Advertising for Pepsi: What a Challenger Brand Teaches Every Marketer

Advertising for Pepsi is one of the most studied, most debated, and most misunderstood briefs in marketing history. Pepsi has never been the category leader, yet it has produced some of the most culturally significant advertising ever made, from the Pepsi Generation campaigns of the 1960s through to the Pepsi Challenge, and beyond. The lessons embedded in that body of work are not really about soft drinks. They are about how a brand with structural disadvantages uses creativity and positioning to compete with a dominant incumbent.

What Pepsi got right, at least in its best periods, was understanding that the number two position is not a problem to apologise for. It is a strategic asset, if you are willing to use it.

Why Pepsi Is the Most Instructive Brief in Advertising

I have worked across more than 30 industries in my career, and the briefs that teach you the most are never the ones where the brand already owns the category. When I was running agencies and sitting across from clients with dominant market positions, the strategic options were relatively clear: defend share, extend reach, protect price premium. The hard thinking came when we were working with brands that were structurally behind. That is where you actually learn what advertising is for.

Pepsi has been in that position for most of its history. Coca-Cola has outsold it for decades. Coke has more distribution, more heritage, more emotional equity in most markets. And yet Pepsi has consistently punched above its weight in advertising effectiveness, winning cultural moments and occasionally forcing Coke to blink. That tension between structural disadvantage and creative ambition is what makes Pepsi such a rich case study.

If you are working through how challenger brands compete on limited budgets, or how brand building fits alongside performance activity, the wider thinking on go-to-market and growth strategy is worth reading alongside this piece. The principles that Pepsi has applied, sometimes brilliantly, sometimes disastrously, map directly onto the strategic decisions most marketers face regardless of category.

The Pepsi Challenge: How to Make Your Competitor Do Your Marketing

The Pepsi Challenge launched in 1975 with a simple mechanic: a blind taste test in which consumers consistently chose Pepsi over Coke. The ads showed real people, surprised by their own preference. It was direct, comparative, and deliberately provocative.

The genius of the campaign was not the taste test itself. Blind taste tests are notoriously unreliable as a measure of brand preference, because preference is not purely sensory. What made the Pepsi Challenge brilliant was what it forced Coca-Cola to do. Coke responded. It reformulated its product, launched New Coke in 1985, and triggered one of the most spectacular own-goals in brand history. The public backlash was immediate and overwhelming. Coke was forced to bring back the original formula, rebranded as Coca-Cola Classic, within months.

Pepsi did not win that war. But it won something more valuable: it made the market leader look defensive, reactive, and uncertain. When a challenger brand can do that, it has fundamentally shifted the psychological dynamic of the category. Pepsi went from being the also-ran to being the brand that rattled the giant.

I think about this dynamic a lot when I work with brands that are trying to compete against much larger players. The instinct is usually to try to out-do the incumbent on their own terms: more product features, lower price, bigger media spend. That almost never works. What works is finding the angle that forces the incumbent to react, because the moment they react, they have acknowledged you as a genuine threat. That acknowledgement does more for your brand than almost any campaign you could run independently.

The Pepsi Generation: Selling Identity, Not Product

Before the Pepsi Challenge, there was the Pepsi Generation. The campaign, which began in the early 1960s, positioned Pepsi not as a drink with particular attributes but as the drink of a particular kind of person: young, optimistic, forward-looking. The tagline “For Those Who Think Young” evolved over the years, but the strategic logic remained constant. Pepsi was not competing on taste or heritage. It was competing on identity.

This is a fundamentally different advertising strategy than most brands attempt. Most brands try to win on product claims: better ingredients, better taste, better value. Pepsi looked at Coke’s dominance on heritage and tradition and decided not to fight that battle. Instead, it claimed the future. Coke was your parents’ drink. Pepsi was yours.

The music partnerships that followed, Michael Jackson in the 1980s, Madonna, Britney Spears, Beyoncé, were extensions of the same logic. Pepsi was not buying celebrity endorsement in the transactional sense. It was buying cultural alignment. The brand was saying: the people who define this generation choose Pepsi. That is a much more powerful claim than anything you can put in a product specification.

Early in my career, I spent too much time focused on the lower funnel. Performance metrics, conversion rates, cost per acquisition. I thought that was where the real work happened. Over time, I came to understand that much of what performance marketing gets credit for was going to happen anyway. The people already searching for your product were already inclined to buy. What actually drives growth is reaching the people who are not yet considering you, the ones who have no active intent, and giving them a reason to form a preference. That is what the Pepsi Generation campaigns did. They built preference in people who were not yet in the market, so that when the purchase occasion arrived, the choice felt obvious.

