MKT 271 Arizona State University Coca Cola on Facebook Case Study Scenario You should assume that you have been hired by the leadership at Coca-Cola. as a

MKT 271 Arizona State University Coca Cola on Facebook Case Study Scenario

You should assume that you have been hired by the leadership at Coca-Cola. as a marketing consultant and you have been selected to answer several questions related to their marketing efforts. You must advise the company on what to do.

In late 2008, executives at Coca-Cola had to decide what to do with a fan-created page on Facebook that had amassed over one million followers in three months. From a legal point of view the fan-created page was in violation of Facebook’s terms of service, because a non-copyright holder was using the imagery and logo associated with a known brand. Facebook contacted Michael Donnelly, Group Director, Worldwide Interactive Marketing for The Coca-Cola Company, to let him know that he was in the position to take down the hugely popular fan-created site or, conversely, he could take it over and make it an official marketing channel for the company. Coke was already revisiting its social media policies, with the Diet Coke and Mentos user-generated video incident fresh in its memory. Those videos, which featured elaborate geysers with Diet Coke as their main ingredient, were among the most viewed online videos at the time but were not initially sanctioned by the company. Donnelly knew that opening up the brand to creative consumers was necessary, but he and his team had to figure out how and to what extent they should do so while still protecting one of the world’s most valuable brands.

The Challenge

You must read the HBS case and prepare a response.

You should analyze the case and address these questions as a part of your response:

What are Coke’s primary internet promotional objectives? Have Coke’s objectives changed significantly over the years and, if so, how?
What do you feel are the most valid measures for assessing the success of Coke’s internet advertising? Explain why you feel that these are the best means of determining effectiveness.
Many of Coke’s competitors are attempting to imitate aspects of its internet advertising and integrated promotional program. (a) Does this present a threat to Coke? (b) Why or why not, and how should Coke respond?

