Beautiful Thinkers: Brad Jakeman, former President PepsiCo Global Beverages, on in-house agencies, our divided society, and why diversity is an economic advantage.

I’m not going to lie. I was a bit intimidated to talk to the man who says the agency model is dead. But then again— as a partner in an agency— how could I not talk to the man who says the agency model is dead? He’s a provocateur, but if you go deeper to understand his viewpoint and where he’s coming from, he has a lot of important things to say.

Brad Jakeman is on the board of Directors for Reporters without Borders, the National Humane Society, and co-chairman of the Board of LGBT Center in New York. He is the founder of Rethink Food, a venture capital fund focused on investing in food systems to make nutritious foods available to underserved communities.

You left PepsiCo to help other organizations and causes grow. Now that you’ve been doing that for a while, how is it going?
I left PepsiCo planning to do three things. One is consulting, and frankly, that has been the least fulfilling part of my portfolio. I’ve learned I’m a better practitioner than I am a theorist. So I don’t allocate much time to it. I take three or four assignments a year, typically working with CEOs or boards on issues like disruption and future-proofing their organizations for the economy to come.

The second thing is sitting on boards. That’s so I can stay connected in the for-profit and not-for-profit worlds. I do that to keep my knowledge base current. The third area— the one I’m spending the most of my time on— is launching a venture fund focused on investing in the food system to make more nutritious foods available to people in certain communities.

Wow, tell me more about how you’re doing that.
The main barrier for these people is price. Less processed, more nutritious foods and beverages have more expensive supply chains because they’re subscale relative to processed food supply chains. We’re investing in helping scale those food suppliers and supply chains to reduce cost.

Big food companies spend about 0.8 percent of net revenue on R&D. If you compare that with other categories like pharmaceuticals, which spend about twenty percent, and tech, which spends about ten percent, you see the financial algorithm is not set up to innovate. That’s why if you look at the acquisitions and exits of food and beverage startups, that’s pretty healthy. The model that’s emerging is big food companies buy their way into portfolio transformation. I believe that M&A is going to become a much more important part of big food strategy to stay relevant.

LFWTR, PepsiCo’s premium-priced bottled water launched in 2016 under Brad Jakeman’s watch. LIFEWTR decided on an innovative approach that positioned the brand as a source of inspiration and hydration for consumers by featuring themed series of original works of art from emerging artists on the labels.

“LIFEWTR Unconventional Canvas series, a partnership with Frieze, championed equal access to arts. The series shone a light on artists Lilian Martinez, Tofer Chin and Sarah Zapata who explored overlooked materials, subjects and locations to bring art outside of traditional venues and reach a new audience.

One of the things that you’ve been saying for a long time is that the agency model is dead. What do you mean by that?
In marketing, there’s a multitude of issues. One that keeps coming up is the role of the agency— specifically how the agency roster has exploded in size. When marketers were just on television, radio, out-of-home, newspapers and magazines, you could go to one agency, and that one agency or agency group could execute everything for you. Now, the world of marketing is much more complex. The suite of agencies is much broader. That raises a lot of issues around how much I’m paying and what value I’m getting.

This relates to in-housing. Ninety percent of companies I talk to believe they should be in-housing, but they’re worried about having a culture that can accommodate the type of people that would historically have worked at an agency. They also wonder if they know how to manage an in-house organization. There is a huge unfounded insecurity that they’re not going to be able to get it right. I say it’s unfounded because, on the other hand, I get approached by a lot of creative people in the agency world and their first question is: “How do I go and work with a client?”

Pepsi MAX’s “Uncle Drew” video was the second most watched ad on YouTube last year and among the 50 most-viewed viral videos worldwide, garnering more than 22 million views.

Uncle Drew is a 2018 American sports comedy film directed by Charlies Stone II and written by Jay Longino. It stars Kyrie Irving as the title character from his Pepsi Max advertisements that began airing in 2012,

You have this weird dual stream of consciousness that’s happening. The client side is saying, “We would like to build something in-house, but we’re fearful we’re not going to attract the talent.” And you have the talent they want to attract saying, “How do I get a foot in the door in a client organization?” The reason they’re saying that is they’re seeing the stress fractures in the agency model. Most of what I hear is, “I want to be close to where the decisions are made about my work.”

The successful in-house model, from what I can tell, is when the CMO and the CD are in partnership. Creatives need to have a seat at the table, but that’s not always appealing to the leadership.
There are a lot of companies that aren’t up for it?

