Warc Blog

P&G focuses on ROI

5 August 2013
NEW YORK: Procter & Gamble, the FMCG giant, has set a "minimum ROI" level against which to measure all of its US marketing campaigns, as the company ramps up its emphasis on effectiveness.

Speaking on a conference call with analysts, AG Lafley, the firm's recently-reappointed chief executive, reported that it was taking a granular approach to monitoring effectiveness.

"We know brand by brand in the US and in a lot of other markets the range of effectiveness we can deliver, and it's wide. And so we are holding all of the businesses to a minimum ROI," he said.

Alongside providing some vital benchmarks, this initiative forms part of a broader effort to more stringently plan and monitor communications.

"Our problem is not the total amount we are spending. Our problem is the mix, our opportunity is the mix and we are going to get the mix better and better and better and there is a lot of opportunity there," he said.

"We're pounding away on communication effectiveness. We're pounding away on best media," said Lafley. "But it's a brand by brand, category by category, consumer segment by consumer segment set of decisions."

New media, Lafley revealed, is taking a rising share of P&G's budget. "Our digital I think is now up to 35% in the US, roughly. It goes up and down, 25% to 35%," he said.

"We have some businesses and brands where digital is incredibly effective, and we're doing more. We have other brands that are on the learning curve. They've got to get up the learning curve faster."

While predicting that total advertising expenditure levels will rise "pretty significantly" on an annual basis, P&G anticipates that the pace of this expansion will fall 20 basis points behind sales growth.

However, rather than lower levels of advertising, reach and frequency, the goal is to maximise the payback from its campaigns, provide a greater clarity of messaging and cut the costs which consumers "never see".

Looking more broadly, Lafley reported that the organisation may streamline its portfolio if certain brands consistently fail to meet expectations.

"We will continue to focus the company's portfolio, allocating resources to businesses where we can create disproportionate value and continuing to exit those where we cannot," he said.

Data sourced from Seeking Alpha; additional content by Warc staff

 
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