Read the scenario carefully and develop your position using supporting arguments from the text reading material and any supporting videos. You must outline your position clearly. Any questions at the end of the case are suggestions to prompt your thinking and do not need to be answered in sequence. For the exclusive use of P. Cameron, 2016.
9 – 51 1 – 1 1 0
REV: DECEMBER 5, 2012
JOHN DEIGHTON
LEORA KORNFELD
Coca-Cola on Facebook
In Los Angeles, 29-year-old Dusty Sorg worked as a professional actor, with parts in series such as
The X-Files, CSI, and Mad Men. His 28-year-old friend Michael Jedrzejewski worked as an
entertainment industry writer. In August 2008, Sorg and Jedrzejewski decided on a whim to create a
brand page on Facebook. They chose Coke, as they later recounted the story, because a bottle of Coke
was at hand, ignoring the fact that there were already about 150 such pages built by fans of the brand.
They borrowed the company’s name, logo, and imagery without permission, but because their
motive was simply to express their genuine enthusiasm as fans of the brand, they thought nothing of it.
While other Coke fan page followings ranged from a handful to a few hundred thousand, Sorg
and Jedrzejewski seemed to strike a nerve with Coke lovers. Within three months they had 1.2
million followers. Facebook executives noticed, and called The Coca Cola Company (TCCC) to point
out that the site was in violation of their terms of service. What, they asked, would Coke like to do
about it?
The Coca-Cola Company
The world’s most popular branded soft drink, Coca-Cola (“Coke” for short) had been invented by
an Atlanta, Georgia pharmacist in 1886. By 2011 the company’s product line included other
carbonated and non-carbonated beverages, bottled water, and juice. In addition to diet and flavored
versions of Coke, TCCC also manufactured such well-known brands as Odwalla, Minute Maid, and
Dasani. By 2010 the company’s portfolio was made up of more than 3000 products sold under 500
brand names in 206 countries. Revenues in 2010 were $30.9 billion.1
TCCC employed 3500 people worldwide in its marketing department. Its chief marketing officer
was Joe Tripodi. His five direct reports included a senior vice president for advertising and, as of
October 2010, a senior vice president for integrated marketing communications. This latter position
was in response to a changing communications landscape. The incumbent, Wendy Clark, explained
her appointment by pointing to the “revelation” that of 150 million views of Coca Cola on YouTube,
fewer than 30 million were attributable to the brand. The challenge in staying on top of so much
consumer discourse was, as she saw it, to scale globally while being locally relevant. “Creating
effective marketing at a local level in the absence of global scale can lead to huge inefficiencies,” she
said.2
________________________________________________________________________________________________________________
Professor John Deighton and Research Associate Leora Kornfeld prepared this case. HBS cases are developed solely as the basis for class
discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2011, 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be
digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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Coca-Cola on Facebook
Michael Donnelly, group director, Worldwide Interactive Marketing, supported Wendy Clark in
the delivery of marketing messages via social channels to a global audience. He led a team focused on
the social business aspects of what the industry called paid, owned, earned, and shared media, in
contrast to broadcast media. Paid media referred to online display advertising, paid search and site
sponsorship. Owned media referred to packaging, delivery trucks, and websites that the firm owned
and controlled. Earned media referred to content whose intrinsic appeal to consumers earned it the
ability to be passed among consumers by word-of-mouth or online peer-to-peer message boards, and
viral advertising that was passed along between consumers. Examples included blogs, social media,
and brand public relations. Coke used the term shared media to refer to media shared with its retailer
customers—for example, store advertising and point of sale material.
The early efforts of the TCCC interactive team had followed the approach that Coke had
employed to develop content for broadcast media, where its standard was among the very highest in
the industry (although the interactive team relied less on its advertising agencies and more on
building in-house capabilities). In late 2010, Donnelly said, “Over the past five years we hired some
of the best-in-class creative directors from agencies and brought them in house. We got awardwinning commercials and iconic imagery; truly some of the best work in years.”
But as the online media landscape evolved, Donnelly observed that reliance on iconic imagery and
tight creative direction was no longer the whole answer to building a brand’s identity. In the new
environment, making things happen according to a predetermined communications strategy was
difficult; yet responding to things after they happened presented its own difficulties. The issue was
brought home to Donnelly by the Diet Coke and Mentos phenomenon of 2006.
Diet Coke and Mentos
On a Saturday in June 2006, Stephen Voltz and Fritz Grobe posted a video on their website at
Eepybird.com and shared it on the video-sharing site Revver. It showed geysers made by dropping
Mentos candy into bottles of Diet Coke. The video was the culmination of six months of backyard
experiments, and the spectacle, dubbed Experiment #137, or “The Bellagio Fountains” after the Las
Vegas tourist attraction, caught on immediately. The website link passed from friend to friend,
attracting thousands of visits to the website within hours. Two days later, Voltz and Grobe received a
call from The Late Show with David Letterman, inviting them to recreate the effect on television. Calls
followed from The Conan O’Brien Show and NPR’s All Things Considered. The manufacturer of Mentos
was also quick to respond and contacted the duo that same week offering to sponsor the Eepybird
antics.
Coke’s initial response to the video was more cautious. “We would hope people want to drink
(Diet Coke) more than try experiments with it,” said a company spokesperson. “The craziness with
Mentos doesn’t fit with the brand personality” of Diet Coke.3 Within nine days of the video’s posting,
