The average American consumes 53 gallons of carbonated soft drinks per year! That not only equates to a lot of big people, but a lot of big dollars. About $60 billion as a matter of fact. At face value, it may seem as though the success of popular soft drinks such as Coke or Pepsi is all about the sexy branding and ad campaigns, but it’s a lot more than that. Although marketing functions do play a significant role, like any business, it’s much more intricate than what you see at face value. And pretty interesting.
I was checking out The Coca-Cola Company’s annual report and came across an interesting statement of how they describe their business:
“We sell the concentrates and syrups for bottled and canned beverages to authorized bottling and canning operations...”
It wasn’t “we create a product called Coca-Cola and distribute it,” it was that they sell the concentrates and syrups to bottling and canning operations. I did a little digging and discovered that the concentrate production and bottling/canning operations are two separate businesses: concentrate producers (the corporate brands you recognize) and bottlers/canners (a franchised network).
Concentrate producers manufacture the concentrate for the soft drink and are responsible for advertising promotion, market research, and bottler relations. They invest heavily in their trademarks. Bottlers and canners on the other hand, purchase concentrate, add water and other additional ingredients, bottle or can the finished product and deliver to retail channels. The bottlers distribute to retail channels that then distribute to consumers (except fountain accounts, which concentrate producers handle directly). The relationship between bottlers and retail channels is crucial to maintaining the concentrate producer’s trademark and brand presence.
The mutual dependency between both businesses in the soft drink industry can be paralleled to the relationship between branded direct marketers and affiliate networks. The brands are dependant on affiliate networks to distribute their products and services to publishers who then promote or “sell” to their user base. Affiliate networks on the other hand are dependent on the direct marketers to deliver high performing offers—and usually, well recognized, brands tend to perform exceptionally well. End-users may see an ad from a particular brand and think it’s directly from the company, not realizing all the value-added parties in between.
I’ll keep my conclusion to this soft drink industry mini case study purposefully short and limited to just one aspect of affiliate marketing. This is not to leave you hanging, but because I want you to use the brief lesson to draw similarities to the aspect of affiliate marketing that you are involved in. Do you create incentivized promotions? Aggregate and resell leads? Run email campaigns? Think about where you fit on the complete value chain between the direct marketer who develops the offer to intermediary who brokers the offer and the publisher that finally pushes the offer.
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