What the 2017 Kendall Jenner Ad Got Wrong

What the 2017 Kendall Jenner Ad Got Wrong

No honest analysis of Pepsi’s advertising history can avoid the 2017 Kendall Jenner ad. It is one of the most instructive failures in modern advertising, not because it was badly made, but because it was strategically misconceived from the start.

The ad showed Jenner leaving a modelling shoot to join a protest march, handing a can of Pepsi to a police officer, and resolving the tension in the scene. It was widely read as a trivialisation of the Black Lives Matter movement and the broader culture of protest. The backlash was immediate and severe. Pepsi pulled the ad within 24 hours.

The strategic failure was not that Pepsi tried to connect with social issues. Brands can do that credibly when the connection is genuine and earned. The failure was that Pepsi tried to borrow purpose it had not built. The brand had no meaningful history of engagement with civil rights, protest culture, or social justice. It was reaching for cultural relevance without having done the work that makes relevance credible.

Compare that to the Pepsi Generation campaigns. Those worked because Pepsi had spent decades earning the right to claim youth culture. The association was built gradually, through music partnerships, through consistent creative choices, through showing up in the right places over a long period of time. The Kendall Jenner ad tried to do in 2 minutes what takes years to build.

I have judged the Effie Awards, which assess advertising effectiveness rather than creative craft. One of the things you notice when you see hundreds of campaigns assessed against business outcomes is that the ones that fail most spectacularly are rarely the ones that tried something genuinely new. They are the ones that tried to claim something the brand had not earned. Effectiveness requires authenticity, and authenticity requires consistency over time. You cannot shortcut that.

How Pepsi Structures Its Advertising Investment

Pepsi’s advertising approach has historically split between two distinct modes. The first is brand advertising: high-reach, culturally ambitious work designed to maintain and build emotional equity. The second is promotional and activation advertising: price-driven, product-focused, tied to specific occasions like the Super Bowl, sporting events, or seasonal moments.

The tension between these two modes is something every large advertiser manages, and Pepsi has not always managed it well. When the brand leans too hard into promotion, it erodes the premium positioning that the brand campaigns have built. When it leans too hard into brand, it can lose relevance at the point of purchase. The best periods in Pepsi’s advertising history are the ones where these two modes reinforce each other rather than pulling in opposite directions.

The Super Bowl is a useful lens here. Pepsi has been a significant Super Bowl advertiser for decades, and its approach to that investment has shifted over time. In earlier periods, the Super Bowl spot was the flagship of the brand campaign, designed to generate cultural conversation and reach a massive audience in a single moment. More recently, Pepsi’s Super Bowl strategy has become more fragmented: multiple shorter spots, social extensions, influencer activations. The reach is still there, but the coherence of the message has sometimes suffered.

BCG has written about the relationship between brand strategy and go-to-market execution, and the core tension they identify, between building long-term brand equity and driving short-term commercial performance, is exactly what Pepsi navigates every time it plans a major campaign. You can read their thinking on brand strategy and go-to-market alignment here. The brands that get this right are the ones that treat brand and performance as a system, not as competing budget lines.

The Role of Music and Culture in Pepsi’s Advertising

Pepsi’s use of music is worth examining separately, because it represents one of the most sustained and coherent brand strategies in advertising history. From the Pepsi Generation campaigns through to the Michael Jackson partnership in 1983, and continuing through subsequent decades, music has been the connective tissue of Pepsi’s brand identity.

The Michael Jackson deal was, at the time, the largest celebrity endorsement in history. But it was not just a transaction. Pepsi and Jackson co-created content, including the “Billie Jean” ad that premiered as part of the Victory Tour. The partnership generated genuine cultural heat, not just paid media impressions. When Jackson’s hair caught fire during the filming of a Pepsi commercial in 1984, the incident generated more press coverage than most brands get from entire campaign launches.

What Pepsi understood, and what many brands still miss, is that cultural partnerships only work when there is genuine alignment between the brand’s identity and the artist’s identity. Jackson was the biggest artist in the world, but he was also genuinely aligned with Pepsi’s positioning around youth, energy, and aspiration. The partnership felt coherent. Compare that to the many brand-celebrity partnerships that feel transactional and generate no meaningful brand equity, because there is no real connection between what the brand stands for and what the celebrity represents.

Creator and influencer partnerships operate on the same logic today. The mechanics have changed, but the strategic question is the same: does this person’s audience and identity reinforce what we are trying to build, or are we just buying reach? If you are thinking through how to approach creator partnerships as part of a go-to-market campaign, this resource from Later on creator-led campaigns is worth a look for the tactical execution side of the question.

