Pepsi’s Advertising Strategy: What It Gets Right and Where It Loses Ground

Pepsi advertising has, over seven decades, produced some of the most studied campaigns in marketing history. It has also produced some of the most expensive missteps. The brand sits in a structurally difficult position: perpetual number two in a category defined by one dominant competitor, fighting for cultural relevance in a market where cola consumption has been declining for years. How Pepsi has chosen to advertise in that context tells you a great deal about what works in challenger brand strategy, and what does not.

This is not a brand history or a campaign retrospective. It is an examination of the strategic logic behind Pepsi’s advertising, where that logic holds up under commercial scrutiny, and where it breaks down.

What Has Defined Pepsi’s Advertising Historically?

There are two Pepsi campaigns that genuinely deserve their reputation, and both are worth examining for the same reason: they were strategically specific. The Pepsi Challenge, which ran from the mid-1970s onward, was not a brand campaign. It was a product claim delivered in public, with a mechanism that made the claim verifiable. Blind taste tests. Strangers choosing Pepsi over Coke without knowing which was which. That is not advertising theatre. That is a commercial argument made in the most direct way possible.

The Pepsi Generation positioning was different in form but similar in logic. It did not try to beat Coca-Cola at its own game, which was heritage, familiarity, and emotional warmth. It claimed a different territory entirely: youth, forward momentum, and the implicit suggestion that Coke was your parents’ drink. That is textbook challenger strategy. You do not fight the category leader on their strongest ground. You redefine the terms of competition.

Both campaigns worked because they were built on something real. The taste test had actual data behind it. The generational positioning reflected a genuine cultural shift that was happening with or without Pepsi. Good advertising does not manufacture meaning out of nothing. It finds meaning that already exists and makes it legible.

If you want to think more broadly about how challenger brands build go-to-market strategies that actually move the needle, the Go-To-Market and Growth Strategy hub covers the frameworks worth knowing.

Where Did the Celebrity Strategy Come From, and Did It Work?

Pepsi’s shift toward celebrity-led advertising is one of the most documented pivots in brand history. Michael Jackson in 1984. Madonna shortly after. Britney Spears, Beyoncé, David Beckham. The list is long and the spend was enormous. The logic is understandable: if you are fighting for cultural relevance and your competitor owns emotional warmth, you try to own cultural currency instead.

The problem is that celebrity association is borrowed equity, not built equity. It creates awareness. It generates press. It can shift brand perception in the short term. But it does not build the kind of structural brand meaning that holds up when the celebrity moves on, gets into trouble, or simply becomes yesterday’s news. And Pepsi has had all three happen to it.

I have sat in enough agency briefings to know how these decisions get made. A senior client wants cultural relevance. Someone in the room suggests a big name. The room gets excited. The numbers get run on reach and impressions. Nobody asks the harder question: what does this association actually say about our brand that we could not say without it? If the answer is “not much,” the spend is buying awareness, not brand building.

That is not to say celebrity advertising is always wrong. When the celebrity genuinely embodies something the brand stands for, the connection has logic. When it is purely transactional, the audience can tell. They may not articulate it, but they feel the difference between a brand that has a point of view and a brand that has a chequebook.

What Does the 2017 Kendall Jenner Ad Actually Teach Us?

The Kendall Jenner ad is worth examining carefully because the lessons are more nuanced than the initial reaction suggested. The ad was pulled within 24 hours. Pepsi issued a public apology. The creative director who made it was reportedly devastated. And the marketing industry spent weeks dissecting it as a cautionary tale about brand purpose gone wrong.

But the more interesting question is not “why was this ad bad?” The more interesting question is: how does an ad this bad get made and approved at a company with Pepsi’s resources and marketing sophistication?

The answer, in most cases like this, is that the problem is not the execution. The problem is the strategy. When a brand decides it wants to be associated with social movements without having any genuine connection to those movements, without any organizational behavior that supports the claim, without any history in that space, the creative team is being asked to do something impossible. They are being asked to make a brand purpose claim that does not exist. And no amount of craft or good intention can fix a brief that is fundamentally dishonest.

I judged at the Effie Awards for several years. The campaigns that hold up under that kind of scrutiny are the ones where the strategy and the execution are aligned, and where both are grounded in something the brand can genuinely claim. The ones that fall apart are almost always cases where someone decided that a big cultural moment was an advertising opportunity, without asking whether the brand had earned the right to be in that conversation.

