A few years ago, Pepsi decided to dump $20 million of their traditional advertising spend and launch a massive social “engagement” campaign.

Unfortunately, by some accounts it can now be considered a failure:

Last week, The Wall Street Journal reported that Pepsi-Cola and Diet Pepsi had each lost about 5% of their market share in the past year. 

If my calculations are correct, for the Pepsi-Cola brand alone this represents a loss of over $350 million. For both brands, the loss is probably something in the neighborhood of 400 million to half-a-billion dollars.

For the first time ever Pepsi-Cola has dropped from its traditional position as the number two soft drink in America to number three (behind Diet Coke.)

In 2010, Pepsi’s market share erosion accelerated by 8 times compared to the previous year.

The thing is, social media is not a marketing vehicle. We have to stop thinking about it like that. Instead, it’s a way to connect with your customers, make them feel special and human again. That’s what Gary Vaynerchuk talks about in the Thank You Economy. I think Pepsi was on the right track, but lost it somewhere. They took marketing spend and turned it into CSR.

Gary Vaynerchuk put it wonderfully at his SXSW session: marketing is it stands today is like a one night stand. Social media is about building long-lasting relationships.