Coca-Cola picks Omnicom for North America media as review closes

Coca-Cola has named Omnicom its North American media partner, completing a global marketing operating system review announced Oct. 22 — one day after global CMO Manolo Arroyo told the ANA Masters of Marketing conference in Orlando that the company had added 160 million new consumers after two decades of failing to grow its base.

The context behind that review was stark. When Arroyo took the CMO job at the start of 2020, Coca-Cola had not recruited new consumers in total for almost two decades. It had been late to digital marketing despite years as a trendsetting advertiser. And it ran a fragmented operation: roughly 2,000 marketing programs, 3,000 product launches a year and relationships with more than 6,000 agencies worldwide.

"It was a time to stop for a minute, in the view of the game, and rethink the future of our market," Arroyo said during his Oct. 21 keynote.

What does the new roster look like?

The reshuffle leaves most incumbents in place, with one notable defection.

• Omnicom takes North American media, uniting media, data, CRM (customer-relationship management), loyalty and creators in a connected ecosystem.
• WPP Open X retains global media outside North America and remains global creative partner; WPP keeps its creator, media and marketing remit.
• Dentsu continues handling media in Japan and South Korea.
• Publicis Groupe, which won the North American media account last year, withdrew from the review after taking on PepsiCo's global media duties last month.

"Our review was about designing the future of our marketing organization," Arroyo said in a statement. "The best marketing systems are built when you combine the best marketing talent with the right partnerships. We are confident that this combination of global scale, local expertise, innovation and collaboration gives us exactly that."

The new structure takes effect in phases beginning Dec. 1. The unanswered question is cost: neither Coca-Cola nor the holding companies disclosed financial terms.

Why did Coca-Cola abandon 'brand love'?

For years, brand love was the key metric for Coca-Cola's marketing teams. But rising brand love did not always translate into brand performance, so the company switched to total consumer base — a behavior-driven metric tied to the P&L.

"We decided to shift to total consumer base, which is a behavioral-driven metric, as the primary correlation and causation of growth in our P&L, and then understand which equity drivers really impact behavioral change for which audiences," Arroyo said.

The transformation rested on four moves: pruning the portfolio, bigger and bolder innovation, a shift to digital marketing for effectiveness and efficiency, and a redesigned marketing operating system, internal and external. The portfolio cut is the most measurable: from more than 400 brands down to about 170, simplifying operations and supply chain. Thirty-two of the remaining brands each generate $1 billion, including Sprite, Fanta, Powerade, Bodyarmor, Smartwater, Vitaminwater, Minute Maid and Simply.

"A brand is a promise… that is delivered through experiences that leave a long-lasting memory," Arroyo said. "It's about memory structures that trigger a behavior change that results in and generates economic value."

How far has the digital shift gone?

The numbers are unambiguous. In 2019, less than 30% of Coca-Cola's media spend went to digital; by the end of this year that figure will be about 70%. Studio X, created in 2021, powers the shift as a globally connected network running creative and media on common data and technology.

"For a company that has been, for so many decades, primarily anchored on television advertising, it was very important to change our ecosystem and operating model," Arroyo said.

Per the company's data, half of memory generation in beverages happens in the first moment a consumer interacts with a brand, offline or online, which makes retail critical. Live experiences in sports, music, food, culture and entertainment — such as this summer's World Cup and the Fanta Halloween push — let brands stand out in an AI-saturated world, with digital acting as the connective tissue across product, retail and live moments.

"We drove not only behavioral change, but also brand equity," Arroyo said. "[Brand] love can be increased as well, but it follows the behavior, and that has translated immediately in our volume growth, in our transactions growth and therefore in our P&L."

Coca-Cola beat Wall Street estimates for earnings and revenue in Q2 and reports Q3 before the market opens on Oct. 27 — the first hard test of whether the transformed model keeps delivering against its own rhetoric.