Tie-in promotions: the glue that made BK stick with Pepsi

Nation's Restaurant News, August 24, 1987 by Marilyn Alva

Tie-in promotions: the glue that made BK stick with Pepsi

When Burger King decided recently to renew its contract with Pepsi-Cola USA, it indicated it was tying a knot with a company that is more than a mere syrup supplier. It was showing, really, how soft-drink suppliers have become closely linked to a restaurant chain's marketing and advertising programs.

The strengthened tie-in promotions Pepsi-Cola promised to deliver as part of the business partnership with the burger chain was a key consideration in cementing the deal, according to Burger King president Charles Olcott.

Olcott was particularly keen on the potential "promotional output' that will be generated under the terms of the new contract.

Pepsi-Cola had started out as a simple supplier when it took the Burger King account from Coca-Cola in 1983. But gradually it has joined with its client in a number of promotions designed to benefit them both.

John Cranor, president of Pepsi-Cola USA's Fountain Beverage Division, estimated Pepsi probably ran about 100 different promotions with Burger King in the last year, ranging from special price reductions on soft drinks to nationwide sweepstakes.

Meanwhile, Pepsi, like its competitor Coca-Cola, had promotional tie-ins with other major restaurant chains it supplies, such as Kentucky Fried Chicken, Taco Bell, and Pizza Hut, owned by parent PepsiCo. Pepsi's relationship with them was not enough, however, to sway Burger King into choosing Coca-Cola, which, as the leading soft-drink supplier to the food-service industry, does, after all, supply its No. 1 competitor, McDonald's.

Pepsi's most recent big-deal promotion with Burger King was the July 4th "America's Choice,' in which Burger King gave away free Pepsi drinks with any purchase.

The one-day giveaway was supposed to be in celebration of Pepsi-Cola's victory in its own blind-taste tests around the country, pitting its soft-drink with Coca-Cola's. The taste test results were turned into the "America's Choice' merchandising slogan now seen on Pepsi cans and cups around the country.

Pepsi said the Burger King tie-in on July 4th marked the first time it backed a promotion with network television advertising. Burger King also took out television advertising for the occasion.

Cranor said that Burger King, in identifying its wants and needs during negotiations, was looking for a supplier that would offer "outstanding, impactful promotional support.'

Indeed, the day after the press conference was held in Miami, Burger King's headquarters, Pepsi-Cola took out full-page newspaper advertisements in "USA Today,' "The New York Times,' "The Miami Herald,' and "The Minneapolis Star & Tribune,' touting the Pepsi-Burger King alliance.

The Pepsi ads were good and free publicity for Burger King. "After all, when you've got the winning taste of flame broiling, you want the winning taste in a soft drink,' said the copy under the head-line "Guess Who Won The Cola Wars At Burger King?'

"We're looking at other ways, through broadcast media, to celebrate our relationship with Burger King,' Cranor said, noting that "big-event national programs and high-level participation' in local ones would increase in the months ahead.

Pepsi-Cola certainly has the resources to do that. Its annual advertising budget is estimated to be around $120 million a year. And its advertising theme, "Pepsi. The Choice of a New Generation,' designed to take away customers from first-ranked Coca-Cola, would seem to work equally well for Burger King, also, similarly positioned in second place in its segment.

The soft-drink suppliers can also gain much from the exposure the fast-food chains offer them. As Tony Tortorici, vice president of public affairs for Coca-Cola USA, said, "We get visibility and the opportunity to serve a growing number of ultimate customers--the consumers.' That is a pretty good number of people.

Pizza Hut drops shop: Pizza Hut and its national advertising agency, Chiat/Day, Los Angeles, "mutually agreed' to part ways.

The move came as no surprise, since Pizza Hut had been talking with other agencies and had indicated it wanted new advertising to replace the Rich Hall campaign.

Franchisees were unhappy with it because of its soft-sell approach.

Pizza Hut said it would decide on a new agency shortly. The chain is reviewing two New York shops for its $25 million account.

Chiat/Day, Los Angeles, meanwhile, is not exactly shedding tears over the Pizza Hut loss. It recently won the hotly contested and far more lucrative Nissan Motor Corp., USA, account, valued at $150 million.

Rich Hall commercials are expected to continue running through the end of the year.