Yes. Many companies view in-house creative as a resource, not a partnership.
Yeah. Well look, there’s a direct relationship between how much you value creative and how much you’re prepared to in-source it. Because when you in-source it, you are taking on the capital cost of housing these people. You’re taking on a less-flexible people cost when you hire people. You have to really believe in it to want to do it. In my experience, the organizations where the leadership team believes in marketing and believes in creative effluence as an economic driver, they’re the ones most predisposed to in-housing the right way.

My message to agencies— given that I was one of the first to build a substantial internal design and content studio at a packaged goods company— is that they need to get better at collaborating with in-house teams. When I was building the content studio at PepsiCo, many of our agencies were very nervous, which was not helpful. Agencies should embrace the fact that in-housing is an inevitability. It doesn’t mean that it’s going to be a binary thing and that they’re going to go away. It just means that the distribution of work is going to be different.

What would that look like? How should agencies be responding instead?
I can absolutely imagine a world where an agency leans in and says: “Okay, as you distribute the work and think about resources, we believe we are the better source for your brand strategy.” This is what I call tent pole campaign development. Your in-house studio is better at fast turnaround work. So, the agency can say: “Let’s build a capability together. We’ll help you build your in-house team to complement our team, and we’ll both have skin in the game.” That just doesn’t happen, and it’s so shortsighted.

When I was building the PepsiCo content studio, a senior agency person said to me, “Well you’ll never make this happen, Brad, because you’ll never get agency people to want to come and work for you.” And I thought, “Wow, if this person is saying to me, I’m sure they’re also saying it to our CEO. That’s going to create a headwind for me when I lay out the final proposal.” All of the innovation in this space is because the advertising agency industry has refused to innovate its model, and the clients have taken responsibility for doing it. If agencies would just cut it out and say, “Let us work with you to figure out the right solution,” their likelihood of having a role in that solution would be exponentially higher.

In 2016, Creators League, a 4,000-square foot content studio opened in New York’s SoHo neighborhood. PepsiCo, like many other mainstream brands, went from doing 3–4 spots s a year to producing 400 pieces of content each year.

I agree. I would much rather work with an in-house agency than four other outside agencies.
Of course. What always shocked me was how marketing departments were formed, the lack of talent and experience a lot of people directing our agencies had. I would talk about the cost of an external agency. They’re not that dissimilar to the hourly cost of external law firms. Would we allow very junior people with no law background to randomly call up our external legal counsel and weigh in on class action suit defense strategy? No, we wouldn’t. Because that would be very inefficient. Not to mention that would yield a very poor outcome, because a partner of a law firm has to take that call and go to those meetings.

I always found it amusing that the same basic rules didn’t apply to the agency. The agency didn’t have the benefit of being able to speak to somebody who understood their language, who could give cogent feedback and evaluate work in a helpful way. An external agency working with a talented internal agency is a much more productive conversation than one with a junior assistant brand person who is two years out of school.

That would be much better than working with four external agencies who all come from different disciplines like digital, promotions, PR, etc.
That’s just stupid. That is not the role of the agency. That is the role of the client. The client is the conductor of the orchestra. The client’s role is more complex now because they have to knit together all of the agencies so that the brand has the consistent narrative. Lazy clients identify the “lead agency.” I hate that term. It’s making them responsible for the other agencies— which the client chose— yet they have no authority or equity over them. Give me a break. That’s never going to happen. It’s just lazy. It’s just lazy.

In 2014, Brad joined the Board of Directors for the Ad Council. In 2015 Love Has No Labels launched as a movement to promote acceptance and inclusion of all people across race, religion, gender, sexual orientation, age and ability.

You’ve talked about how brands can get into trouble when they traverse into territory that they don’t really belong. Do you have different advice for legacy brands trying to have a higher purpose vs. a startup brand who can embed it from the start?
Purpose-based marketing is a phrase du jour. The industry goes through these cycles, then moves on to the next. I didn’t go to the AMA conference this year, but what I heard— and I saw it at Cannes— is that most people talking about purpose marketing are not talking about purpose marketing. People confuse a brand positioning with a brand purpose, and the whole thing is getting murky.

It’s very hard to take a legacy brand and make it all about purpose-based marketing. Authenticity dictates that purpose be built into the brand DNA. It’s not impossible. I would say Dove is a great example of a brand that has embraced its societal purpose in a very authentic way, even though it is a very old brand. But it takes a long time to do that.

