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Pepsi Seeks More Innovative Digital, Social Startups

After working with 10 pilot projects in the U.S., Pepsi plans to launch a similar program in Europe.

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PepsiCo is expanding a program it launched last year to identify promising social and digital media startups, launching a European version of the program at the same time some of the pilot projects chosen last year continue to play out.

Bonin Bough, the global director of digital and social media at PepsiCo, said nothing has been announced about a repeat of the program in the U.S. but "stay tuned." Last summer, Pepsi announced it would single out 10 startups for recognition and award them pilot project contracts in a program called PepsiCo10. The winners announced in September were in four targeted categories: retail and location-based experiences, mobile, social, and digital video and gaming. This year's contest is likely to feature an expanded list of categories where Pepsi is looking to find innovative new products, he said.

"The goal is to figure out, how do we create an incubation opportunity inside our organization to identify emerging startups and emerging technology," Bough said. "As we continue to grow our program, we will be looking at different formats and adaptations of it." For example, Pepsi might carve out a category just for technologies for women or just for smartphone apps.

Among the most interesting technologies from the first PepsiCo10, Bough pointed to Tongal, a website organized around crowd-soured production of videos, such as one current animated feature project built around the Extremely Brisk campaign for Brisk iced tea, which Pepsi produces in partnership with Lipton.

BreakoutBand, a social experience where participants collaborate to create music, is significant because users often spend 45-minutes or more with the website, which is a lot of time for a marketer to capture in a branded experience. Pepsi also brought BreakoutBand to the South by Southwest conference as a kiosk experience, and although people don't spend quite as much time with it in that format, it still makes a big impression.

Bough also likes TableTop Media, which makes a device for restaurant tables that can be used for promotions as well as ordering. Other important modes of consumer interaction Pepsi is exploring include applications on mobile devices with barcode scanners to let consumers receive and act on promotions in a store, as well as second-screen interactions in the family room where consumers use a laptop or tablet to respond to what they are seeing on TV.

Pepsi wants to gain experience with innovative projects early, rather than waiting until they're ready for prime time, Bough said. "It's no longer about just identifying if a platform has scale or not." If a product "has the right stuff with consumers," the fact that it doesn't immediately have a large audience doesn't necessarily matter in an age when a product like Angry Birds can become a sensation overnight. If the startup has a good idea, "then we can bring the scale to these platforms rather than waiting for them to have four million users," he said.

PepsiCo is not investing in these companies in a venture capital mode, but it is giving them exposure and a chance to prove their mettle working for a major consumer packaged-goods company. "We're teaching them how to work with big organizations, which is a skill in and of itself," Bough said.

At the same time, Pepsi is learning how to work with small operations that may not have more than a handful of people. "You can't let the perfect be the enemy of the good," Bough said. Instead, it's important to embrace "a culture of iteration" that recognizes there will be time to improve and refine the product in the next version, just as innovative companies like Google and Apple do, he said.

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