Brand purpose is not a creative brief. It is a business decision. If your organization does not actually behave in ways consistent with the purpose you are claiming in advertising, the advertising will ring false. Consumers are not naive, and they have more tools than ever to call out the gap between what brands say and what brands do.

How Does Pepsi’s Advertising Approach Differ from Coca-Cola’s?

The Cola Wars framing is useful here, not because competition is the only lens worth using, but because the contrast reveals something important about how each brand has chosen to compete.

Coca-Cola has, with remarkable consistency, owned emotional warmth. Happiness, togetherness, nostalgia, the simple pleasure of a cold drink shared with people you care about. That positioning has been reinforced across decades and across markets. It is not exciting. It does not generate much industry chatter. But it is coherent, and coherence compounds over time in ways that campaign-by-campaign thinking rarely appreciates.

Pepsi has historically tried to own energy, youth, and cultural currency. When that positioning is executed with discipline, as it was during the Pepsi Generation era, it works. When it becomes a licence to chase whatever cultural moment feels relevant that quarter, it produces inconsistency. And inconsistency is expensive, not just in creative production costs, but in the erosion of brand meaning that happens when audiences cannot form a stable picture of what a brand actually stands for.

The structural challenge for Pepsi is that being the challenger requires more strategic discipline, not less. When you are not the default choice, every piece of advertising has to work harder to justify the switch. Coca-Cola can afford to be broadly warm and slightly vague because it is already the preference. Pepsi cannot. It needs a sharper argument.

What Role Does Sponsorship Play in Pepsi’s Advertising Mix?

Pepsi has been one of the largest sports and entertainment sponsors in the world for decades. The NFL Super Bowl halftime show. The UEFA Champions League. Music festivals. These are not small commitments. And they reflect a deliberate choice to buy into events that generate mass cultural attention rather than building that attention organically through brand narrative.

Sponsorship at that scale can be genuinely effective, but it requires a clear answer to a question most brands never ask explicitly: what does this sponsorship allow us to say or do that we could not say or do otherwise? If the answer is just “we get our logo in front of a large audience,” that is awareness spend, and it needs to be evaluated as awareness spend, not as brand building.

The Super Bowl halftime show is interesting because Pepsi did not just sponsor it. For years, it produced it. That is a different kind of involvement. It gave Pepsi genuine creative control over one of the most watched entertainment moments in the world. Whether that translated into measurable commercial outcomes is harder to say, but the logic of deep integration rather than logo placement is sounder than most sponsorship thinking.

Sponsorship strategy is one of the areas where I have seen the most money wasted in agency work. A client signs a major deal because a competitor has a similar one, or because the CEO is a fan of the sport. The activation budget is an afterthought. The measurement framework does not exist. And three years later, nobody can tell you what the sponsorship actually did for the brand. BCG’s work on go-to-market strategy makes the point clearly: commercial decisions need commercial frameworks, and sponsorship is no different.

Is Pepsi’s Advertising Effective at Driving Growth?

This is the question that matters most, and it is the one that gets asked least in most discussions of Pepsi’s advertising. The industry tends to evaluate advertising on creative merit, cultural impact, and awards. Those are not irrelevant, but they are not the same as commercial effectiveness.

Pepsi’s market position relative to Coca-Cola has not fundamentally changed in decades. That is not necessarily a failure of advertising. Category dynamics, distribution, pricing, and product portfolio all play a role. But it does raise a legitimate question about what the advertising is actually achieving beyond maintaining share of voice.

Earlier in my career, I overvalued lower-funnel performance metrics. I thought if you could show a direct line between spend and conversion, you had your answer. Over time, I came to understand that much of what performance marketing gets credited for was going to happen anyway. The person who was already going to buy does not need to be converted. Growth requires reaching people who were not already considering you, which means investing in the kind of brand advertising that creates new demand rather than just capturing existing intent. Pepsi’s challenge is that a lot of its advertising spend appears to be doing the latter when it needs to be doing the former. For more on why this distinction matters, Semrush’s breakdown of market penetration strategy is a useful reference point.

