters a deeper relationship with the brand."

TEMPORARY FIZZ?

Web campaigns are growing in importance for most foreign companies in the mainland. With more Chinese than Americans online, social media and blogs are "a must-have component of marketing in China," says Sam Flemming, chief of CIC, a research firm in Shanghai that works with Pepsi.

Coke, meanwhile, is no stranger to the Net, and it's turning up the heat in China, too. Pepsi may be the No. 1 cola, but it's behind Coke's Sprite, the top soda in the country. Coke's Minute Maid leads the juice segment, with 10.3% of the market, vs. just 1.4% for Pepsi's Tropicana. Coke also sponsors an American Idol-style competition of its own, and its iCoke Web site is a popular portal for gamers in China. "Everyone knows about iCoke," says Tony Ip, China managing director for G2, Grey Group's digital-marketing arm. Though Pepsi's big campaigns create a lot of buzz, it's short-lived, he says. "I don't see them building equity," says Ip.

Pepsi executives counter that the efforts will pay off as they move into juices and other noncarbonated drinks. But they acknowledge that marketing can get you only so far in China and that plans to boost distribution are equally important. To really succeed, says Ken Newell, Pepsi's beverage chief for the country, "we must build plants further into China."