Social media trends: Pepsi’s charity contest

by Urs E. Gattiker on 2010/03/04 · 13 comments 13,215 views

in d business Fortune 500

The number of contests on social media that raise money for charities have increased significantly in the last year. This is partly due to companies and non-profit groups learning how best to use Facebook, Twitter and other online tools for marketing and fundraising.

But this causes new challenges. For instance, December 2009 JPMorgan Chase & Company fumbled its online contest to award millions of dollars to 100 charities. In fact, some groups publicly stated that Chase changed the contest rules to ensure those who do not fit its image would not reach the top 100.

This post will focuses on the viability of crowdscoring for selecting a winner as applied by Pepsi and Chase in recent charity contests and other critical issues, including business ethics, reputation management (watch the videos).

What happened?
The Joyful Heart Foundation’s (JHF) submission originally included a link to a video on YouTube that incorporates a photo of the Pepsi Refresh website. But the Pepsi Refresh site went up only after the submission deadline had passed. Inquiring minds wanted to know how the charity get hold of the image. One explanation was that it was provided to the charity by Pepsi ahead of the site’s release, thereby giving JHF an unfair advantage.

The video below claims that, “With your help – and this grant from Pepsi – we’ll change the world.” Some would call this bold, others confident. We consider it pompous, but maybe it is a somewhat extreme version of a can-do spirit.

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What made matters worse was that Pepsi staff decided that it would be easier for Refresh voters to view the video directly on their site. Hence, Pepsi staff changed the link on the foundation’s application after the deadline.

Then what?
On February 25, The New York Times published the article “Pepsi Charity Contest Trips Over Its Own Submission Rules“. Remember, instead of spending US$20 million on Super Bowl advertising this year, Pepsi is giving that amount to charities who get the most votes on social media.

    “The tiny charity currently atop the rankings in one category of the contest accidentally got a little help from Pepsi itself.
    Materials submitted by the Joyful Heart Foundation, a charity started by Mariska Hargitay, one of the stars of “Law & Order: Special Victims Unit,” to help victims of sexual assault, were updated by the staff at Pepsi after the submission deadline, which is against the contest rules.” – Stephanie Strom, The New York Times

Did Pepsi do anything about this? Well, it admitted the error…

    “The Pepsi Refresh Project focuses on promoting positive social change and collaborating with people who have the ideas and the passion to refresh the world.
    Despite our best intentions, we did not follow the program’s guidelines properly, which is the subject of an article in today’s New York Times
    We will be taking the following steps: Pepsi will award Joyful Heart a discretionary grant of $250,000. The second- and third-highest vote-getters at the $250,000 level will receive $250,000 grants from the Pepsi Refresh Project. We also will return the submission to its original format.
    We are committed to giving away $1.5 million in mid-March to what will now be 33 grant recipients and more than $20 million by the end of the year to help people bring their positive ideas to life. More than anything, this is the most important commitment of all.
    As we move forward and learn from this, we are committed to taking steps to ensure the fairness and integrity of the program and that the Pepsi Refresh Project continues to inspire people to create positive ideas that will change the world.” – The Pepsi Refresh Team

What about business ethics?
At first glance, it seems Pepsi did the only sensible thing: apologize and move on.

But their response is open to another interpretation:

    Yes, we apologize for our ‘mistake’, but we like them so we’ll give them money anyway.

In an email, Pepsi’s Bonin Bough told Beth Kanter, “We believe that the democratic process is better than us deciding on our own but only time will tell.” In a subsequent blog post, Kanter wrote, “I’m skeptical that ‘Vote for Me’ contests are the best strategy for selecting the best solutions or ideas.” We heartily agree.

But the above suggests that Pepsi never wanted to give their audience control to select the winner. Instead, it manipulated the contest and found another way to pay JHF when it got caught. So why have a contest; why not just select a charity and be done with it? That would have been better than the mistakes made, no?

More resources about Pepsi and social media

Bottom line
Maybe Beth Kanter is right when she says,

    “And now we have a real-life example with the Pepsi Refresh Contest making a mistake by not following its own rules, but moving swiftly to acknowledge it, fix it, and move on. This is what Clay Shirky calls failing informatively.”

It was one thing for Pepsi to ditch the Super Bowl, but its subsequent decision to give the US$20 million savings to charity was brilliant. However, the management failure of the giveaway took the sheen off Pepsi’s triumph.

You may wonder why Pepsi made this mistake, since, as well as being unfair, we know how such behavior can backfire. JPMorgan Chase & Company managed to fumble the ball in December 2009 with its US$5 million Facebook giveaway contest, so the Pepsi staff should have seen the writing on the wall when they intervened on JHF’s behalf, right?

Some suggest that whether Pepsi’s Refresh Project is successful or not depends on its ability to follow through and make it work in combination with their total marketing mix. Trying to control the outcome and violating its own rules is likely the quickest way to failure.

We believe the financial crisis and increasing demand for transparency in corporate governance may have spread to social media and social media’s trends have spread further afield.

    1. Wisdom of crowds can only be conventional: Just because a charity manages to get a huge crowd to vote for it online does not make its work Nobel prize material. The earth did not stand still just because Galileo lost favor, nor has evolution been disproven due to the faith of believers.

    2. Increasing demand for more transparency: Contest rules must be clearly spelled out and one must follow them. These days, investors and customers want improved transparency for everything, and for once, social media is not starting but following a trend.

    3. Do not expect to control the voting process: Trying  to control the outcome of a contest by disqualifying a charity you do not not like (e.g., JPMorgan Chase & Company rejected Students for Sensible Drug Policy, the Marijuana Policy Project) or violating your own rules by giving preference to another (see Pepsi) will backfire. In fact, it might wipe out more than whatever was gained by organizing the contest in the first place. In turn, the damage to your brand and reputation can be huge.

Please, leave a comment! We love to hear your thoughts: how do you feel about using crowds to select a charity contest winner? Does this ensure selecting the worthiest causes that get the biggest bang for your buck? How do you feel about the way Pepsi handled this problem? Is saying sorry good enough? How can such mistakes be avoided? Please share your insights.

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Article source: Social media trends: Pepsi’s charity contest

PS. Coke does it a bit different but its commercial about the Olympic Hockey Champion is an example of how to use social media, national pride and sports events to increase brand buzz, great to watch

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