Pepsi’s Advertising in International Markets

One dimension of Pepsi’s advertising that gets less attention in most case studies is how the brand adapts its strategy across markets. In the United States, Pepsi is clearly number two. In some international markets, particularly in the Middle East and parts of Asia, Pepsi has historically held stronger positions. The advertising strategy has to flex accordingly.

In markets where Pepsi is the challenger, the aggressive, comparative positioning that worked in the US makes sense. In markets where Pepsi is the leader or close to parity, the same approach would be strategically incoherent. You do not position yourself as the underdog when you are not the underdog. That kind of inauthenticity reads immediately.

This is a tension I have seen repeatedly when working with global brands. The instinct is to run the same campaign globally, because it is cheaper and simpler to produce. But the strategic logic of a campaign that works in one market can be completely wrong in another. Challenger positioning is not a creative style. It is a strategic posture that only makes sense when the market reality supports it.

The brands that manage this well are the ones that have a clear global brand framework, a set of values and identity elements that remain constant, while allowing the strategic angle and creative execution to flex by market. Pepsi has done this with varying degrees of success. The music and youth positioning is genuinely global. The competitive aggression is market-specific.

What Pepsi’s Advertising History Teaches About Measurement

One of the more uncomfortable truths about Pepsi’s advertising history is that it is very hard to measure the effect of its best campaigns. The Pepsi Generation work built brand equity over decades. The Michael Jackson partnership generated cultural conversation that is almost impossible to attribute to a specific business outcome. The Pepsi Challenge shifted competitive dynamics in ways that showed up in market share data over years, not weeks.

Modern marketing measurement is not well equipped to capture this kind of value. Most measurement frameworks are designed to track short-term, attributable outcomes: clicks, conversions, sales in a defined window. They are good at measuring demand capture. They are poor at measuring demand creation, which is what the best Pepsi campaigns were doing.

I have managed significant ad budgets across many categories, and the pressure to demonstrate short-term return on investment is constant. That pressure is not unreasonable. Businesses need to know their marketing is working. But the measurement frameworks we use to answer that question often create a systematic bias toward lower-funnel activity, because lower-funnel activity is easier to measure. The result is that brand investment gets cut, performance investment gets increased, and over time the brand loses the equity that makes the performance activity work in the first place.

Tools like Hotjar are useful for understanding user behaviour and experience on owned channels, but they capture a narrow slice of what advertising does. Understanding how your audience actually experiences your brand requires a broader measurement approach, one that combines behavioural data with attitudinal research and honest approximation rather than false precision. Pepsi’s best advertising would have looked terrible in a last-click attribution model. That does not mean it was not working.

Forrester has written about intelligent growth models that go beyond simple attribution, and the core argument, that growth requires a more sophisticated view of how marketing creates value over time, is directly relevant to how you evaluate campaigns like Pepsi’s. Their thinking on intelligent growth is worth reading if you are trying to make the case internally for brand investment alongside performance activity.

The Strategic Lessons for Every Marketer

Pepsi’s advertising history is not just a story about a soft drink brand. It is a masterclass in how to compete when you are not the category leader, and a cautionary tale about what happens when you lose strategic clarity.

The lessons are transferable across almost any category. Challenger positioning, done well, is one of the most powerful strategies available. But it requires genuine commitment. You cannot be a challenger brand on Mondays and try to be the establishment on Fridays. The Pepsi Challenge worked because it was relentlessly consistent. The Kendall Jenner ad failed because it was not consistent with anything Pepsi had built.

Cultural partnerships only generate brand value when the alignment is real. Reach without relevance is expensive and forgettable. Music, sport, entertainment, creators: all of these can work, but only when the strategic logic is sound. The question is not “who has the biggest audience?” The question is “whose audience and identity reinforces what we are trying to build?”

And brand building requires patience and a measurement approach that can capture long-term value. The brands that cut brand investment in favour of performance activity are often borrowing against equity they do not realise they are spending. When the equity runs out, the performance activity stops working, and by then it is very expensive to rebuild what was lost.

I spent the early part of my career building performance capability. I am glad I did, because I understand how it works and where it genuinely creates value. But the further I have gone in this industry, the more convinced I am that the brands that win over the long term are the ones that treat brand building as a commercial investment, not a creative indulgence. Pepsi, at its best, understood this. At its worst, it forgot it.

If you are working through how to structure your own brand’s go-to-market approach, whether you are a challenger or a leader, the strategic frameworks and case studies in The Marketing Juice’s growth strategy hub cover the thinking behind positioning, investment allocation, and building campaigns that compound over time rather than burning out after a single quarter.

About the Author

Keith Lacy is a marketing strategist and former agency CEO with 20+ years of experience across agency leadership, performance marketing, and commercial strategy. He writes The Marketing Juice to cut through the noise and share what works.

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