The category is also contracting. Carbonated soft drink consumption has been declining in most Western markets for years as consumers shift toward water, energy drinks, and functional beverages. Pepsi has responded with portfolio diversification, which is the right strategic call, but it creates a complicated advertising problem. How do you maintain investment in a flagship brand in a declining category while also building new brands in growth categories? The answer requires genuine strategic prioritization, not just budget allocation.

What Can Marketers Learn from Pepsi’s Advertising History?

There are several things worth taking from Pepsi’s advertising history that apply well beyond the cola category.

First, challenger positioning only works when it is maintained with discipline. The Pepsi Challenge and the Pepsi Generation worked because they were sustained, coherent, and built on a genuine claim. When Pepsi drifted from that discipline into cultural moment-chasing, the advertising became less effective and more expensive.

Second, brand purpose requires organizational commitment, not just creative ambition. The Kendall Jenner ad is the clearest example of what happens when a brand tries to claim a position it has not earned. The creative team cannot fix a strategy that is not grounded in reality. If the brief asks them to, they will produce something that looks good in a boardroom presentation and falls apart in the real world.

Third, awareness is not the same as brand meaning. Pepsi has never had an awareness problem. It has had a brand meaning problem, specifically the challenge of articulating a clear, consistent reason to choose Pepsi over Coke that does not depend on whatever celebrity or cultural moment the brand has attached itself to that year.

Fourth, category dynamics shape what advertising can and cannot do. No amount of creative excellence will grow a declining category. Advertising can shift share within a category, but it cannot reverse structural consumer behavior change on its own. Pepsi’s strategic challenge is partly a marketing problem and partly a portfolio and product problem, and conflating the two leads to misdirected investment. Forrester’s intelligent growth model is worth reading on this point, particularly around how growth levers interact with each other.

Fifth, and perhaps most importantly, the best Pepsi advertising has always been built on a specific, defensible claim. Not a feeling. Not an aspiration. A claim. The taste test is verifiable. The generational positioning is specific. When Pepsi has drifted toward vague emotional territory, it has been on weaker ground. That lesson applies to any brand in any category.

I remember early in my career sitting in a pitch for a brand that wanted to “own happiness.” The room nodded along. I thought: Coca-Cola already owns happiness, and they have been building that for a century. What is the actual claim here? There was not one. The brief was a feeling, not a strategy. We did not win that pitch, and I am not sure we deserved to.

How Should a Brand Like Pepsi Think About Advertising Going Forward?

The most honest answer is that Pepsi needs to decide what it is actually for before it decides how to advertise. That sounds obvious, but it is harder than it sounds for a brand that has been in market for over a century and has accumulated decades of positioning decisions, some of which contradict each other.

The challenger frame still has value, but it needs to be updated. Youth and cultural currency are not sufficient differentiation in a world where every brand is trying to be culturally relevant. The question is: what specific tension or truth does Pepsi represent that Coca-Cola does not and cannot? That is the brief worth writing.

There is also a channel strategy question worth examining. Pepsi has historically been a mass media advertiser, which makes sense for a mass market brand. But the fragmentation of media consumption means that mass reach is harder and more expensive to achieve than it was during the peak TV era. Creator-led marketing approaches are worth considering not as a replacement for brand advertising, but as a way of building cultural relevance in specific audience segments where mass media does not reach efficiently.

The portfolio question matters too. Pepsi the cola brand and PepsiCo the corporation are different things, and the advertising strategy for each requires different thinking. A brand that is declining in volume needs to be managed differently from a portfolio that is growing through diversification. Mixing those two problems up produces confused strategy and wasted spend. Growth strategy examples from other categories show how companies have navigated this kind of portfolio complexity with more or less success.

Measurement is the final piece. Pepsi spends at a scale where measurement frameworks matter enormously. The temptation with large brand budgets is to use reach and frequency as proxies for effectiveness. They are not. They are inputs, not outputs. The output is commercial performance: volume, share, margin. Any advertising investment that cannot be connected, even loosely, to those outcomes is harder to justify than the industry usually admits. BCG’s research on scaling marketing operations is relevant here, particularly around building the organizational capability to make faster, better-informed decisions about where spend is actually working.

For a broader look at how growth strategy thinking applies across different market contexts, the Go-To-Market and Growth Strategy hub pulls together the frameworks and perspectives worth working through.

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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