it had been viewed 2 million times, and Mentos estimated that the company had received $10 million
worth of publicity as a result.4 The buzz around the video continued to grow, and spawned
thousands of copycat videos featuring mints and carbonated drinks. In July, Coke launched a new
user-generated content strategy, which had been in the making for many months. Coke changed its
corporate website to one inviting consumers to upload videos of their own making in response to
challenges designed by Coke.
In August 2006, Donnelly joined TCCC from Johnson & Johnson, and immediately met and
formed a partnership with Voltz and Grobe. He went to Google Video (a video-sharing site that
Google ran before it acquired YouTube) and offered the site a second installment in the geyser series
that was known as “The Extreme Diet Coke and Mentos Experiments: The Domino Effect,” which
2
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Coca-Cola on Facebook
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captured a chain reaction of 250 Diet Coke and Mentos geysers. Google used this spectacle to
inaugurate its revenue-sharing service on its video-sharing site, with Coke as its first advertiser.
As a result of the exposure from the videos, Mentos reported a sales increase of 15% over the
previous year, its largest in company history, while Diet Coke saw a 5%–10% increase in sales of its
two-liter bottle (the one used in the videos) and a 27% increase in traffic to Coke.com.5 Voltz and
Grobe, in partnership with Coca Cola, continued to make videos of Diet Coke and Mentos
experiments through 2010 and set Guinness World Records for activating 500 geysers in Cincinnati,
800 geysers in Holland, 1,300 geysers in Belgium, and over 2,200 geysers in Germany.6
The Blossoming of Social Media
The success of the Diet Coke and Mentos video occurred before the take-off of social media.
Twitter did not launch until July 2006. Facebook had just 10 million active users worldwide in mid2006; and although MySpace had 100 million members, it lacked the ability to broadcast to a
member’s entire network of friends. MySpace introduced an instant messaging capability in 2006, but
it connected individuals, not networks, and neither people nor brands had the ability to live on what
came to be called the social grid. (See Exhibit 1 for the growth in Facebook’s members from 2006–
2010.)
After 2006, social media sites began to evolve into media where fans could express support for
people and brands. Anyone could post photos, videos, and comments, and the spread of these items
was mediated only by the community that formed around the person or brand. The content-sharing
mechanism on Facebook allowed people to see when friends in their social network mentioned
brands.
However, firms were slow to systematically integrate social media into marketing strategies. Mark
Zuckerberg, Facebook’s founder, introduced “brand pages” as one of three new promotional tools at
a Facebook media event in New York in November 2007. Flanked by executives from Blockbuster,
CBS, Chase, The Coca-Cola Company, Microsoft, Sony Pictures Television, and Verizon Wireless, he
announced, “The next 100 years are going to be different for advertisers, starting from today. For the
past 100 years, media has been pushed to people, but now marketers are going to be a part of the
conversation.7” The bold announcement failed to attract either advertisers or Facebook users to brand
pages. The top brand page in early 2008 was run by Victoria’s Secret, with 380,000 fans. Zuckerberg
tried again in August 2008, announcing “engagement ads,” units that invited users to become “fans”
of a brand, comment on an ad or give a gift. A Facebook advertising executive explained that
Facebook was solving the demand-creation side of the online advertising equation as opposed to the
demand fulfillment side, which was solved with tools like search ads, text links, and performance
display ads. “We’re convinced the web as a whole hasn’t done a good job creating value on the
demand-generation side,” said the executive. “Social media creates that opportunity for marketers.”8
But at the end of 2008, few brands had a presence on Facebook, and those that did attracted in total
barely 1% of Facebook members.
During 2009, the situation began to change. More firms began to experiment with Twitter and
Facebook, and many of them used special offers to attract sign-ups. Airlines offered last-minute fares
and frequent flyer mile incentives not available on other channels. Retailers offered seasonal
discounts to Facebook fans. Starbucks announced to customers in its stores that deals were available
if only they would become Facebook fans. A study published at the end of 2010 found that of a
random sample of Facebook members who had “liked” a brand, 55% were fans of a media or
entertainment business, 51% a cause, 46% a fashion or luxury brand, 32% a sports team, 18% a car
brand, and 8% a brand of consumer packaged goods. Among the reasons customers gave for
3
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Coca-Cola on Facebook
becoming a brand fan: 39% said it was to receive advance information of future products and future
offers, 33% to take part in games and contests, 33% to get exclusive information, 33% to receive
invitations to events related to the brand, and 26% to be involved in the development of new
products and new offers. Overall, the study found that the effect of following a brand on Facebook
was that 36% of fans wanted to buy the brand’s product more.9 By early 2011, the Top 10 brand fan
pages had over 200 million fans.
Starbucks and Social Media
A widely discussed example of the application of social media came in 2008 when Starbucks,
which by then was the world’s largest retail coffee chain, began to experience its first-ever decline in
revenue and stock market valuation and turned to social media for help. In March of that year,
Starbucks created what it called its first social media website, MyStarbucksIdea.com. The site invited
customers to contribute ideas to what amounted to an effort to repair the troubled company. Using
the slogan “Share, vote, discuss, see,” it asked customers to contribute ideas by posting to a
discussion board where other customers could debate their merit, suggest improvements to the ideas,
and vote them up or down. A total of 75,000 ideas were contributed, from which the company chose
to implement 100, including complimentary WiFi, the ability to buy a friend a beverage remotely, and