Particularly if you’re a legacy brand, you’ve got to be absolutely sure that the societal purpose you choose is authentic. The litmus test is: can you really make a difference or are you just attaching yourself to a cause? Have you done an end-to-end audit of your brand— not its communications, but the people and the organization— to avoid what happened to Audi a few Super Bowls ago? They made a commercial about empowering women only to find out that there wasn’t a single woman on the executive board at Audi or Volkswagen.

If you’re a legacy brand and you attach yourself to a social purpose, people are going to approach it with skepticism, which translates into investigation. If that you are not walking the talk, that’s worse than not having a social purpose positioning in the first place.

It used to be brands had to make sure that they weren’t doing any harm. That was the bar. Now the bar’s much higher. People are looking to make sure that your company is actually having a net positive impact on society, on the environment and so on. They are much more attune to discrepancies in what you say, what you do, and who you are than they ever have been before.

“PepsiCo’s in-house content development studio, Creators League. premiered its documentary film, A Tuba To Cuba at SXSW in 2018.”

As you’ve said, quite often the people that are objecting in the social sphere aren’t even your customers.
You know, somebody gave me a great phrase about the emergence of the Twitter troll. If a brand seems to have done something wrong, the pile-on is immediate and significant and profound— seemingly without any process of digestion or comprehension. This person said to me, “Your commenters are rarely your consumers.”

So, how do you then advise clients? Because you can’t test for that. Clients are already fairly risk-averse.
It’s controversial and not everybody agrees with it, but I would rather be a brand that has some controversy associated with it than be a brand that’s completely irrelevant. To be relevant to consumers, brands have to in some way, shape or form reflect their society and circumstances. In some cases, brands need to give consumers their perspective on issues. Often those issues have two sides.

I counsel brands never to develop a marketing culture where they say: “We’re going to do this, that and the other to make sure that a brand crisis never happens to us.” Because it will. Given the complexity of publishing platforms, the divided nature of society, and the online-enabled voice that everybody has, every brand is three seconds away from a faux pas.

The phrase I encourage marketers to think more about is: “What are we going to do if it happens to us? What is our plan, how will we manage that? What is the process, what is the messaging?” Some of the received wisdoms dates back to the days where brands were only being commented on by legitimate media with editors and newsrooms. The head of comms could call twelve editors, explain their point of view, and then the coverage would change. But now, the story keeps going.

We’ve seen it with Gillette. We see it with Dove. We’ve seen it with Pepsi. Something happens that causes society or factions within society to have a negative response. Brands tend to want to make it go away, as opposed to entering the dialogue. And entering the dialogue is fraught with many dangers, don’t get me wrong. One of which is that it continues the news cycle. Brands have an opportunity to either help write the conclusion or allow it to be written by somebody else.

P&G has done a lot of interesting things with using their platforms as a way to raise social consciousness. They typically pull it off, except in the most recent case of Gillette.
I thought it was an incredibly brave move for a brand for men to direct a message that men needed to hear. It was a shame that, again, all these special interest groups weighed in. They deliberately muddied the water as if somehow Gillette was talking about masculinity not being a good thing, that men were being emasculated. They were talking about toxic masculinity, masculinity that had gone off track, that had been intensified on all the wrong dimensions. That’s what they were addressing. But again, going back to my point, you’re publishing in a very divided society now. Special interest groups wanted to make sure that that message was interpreted in a different way, and that was just unfortunate.

Brad recently launched fashion brand, Ryland Life Equipment, with his partner Ryland. The brand’s aim is to equip men for whatever life throws at them. They have a concept store, which is located in the Hamptons.

You’ve said, “The best thing brands can do, when that kind of thing happens to another brand— beyond saying, ‘there but for the grace of God go I’—is to help each other out. Have each others’ backs.”
The number one counsel I give is to assume positive intent. Assume they were trying to do the right thing and maybe screwed up. That’s not always the case. Sometimes people just are really tone deaf. But start with giving them the benefit of the doubt. Look at what they’ve said and done historically as an organization. If what they’ve said and done is inconsistent with this one thing, then give them even more of the benefit of the doubt.

Then reach out and offer help. Sometimes that’s just weighing in on your social media channels with an alternate, maybe less fashionable point of view, like, “Hey, here’s another way to look at that.” Because it’s much more helpful when someone else is saying the things that you really want to say but can’t because you’re on the back foot.

