Hands-On Commentary--Was Apple Cheated by Pepsi in the Free iTunes Song Promo?

You might think so based on articles like the one posted by Think Secret which claims that Apple's internal goal was 25 million redemptions but the promo netted only 5 million. We don't know how many redemptions Apple expected to get but 5 million redemptions out of 100 million possible is not too far off from what we'd guess given the design and expected execution of the promotion. Why is that?

We participated relatively heavily in the promotion. On the one hand, it wasn't hard to do since we use our iPod mini, and our iPods before it, for hours every day and we tend to favor diet Pepsi along with Dr Pepper when we buy soda which we do a lot. On the other hand, it was difficult because we almost never buy 20-oz bottles of soda. This is partly because they are only available as singles in coolers in convenience stores or in special coolers in grocery stores or in special dispensing machines located in some bowling centers, motel hallways and the like. It is also partly because the 20-oz bottle is probably the most expensive way to buy soda and partly because 20 oz is more than we usually want to drink at one time and no fridge is usually available for the residual.

It took some serious effort to change our habit of buying soda in large flats or 12-can and 24-can boxes with large discounts or as reasonable doses from 12-oz cans from dispensing machines. One might ask if the average person who stops by a convenience store and drinks a 20-oz bottle of soda is really likely to care about redeeming a song via a computer for use with an iPod, if they even know about it in the first place. Pepsi knows the demographics of those who buy its products and we don't. But one might also ask why so many of Pepsi's promotions involve the 20-oz bottles. If Pepsi bore the cost of the promotion and knew this would minimize their outlay but Apple didn't, then maybe one could conclude that Apple got cheated but there are a lot of "ifs" involved in reaching that conclusion, more than we are comfortable with.

Clearly, Pepsi did not make the bottles with the iTunes promo caps widely available in the market quickly after the promotion began. We found only a few such bottles in a few 7-11 stores after an extensive search of Northern Virginia a full week after the four-week promotion began. It was several weeks into the four week promotion before the promo bottles were fairly common. But again, it may not have been practical to do better given Pepsi's distribution process.

Our first thought when the promotion period was announced for just 30 days with an additional 30 days for redemption that pushing 300 million 20-oz bottles promo bottles onto and through the market in that time period would be a monumental feat. We still see notes on web sites from people saying they never arrived. However, one of the areas mentioned was San Diego, CA, when we were there so we went to the local Albertsons in San Diego and found iTunes promo bottles in their singles cooler by the checkout counter. There were still promo bottles there last week which can be redeemed through today [Note: We originally incorrectly wrote "Saturday"]. So it seems that some people just don't know where to look. We wonder if Pepsi will get even the 100 million winning bottles (one-third of the total) to and through the market by Saturday. Only Pepsi knows this for sure.

Was the rate of winning bottle caps changed to accomodate a slow delivery of the promo caps to market? We managed to score free songs at a 75% rate, without "tipping", from nearly 80 20-oz bottles, a rate that is over double the advertised 33-1/3% rate. We are not particularly lucky so we don't believe that our success was entirely luck. In fact, the success rate enjoyed by a few other people whom we know who bought 50 or more iTunes promo Pepsi bottles ranged well above the advertised rate according to their recollection. Our experience over time, which supports a change, was that we had a winning rate of around 50% in the beginning and that it increased to nearly 100% toward the end.

We also have some concerns about the integrity of the process. Two of our first ten winning bottlecaps would not work, i.e. the code was not uniquely readable or it was bad. The instructions for bad caps were to get an RMA from a Pepsi web site and send the cap in a padded envelope to a Pepsi redemption center. Then, a working code would be sent back by email. Despite the fact that a padded envelope and postage costs more than 99 cents, we did this twice to test the system. The first bad cap was obtained during our first weekend survey and it received an RMA from Pepsi in the 300's. The second followed by four days and it received an RMA in the 900's so at least initially there were more than a few caps with redemption codes that did not work or were not readable. Inspite of spending an extra $3+ for the two "free" songs, we received only one code back by email from the redemption center and even that was nearly after the promotion is set to end. We suspect that most people just trashed a winning cap with a code that didn't work.

So, in conclusion, it seems to us that the promo was designed and executed in a way that was stacked against getting a high redemption number even though the actual winning rate may have been higher than designed and may have even increased over the promotion. However, it strikes us that almost any marketing person should have anticipated that happening so we find it hard to believe that Apple was cheated. If Pepsi didn't perform up to its contract, we expect that Apple will be getting some consideration but it would have been far better if the program had been designed and executed to deliver more redemptions than 5 million.