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Coca-Cola Super Bowl Ad Stirs Up a Melting Pot of Controversy

By Rich Duprey – Feb 3, 2014 at 6:01PM

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An ad that was meant to be inclusive has divided a large segment of the population.

Being able to bring people together to enjoy its cool, refreshing soda has been a hallmark of Coca-Cola (KO 0.88%) advertising since the groundbreaking "Hilltop" ad back in 1971 that featured dozens of multicultural teens singing they'd "like to teach the world to sing." 

So the beverage giant probably figured its "It's Beautiful" ad that premiered during yesterday's Super Bowl would also be a uniting force. Again displaying a diverse cast, the ad has the song "America, the Beautiful" being sung in English before suddenly switching to an ever-changing roster of seven additional languages as the images show the huge melting pot of U.S. culture. 

Coke said it plans to debut a 90-second version of the ad during the 2014 Winter Games, which begin Friday in Sochi, Russia. "For 127 years, Coca-Cola has been proud to be a part of bringing friends and families together while memories are made. With 'It's Beautiful,' we are simply showing that America is beautiful, and Coke is for everyone," Katie Bayne, Coke's North America brands president, said in a press release.

Yet rather than the ad being seen in an inclusive light, a firestorm of criticism erupted on Twitter, Facebook, and other social media outlets questioning the wisdom of depicting such a decidedly American song in languages other than English. 

Some companies purposely wear their agenda on their sleeve, such as last year when General Mills ran a Cheerios commercial featuring a biracial family that generated similar levels of backlash (they made a return appearance during the Super Bowl, apparently without triggering the same animosity). The head of the Duck Dynasty clan also created a dust-up when he gave his opinion of homosexuality while Chick-fil-A's CEO got his company embroiled in controversy when he defended traditional marriage. It's probably worth noting the Coke ad also showed two dads roller-skating with their daughter, presumably the first Super Bowl depiction of an openly gay family.

Companies do run a risk of damaging their brands by campaigning for an issue that is unrelated to their product. With the cost of a Super Bowl ad having soared to $4 million this year, it's a risky move to use the time to champion a cause, and shareholders would be right to question the expenditure if it was being used for purposes other than advancing sales. 

Coke is generally recognized as one of the world's most valuable brands, and until falling to third place last year behind Apple and Google, it held the top spot for 13 straight years on Interbrand's list of 100 best global brands. The brand management firm estimates Coca-Cola is worth over $79.2 billion, which takes into account the brand's financial performance, the role it plays in influencing consumer choice, and its ability to command a premium price. Obviously such metrics would be threatened if the calls to boycott Coke that arose following the ad's run were carried out.

It's already facing an environment that's witnessing a domestic decline in diet carbonated soft drinks. Some 60% of Coke's revenues are tied to CSDs, much more than PepsiCo (NYSE: PEP), which, because of its Frito-Lay snack division, only generates a quarter of its sales from CSDs, though less than DrPepper Snapple Group (NYSE: DSP) at 70%.

Still all three companies have suffered drops in sales volumes, averaging declines in the mid- to high-single digits and the beverage makers have been scrambling to reverse the trend. While seen largely as a result of the artificial flavors the soda jerks have added to the beverages, Coke, which saw its volumes fall 6.8%, hardly needs consumers finding another reason to swear off Diet Coke.

I noted last month that one research firm thinks virtually all the Super Bowl spots aren't worth the money advertisers pay because 80% of the ads featured fail to get the audience to take action, buy a product, or try a service. In fact, the more advertisers pay, the less effective their ads become. That would apply for companies such as Anheuser-Busch InBev, which arguably had the most popular ad with its "Puppy Love" Budweiser spot, which was all feel-good schmaltz and had little to do with beer -- other than featuring the company's signature Clydesdale horses.

While I found Coca-Cola's Super Bowl ad jarring, I didn't see it as offensive. Certainly large segments of the population think the U.S. should be an English-only country, and particularly the advertising in a distinctly American venue such as the football classic, while others see the multiculturalism as a natural outgrowth of a diverse population. How about you? Did the Coca-Cola commercial leave you cold or did you see it as a sign of the inclusiveness of the country? Let me know in the comments section below!

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Coca-Cola. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Stocks Mentioned

Coca-Cola Stock Quote
$64.35 (0.88%) $0.56
PepsiCo Stock Quote
$185.69 (-0.11%) $0.21
Alphabet Stock Quote
$100.44 (-0.55%) $0.55
Apple Stock Quote
$147.81 (-0.34%) $0.50
Dr Pepper Snapple Group, Inc. Stock Quote
Dr Pepper Snapple Group, Inc.
Anheuser-Busch InBev/NV Stock Quote
Anheuser-Busch InBev/NV
$60.35 (1.04%) $0.62
General Mills Stock Quote
General Mills
$86.52 (1.29%) $1.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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