The example I give is the Dove incident. Somebody extracted a three-second snippet from a 90-second piece of content of a black woman’s head changing into a white woman. All of a sudden, people jumped on that and said, “Aha, this is a penetrating insight into the deep darker core of Dove the brand and Unilever the organization.” Twenty-five years of work Dove had done beyond advertising to generate a better perspective on beauty and diversity for women was erased based on this three-second extracted footage. That is just insane. The fact that so many people are prepared to believe it and people weigh in on it and that it makes its way onto newscasts is just so shocking. Nobody ever says, “Wait, what was the context?”

Do you see this happening at the CEO level of the bigger brands?
It’s less about the CEOs weighing in. When a brand has a particular cause, they need to have a circle of stakeholders and opinion leaders they are frequently talking to, seeking council from, showing work prior to it airing. Then make sure they know what you would like them to say if something goes wrong. Often when something has gone wrong, the brand finds out after the fact a group of very influential people wanted to say something in defense of the brand but were fearful because they didn’t want to perpetuate the news cycle.

Does that include self-interest groups to try and head off any of that type of controversy?
I wouldn’t. My recommendation is don’t go after the people who oppose you. Obviously, you have to have a productive dialogue. But I typically wouldn’t share stuff with them because sometimes all you’re doing is prewiring them for a more concerted attack. Your chances of converting them to your way of thinking are so minor. If you show it to them and they ask you to make changes you don’t want to make, that’s going to antagonize them even more.

Show it to people who are genuinely supportive of the cause that you are trying to address to make sure that you re addressing it in an appropriate authentic way, and that there aren’t any potential faux pas that you’re going to make. I typically think that’s more productive.

Brad, with his mom and dad. “I’ve said that I became more successful, more ambitious, more driven because I had two parents who had great careers that made them really happy.”

You’ve always championed diversity. I’m curious what shaped that and if your mom played a role in that formation.
Fifty-one years ago, when I was born, my mom was one of a very, very small percentage of women that pretty much went straight back to work when I was very young. My most vivid memories of my mom growing up have to do with her working. Not that she was absent from the household, but I always remember I couldn’t wait till she got home. I would go into her office and ask her all about her day. I was fascinated. As a kid, I saw that my mom’s career was really important to her.

The other experience that’s led me to my point of view is watching firsthand as very close friends become new moms. They’re conflicted that there’s a societal value judgment on how much time they spend in the office versus with their kids. I always told them that I became more successful, more ambitious, more driven because I had two parents who had great careers that made them really happy. I never minded being looked after by my grandma or eating later because mom at the office or not having a mom who could go to all the PTA meetings. I thought of my mom as more special because of those things, not more absent.

The third part is almost like a coincidence. Eighty-five percent of my bosses have been women. If my direct boss wasn’t a woman, the company was run by a woman. When I was at Ogilvy, Charlotte Beers was running it, then Shelly Lazarus. At Citi, I worked for Anne Macdonald. And the CEO of Citi’s consumer bank was Marge Magner. I followed Anne Macdonald to Macy’s. Activision was the first job that I didn’t work for a woman. Then at PepsiCo, obviously Indra Nooyi was the chairman and CEO. My entire career has largely been working for women or working for companies being run by women. That was my reality. It struck me as odd that that wasn’t the reality for everybody.

How do you advise companies who want to increase their diversity?Whenever a company asks me to help with diversity efforts, the first question I ask them is: “Why is it important?” A huge amount of people either can’t answer the question or they talk about corporate responsibility, being good corporate citizens. That’s all bullshit. The reason you have diversity is to get better outcomes. Time and time again, it has been shown that people bringing different life experiences and perspectives to the table always yield a better solution.

If you just want to do it to be a good corporate citizen, I’m not interested in helping you. Hire a few prominent women and publicize them, put them on a lot of stages. There you go, knock yourself out. But if you’re doing it because you see that there is a disproportionate economic advantage to it, which there is, then let me help you architect how to get there.

I think that’s right. I have to say though, being on this side of it, that it would be nice to be hired because I’m good, not because I’m a woman.
Can I give you a fabulous response that Cindy Gallop, who’s a very close friend of mine, would give you if you said that to her?

Yes, what would she say?
She’d say, “Get over it and just think about all the mediocre men in history that have been hired just because they’re men.”