P&G aims to increase online sales

09 September 2009

CINCINNATI: Procter & Gamble, the FMCG giant, is looking to substantially increase the amount of revenue it generates via the internet, and will heighten its digital adspend to help achieve this goal.

Forrester, the research firm, reported that eCommerce retail sales reached a value of $156.1 billion (€107.7bn; £94.5bn) in the US last year, a figure it predicts will grow to $229.1bn by 2013.

Nielsen also estimates that only one third of Americans currently buy packaged goods on the web, although it forecasts sales levels will see an uptick of at least 20% each year in the short-to-medium term.

At present, online delivers just 1% of P&G's annual revenues, or $500 million, a total the world's biggest advertiser hopes to drive to $4bn going forward.

Lucas Watson, P&G's global team leader, digital business strategy, said "some categories see as much as 30% to 50% of their business in e-commerce. Our forecasts don't suggest consumer products will ever work like that."

Despite this, he argued it is "not out of the realm of possibility eCommerce will be more than 1% of our sales. Getting north of 10% would be an aggressive goal, but somewhere in between that would be, we think, within the realm of possibility."

The Cincinnati-based company has recently started adding links to the online portals of various retailers to its own brand websites, a programme it now intends to roll out globally.

During the first quarter, the owner of Tide and Pampers also boosted its digital advertising expenditure, taking the medium's share of its budget to 4%, TNS found, and this did not including all search, video and targeted ads.

"Whether it's an investment in a banner ad, in a search-marketing ad or in a shopping experience ... we will look at all of those and their ability to drive revenue for our company," said Watson.

"The ability whenever the consumer raises her hand and says, 'I'm ready to buy,' to connect her directly to a purchase rather than have her wait and go to a store, we think of it as providing better service,"  he added.

Moreover, Watson suggested marketing mix models have shown digital advertising is providing P&G with a strong return on investment, even though "many people predicted it would not happen that way."

Data sourced from AdAge; additional content by WARC staff