splash sticks to block the hole in coffee cup lids.
Starbucks’ next social media push began in January 2009, when the company launched a Facebook
page, complemented by Twitter, Flickr, and YouTube. By June, 3 million people had recorded a
“like” for Starbucks on Facebook, and the company embarked on a drive to become Facebook’s
largest brand site. It used coupons, special offers, and discounts promoted in stores, to encourage
customers to “like” it on Facebook. “Starbucks has provided Facebook users a reason to become a
fan,”10 said the CEO of the company that was responsible for the brand’s social media strategy. By
early 2010, Starbucks had attracted close to 6 million Facebook fans and almost 1 million Twitter
followers. Commenting on the company’s social media success, Chris Bruzzo, Starbucks’ VP of brand
content and online, said: “If we had approached it not from ‘what you know and love about
Starbucks’ but as a marketing channel, we would have taken this down a path that would have been
very different. This was not [built as a] marketing channel, but as a consumer relationship-building
environment.”11
The content posted to Facebook ranged from webisodes that introduced “Via” (its instant coffee
product) through the story of a person on a road trip, videos that told the stories of coffee harvesting
techniques, and photos of and by Starbucks customers at their favorite locations. But discounts on
products were a main attraction. To introduce its new line of healthier pastries, Starbucks ran a
promotion in March 2010 on Twitter and Facebook called Free Pastry Day. Customers who bought a
handcrafted coffee drink were offered a free pastry if they presented a coupon that had been posted
online. A blogger covering social media for the food and beverage industry reported: “During this 24
hour blast Starbucks went from being the #4 trending topic on Twitter to #2, and now [later in the
week] they are #12. This first 24-hour period resulted in over 44,000 tweets that included the word
Starbucks. Some stores reported outages of pastries, and I think many consumers were surprised that
so many took part. I personally went to two locations and they stated that the flow had been steady
and more than any promotion they have had outside the holiday period. There was also a wave effect
with the coupon since . . . pass around was very powerful for them as well. Just another way to show
the real power of social media.”12 That week, Starbucks added 200,000 fans to its Facebook page,13
and later that summer Starbucks overtook Coke as the top brand on Facebook. Four months later,
Coke was back on top. The two brands would continue to be neck-and-neck for the largest number of
Facebook fans for the rest of 2010.
4
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Coca-Cola on Facebook
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In October 2010, Starbucks launched what it called the Starbucks Digital Network in its U.S.
company-owned stores. Along with free wireless connectivity in all stores, Starbucks partnered with
Yahoo! to create a portal to offer free premium news, entertainment, and lifestyle content—including
content local to the store—to patrons in each store. Providers included the location-based social
network Foursquare, and the professional social network LinkedIn.14
Coke’s Brand Page
Sorg and Jedrzejewski launched their unofficial Coca Cola Facebook page on August 31, 2008.
They had at their disposal the functionality that Facebook built into all its pages. Their page included
a discussion board on which questions were debated and polls were conducted, a fan photo page,
video sharing, and a Wall on which comments, opinions, links to images and videos, and fan status
updates appeared in an endless scroll. At the top of the page, alongside the title “Coca Cola,” was a
crisp, high-resolution image of a Coke can covered with a thin layer of condensation.
As Donnelly at TCCC tracked the 150 Coke fan pages (see Exhibit 2), he was astonished by this
one’s rate of growth (see Exhibit 3). He speculated that its rapid growth had something to do with
the fact that Sorg and Jedrzejewski had very active and expressive “social graphs,” their network of
Facebook friends, who became the core of their fan base. Donnelly noted that theirs was a more
technically sophisticated site than most other fan productions. To a fan looking for a Coke site to join
(or as Facebook preferred to put it, to “like),” theirs was by far the most professional. And as
Facebook itself grew globally, Coke, being more developed globally than most brands, grew with it.
Italy, Chile, and France had more fans on Sorg and Jedrzejewski’s site than did the U.S.
Donnelly would have been content to watch the fan activity on Facebook for a while longer, but
toward the end of 2008, he was compelled to take action. Facebook called TCCC to say that Sorg and
Jedrzejewski’s site was in violation of a policy governing pages that bore brand names and images.
Individuals unaffiliated with a brand could not host a brand’s page. Brand owners had a series of
options. According to the guidelines, they could tell Facebook to take down the page, or have
Facebook transfer control of the page to the copyright owner. Alternatively, the brand could
approach the page owners and negotiate a transfer. Finally, the brand could consent to have an
unaffiliated third party host and administer a page in its name, and if the brand wished it could start
an “official” page in its own name and hope to migrate new fans there.15
Donnelly and his team deliberated. While controlling a product’s messaging was always
preferable to the alternative, he was concerned that a straight takeover of the page would be viewed
by the fan base as an invasion of their community by a domineering marketer. At the same time,
there was a parallel concern that hundreds of millions of marketing dollars could potentially be
undermined if brand control was ceded. In December 2008, as TCCC explored its options, the page
grew from 1.2 million fans to 1.9 million fans. After much back and forth, Donnelly’s group decided
that the best approach would be to get to know Sorg and Jedrzejewski by inviting them to tour
TCCC’s headquarters and meet with the interactive marketing team.
The tour included a visit to the World of Coke museum, a 92,000-square-foot attraction in
Atlanta’s downtown core, a visit to the company’s expansive archives of historical advertisi…
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