P&G champions digital

02 May 2011

CINCINNATI: Procter & Gamble, the consumer goods giant, believes digital media could become a "more effective and efficient" marketing channel for promoting its products.

The company reported that, during the financial year to date, five out of its six core segments have expanded on an annual basis, while 15 of its 17 largest markets are also yielding improved totals.

Similarly, 21 brands from the list of 24 which deliver at least $1bn (€675m; £599m) in revenues a year have recorded positive growth across the same period.

P&G credited a willingness to pursue a clear core mission, and maintain the marketing support behind its portfolio, as fuelling overall success.

"What we call our purpose-inspired growth strategy – of more consumers, more parts of the world, more completely – is working," said Robert McDonald, Procter's chief executive, on a conference call.

"That's the reason we're holding or growing share in two-thirds of our business globally."

Innovation constitutes one key element of P&G's plans, with recent introductions including Tide PODs three-in-one laundry detergent and the mid-priced Olay Age Protect line.

To back such new launches and the rest of its stable, the Cincinnati-based operator is intent on maximising the results generated by advertising.

"If you look historically, our advertising spend ... has been generally around 10% of our sales and I don't expect that to change," said McDonald.

"We're going to continue to invest in our brands."

However, despite suggesting that Procter Gamble would still allocate between 9% and 10% of its turnover to this area, McDonald argued wider shifts were starting to exert an influence.

"The internals change quite dramatically as we move more and more to our advertising spend to digital and other forms of media, which may be more effective and more efficient," he said.

"So we're actually getting a lot more for advertising spend than we ever have before."

Measurement also became a central priority for most major brand owners as the economic downturn encouraged them to place greater scrutiny on nearly all sources of expenditure.

Procter & Gamble was no exception, leveraging systems which monitor the return on investment from its activity in extremely close detail.

"We have a marketing mix modeling technique that tells us the ROI of each medium," McDonald said. "And as a result, we can move money to the more effective medium."

As a consequence of these combined processes, the parent of Pantene and Pampers is able to enhance the proportionate payback from its communications.

"We're getting a lot more for the money that we're spending but the amount we're spending as a percent of sales is about the same," McDonald said.

"Obviously, given the size of our company, we have a scale advantage versus our competitors who may be smaller and spend less money."

The broader knock-on benefits from such trends incorporate cutting back on the use of offers and deals, and the volume of goods Procter & Gamble sold in this way fell by 3% during the last quarter.

"We're seeing that some of the deceleration in promotion is resulting in higher pricing," said McDonald.

Data sourced from Seeking Alpha; additional content by Warc staff