Coca-Cola Pours More Energy Into Ads : Marketing: The soft-drink giant’s signing of Hollywood’s high-powered Creative Artists Agency is seen as an effort to overcome what some consider a flat campaign against Pepsi.

In the decades-long cola wars, Coke still holds more of the battleground than archenemy Pepsico. But Pepsi has made significant incursions.

So Coca-Cola’s hiring of Hollywood powerhouse Creative Artists Agency is being interpreted by beverage industry analysts as a major counteroffensive against Pepsi’s successful marketing efforts in recent years.

Advertising and promotion--despite their highly subjective nature--are very serious business for the soft-drink companies, which execute their marketing plans with all the solemnity that their huge price tags demand.

For television ads alone, Coke and Pepsi together spend hundreds of millions of dollars annually. They dole out millions more to hire such celebrities as Ray Charles (Diet Pepsi) and Paula Abdul (Diet Coke) in hopes of capturing bigger bucketfuls of the 13 billion gallons of soft drinks that Americans consume annually.

“Coke was always the dominant voice, and it was so strong that they created a universal trademark,” says Tom Pirko, president of BevMark Inc., a Los Angeles beverage industry consultant.

But in recent years, Coca-Cola has not been able to come up with slogans as memorable as some from its past--from “Things Go Better With Coke” to “It’s the Real Thing.”

“For some time now they’ve been coasting,” Pirko says, “and Pepsi knows it.”

These days, the cola wars take the shape of an endless parade over the airwaves of smiling celebrities.

This year alone, Coca-Cola has used Randy Travis, Anita Baker, Wayne Gretzky and CNC Music Factory to promote Coke. To pitch Pepsi, Pepsico has hired everyone from Bo Jackson to Bert Parks for its “summer chill out” series of commercials.

Why? For the giant beverage makers, even a tenth of a percentage point in market share means hundreds of millions of dollars in revenue.

“Pepsi has had a definite edge in their advertising and promotion over the last two years,” explains Hellen Berry, a vice president of marketing at Beverage Marketing Corp., a New York consultant. “Coke has basically been playing catch-up in its advertising with Pepsi.”

That’s not surprising, according to Video Storyboard Tests Inc., a New York-based company that surveys consumer opinions about TV commercials.

Until 1983, Coca-Cola beat out Pepsi in the firm’s annual survey of the top TV commercials. But for seven of the past eight years, “Pepsi has outperformed its rival in viewer retention, thanks to the well-publicized use of rock superstars, hot celebrities and elaborate productions,” according to Video Storyboard President David Vadehra.

However, analysts on Wednesday were not convinced that Coca-Cola’s unusual relationship with CAA would help boost sales of its sodas.

“I thought the use of big-name, high-priced celebrities as spokesmen was diminishing,” says Joseph Doyle, a beverage industry analyst with Smith Barney in New York.

Indeed, while celebrities may get good marks for grabbing viewers’ attention in commercials, surveys show they suffer credibility problems among viewers. The public, it seems, is jaded enough to suspect that pitchmen are in it just for the money.

“I think their philosophies have changed a little bit,” Gary Hemphill, editor of Beverage Industry, says of the cola makers. “During the 1980s, it was more star wars than cola wars, with Michael Jackson and Madonna for Pepsi. Coca-Cola had a similar entourage. Now both companies are playing that down a bit. They are instead trying to use stars only as part of well-developed marketing campaigns.” CAA officials Wednesday said the deal with Coca-Cola did not automatically mean that such CAA clients as Tom Cruise, Dustin Hoffman and Kevin Costner would soon be slugging down cans of Coke in TV commercials.

But Jay Nelson, an analyst at Brown Bros. Harriman in New York, says CAA could negotiate everything from celebrity endorsements to product tie-ins on behalf of Coke. One of Coca-Cola’s big summer promotion campaigns, he points out, included give-aways of compact discs by pop artists on the Sony Music label--another firm with which Ovitz is associated.

“Certainly the entertainment business is global, just like Coca-Cola,” Nelson says.

BevMark’s Pirko says part of Coke’s problem in recent years has been relying too much on “gimmicks”--not just CD giveaways but inserting $100 bills inside soda cans, a promotion that had to be recalled because of “technical problems.”

Coca-Cola, he says, perhaps has neglected good, old-fashioned advertising that can expand market share. “They’ve tried a lot of quick fixes, and it hasn’t paid off,” Pirko says.

Analysts also say the CAA deal appeared to be part of an ongoing shake-up in Coca-Cola’s advertising and promotion department--which, though the longtime envy of the industry, is also considered one of the most tradition-bound.

Within the past few weeks, Ira C. Herbert, executive vice president and one of Coke’s top marketers, announced plans to retire. Herbert had been trying to revive Coke’s ad campaigns, which critics say have paled beside Pepsi commercials. Pepsico has won raves, in particular, for its “You’ve got the right one, baby, uh huh” refrain, performed by Ray Charles for Diet Pepsi.

Peter S. Sealey, a veteran Coke executive who headed marketing at Columbia Pictures when Coke owned the movie studio in the 1980s, is now developing its global advertising campaign. In addition, Charles (Chuck) Fruit, a highly regarded Anheuser-Busch executive, recently joined Coke as vice president and global media director.

Exactly how CAA fits into Coke’s future marketing, promotion and advertising efforts remains to be seen.

“Coke picked a company that knows how to make waves. CAA has a powerful voice and knows how to be heard,” Pirko says. “But we’ll have to see on the follow-through.”

Fighting the Cola Wars Coke has gained the market share. . Market share of the 10 most popular soft drinks last year versus 1986. 1986 Coke Classic: 18.4% Pepsi: 17% Diet Coke: 7% Diet Pepsi: 4%Dr. Pepper: 3.5% Mountain Dew: 2.8% Sprite: 3.5% 7-Up: 3.1% Caffeine-Free Diet Coke: 1.2% Caffeine-Free Diet Pepsi: 0.9% All others: 38.4% 1990 Coke Classic: 19.2% Pepsi: 16.5% Diet Coke: 9.9% Diet Pepsi: 5.7% Dr. Pepper: 4.3% Mountain Dew: 3.7% Sprite: 3.6% 7-Up: 2.5% Caffeine-Free Diet Coke: 2.2% Caffeine-Free Diet Pepsi: 1.3% All others: 31.1% Source: Beverage Marketing Corp. . . .but some analysts say Coke has lost the edge in advertising. A survey for the trade publication Adweek found that American TV viewers prefer Pepsi’s commercials. Survey respondents, who were selected randomly, were asked to name one or more TVcommericals that were their favorites during the past month. Pepsi: 24% Energizer batteries: 7% Coca-cola: 7% Diet Pepsi: 7% Nike Athletic Shoes: 7% Miller Life: 7% Budweiser: 6% Kellogg Cereal: 5% McDonald’s: 4% Wendy’s: 3% Source: Adweek MAIN STORY: A1