PepsiCo just ended the era of procurement in marketing

PepsiCo spends $5.4 billion a year on marketing and $3.4 billion of that on advertising. Last week it gave the whole global media account, planning, buying, activation and the technology underneath, to Publicis Groupe under a "One PepsiCo" model across more than 200 markets. Omnicom's OMD had bought PepsiCo's American media for more than twenty years. PepsiCo called the process a media capabilities review. There was no pitch.

I built my career on the pitch. At Nestle I ran the biggest media pitch Pakistan had seen and it saved the company more than PKR 9 billion over my years there. Later I sat on the Publicis One executive committee in Malaysia, where we won MYR 180 million of new business, most of it in pitch rooms. I know exactly what a pitch is for. It is procurement's one real lever on a marketing budget. You put four holding companies in a room and make them cut rates, fees and margins against each other until one of them bleeds enough to win.

PepsiCo just told the market that lever is finished. So did Microsoft. So did Coca-Cola. Three of the biggest media accounts to change hands in eighteen months moved without a competitive process, and all three went to the same holding company. That is the end of an era, and I do not think the industry has said so out loud yet.

Three of the biggest accounts of the year moved without a pitch

In April, Microsoft ended twelve years with Dentsu and moved its estimated $700 million global media account to Publicis. The Drum called it unusual for one of the biggest appointments of the year that the account moved without a pitch. Microsoft framed the deal as a strategic partnership on agentic AI, with Publicis data on one side and Microsoft cloud on the other, and the media appointment buried inside the announcement.

A year earlier Publicis took Coca-Cola's media and data business in North America from WPP after a closed-door review. PepsiCo followed this month. Publicis Media booked $10 billion of new client billings in 2025, which The Drum puts at roughly one third of all media spend that changed hands worldwide. Coca-Cola, Mars, Kenvue and Aldi all went to Publicis last year.

When one seller wins a third of everything that moves, and the biggest clients stop asking for bids, the buyers have stopped believing the bid changes the answer.

Procurement squeezed the fee until the profit moved somewhere it could not see

Procurement took over media buying in the mid 2000s with one method: benchmark the rates and the fees, and make the agencies compete on both. It worked. Fees fell for two decades and every pitch I sat in ended with an agency accepting less than the last one.

The agencies answered by moving the money. In 2016 the ANA commissioned K2 Intelligence to look at how US media was actually bought. The report found cash rebates, free inventory credits and disguised service agreements to be pervasive, with advertisers saying they never received or never knew about them. K2 described a fundamental disconnect. Advertisers believed their agencies were duty-bound to act in their interest. Agency executives said the relationship was defined solely by the contract. The report also flagged principal transactions, where the agency or its holding company buys media on its own account and resells it to the client at a markup.

Ten years later that footnote is the business. The ANA's March 2026 study found that 58 percent of marketers used principal media in the past year, up from 47 percent in 2024. 76 percent say they do it because it costs less. 90 percent say their top worry is whether the recommendation is in their interest, and only 57 percent have any internal rules governing it. Television is where most of it happens, at 74 percent.

Read those numbers as a procurement officer. The fee you spent twenty years squeezing is no longer where the agency makes its money. The agency now makes money on the spread between what it paid for inventory and what it charged you, and that spread lives inside a deal you cannot benchmark because the agency owns the goods. Procurement squeezed the pitch so hard that the profit escaped into places the pitch cannot reach.

Procurement hollowed out the agencies before it killed the pitch

The fee squeeze did something worse than hide the profit. It emptied the building. An agency's only cost is people, so every fee cut in every pitch came straight out of the team. I watched it from three chairs over twenty years. The A team pitched the account and the C team ran it. Planning directors were replaced by executives two years out of university. Anyone with real judgement about a client's business left for Google, Meta, a consultancy or the client side, because the client paid better for the same brain. I made that move myself, from GroupM to Nestle, and so did most of the people I pitched with.

Two decades of that and the industry is now shedding people faster than at any point in my career. WPP has cut almost 11,000 roles since the start of 2025 and its headcount stood at 97,388 in June. Omnicom wants the combined Omnicom and IPG workforce down to about 105,000 from 128,000. Dentsu is cutting roughly 3,400 roles outside Japan, about 8 percent of its people abroad. In the US, agency employment fell 3 percent between March 2023 and March 2025 and more than a third of agency staff say they are thinking of leaving the industry. Gartner puts the share of marketing budgets spent on agency fees at 19.2 percent and falling.

Here is the consequence for the pitch. When PepsiCo went looking for a partner in 2026, the human capability it might once have compared, the planners and strategists and negotiators who differed from one holding company to the next, had largely gone. What differed was the asset the holding company had bought: a database, a platform, a cloud partnership. Procurement spent twenty years stripping out the part of the agency that could be pitched, and then found there was nothing left to run a pitch on.

The pitch cannot price what the agency now sells

PepsiCo told Marketing Dive what it was buying: media strategy, planning, activation, data, connected identity and technology, integrated across markets. Half of that list is data and technology. Connected identity means knowing that the person who bought a Gatorade at a petrol station is the same person who saw the ad on their phone, across 200 markets.

Publicis owns that asset. It paid $4.4 billion for Epsilon in 2019, a company whose entire business is matching individual people to their purchases and to the ads they see. Omnicom's answer is Omni, built on Acxiom's identity data, and in June and July Omnicom moved at least 468 of the engineers who build Omni to Endava, an outside contractor. One bidder runs its data platform with its own people. The other just handed its platform away. There is no spreadsheet that compares those two on price, so PepsiCo did not pretend to run one.

Gartner's Andrew Frank said of the Microsoft move that the agency business is shifting away from traditional agency services toward platform integration with data-driven AI at the core. A pitch is built to price services. Nobody has built one that prices a platform, and the clients with the most money have stopped waiting for someone to try.

The agency now picks the client

The clearest proof that the power moved is what Publicis did next. It withdrew from Coca-Cola's global media pitch, worth close to $4 billion and run by MediaSense, because it had taken PepsiCo instead. An agency walked out of the biggest pitch of the year because it already had a client who signed without one.

In twenty years of pitching I never saw a holding company turn down a $4 billion room. Now the one with the data chooses its client and lets the others run their process without it. The pitch consultant, the scorecard and the three rounds are all still there for Coca-Cola. The bidder that mattered has left the building.

Marketing wins by default, and everyone below PepsiCo loses the lever

CMOs did not stage a rebellion. Procurement sat in PepsiCo's capabilities review and signed. The seller changed what it sells, and procurement's method had no column for it. Marketing gets its budget decisions back because the decision is now about data and technology, which is a marketing judgement. Procurement's job shrinks to contract governance: who owns the data, what the agency may buy as principal, and what happens to your records when the same database serves your rival.

The brands that lose are the ones below PepsiCo. For a company spending $20 million or $50 million, the pitch was the only power it ever had over a holding company. That company will still run one, and four agencies will still turn up and compete on rates, because rates are the part that four bidders can still compete on. The part that decides the outcome, whose identity data the plan runs on and who controls the platform, was decided when the holding company chose its anchor clients. Epsilon's best people are on PepsiCo and Coca-Cola. Everyone else is in the queue behind them.

If that is your position, own the system yourself. Your first-party data, the identity match, the planning logic and the reporting can live inside your company, run by people who answer to you. That is what Kitsune builds for companies that will never be PepsiCo: one workflow, connected to the tools you already run, working within ten days. A holding company serves its biggest client first. A system you own serves you.

The pitch died on the biggest account in food and drink, and nobody in the room needed it. The next ten advertisers who watch that will not run one either.