Pepsi, Looking for Economies, Splits With the Expensive David Beckham
David Beckham has split with Pepsi, a brand with whom the soccer player has had an advertising contract for 10 years, according to Ad Age. The report doesn’t cite a reason for the split but offers this piece of background:
It’s worth noting that he’s among the most expensive sports endorsers in the world, which may make it more difficult for marketers to fit him in tightening budgets. His expired Gillette contract, for instance, reportedly paid him upwards of $10 million over a three-year period, and a fourth-year option declined by Gillette would have been for at least $5 million more. Given the performance of his team and the relative obscurity of the league in the U.S., it may not be as cost effective as it once was for marketers like Gillette owner Procter & Gamble and Pepsi to link up with Mr. Beckham.
The notion that Pepsi is looking to make its marketing cheaper fits with a number of recent events on the brand:
- Pepsi’s SG&A expenses have been rising and its net income has been going down, suggesting that it needs to reduce its ad expenses, among other things.
- The client switched its account from BBDO to TBWA/Chiat/Day.
- TBWA’s new ads are low-production affairs, so far relying on simple animated typeface messages and straightforward studio-based photography.
Prediction: Agencies at PepsiCo this year should expect this client to continue making spending cuts where it can in Q1 and Q2.
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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