P&G set to name Lafley's successor

09 June 2009

CINCINNATI: Procter & Gamble, the US consumer goods giant, is said to be preparing to appoint Robert McDonald, its chief operating officer, to the post of chief executive, replacing AG Lafley, who will stay on as chairman. The move is thought to be prompted by slowing growth, as consumers cut back their spending levels in the downturn.

The Wall Street Journal has reported that McDonald will take over the position of ceo on July 1, with Lafley remaining as a "hands on" chairman.

McDonald became P&G's chief operating officer in July 2007, and is attributed with having worked alongside Lafley on many successful projects, and in cutting costs across the company.

Lafley was appointed as chairman in 2002, having assumed the role of ceo in 2000, but the company's share price has fallen by 14% this year.

He recently forecast that P&G's organic growth for the coming year would be between 1% and 3%, compared with previous annual targets in the 4% to 6% range, arguing "you have to see reality as it is."

In a note regarding the proposed move sent to clients, Ali Dibadj, an analyst at Bernstein, said that "although the transition was expected, this would be much sooner than the company implied."

One area where P&G may look to develop its operations is through increasing its use of digital media, which is "an incredible way to connect with consumers," according to its global marketing officer, Marc Pritchard.

Figures from TNS Media Intelligence show that Procter & Gamble reduced its US adspend by 18% in the first quarter of this year, including a reduction of 44% on its outlay on network television.

By contrast, the company doubled its online display expenditure, although these ads still only took a 4% share of its total quarterly advertising spend of $672 million (€485m; £422m).

The brands that enjoyed a boost in online support included CoverGirl, P&G's cosmetics range, which diverted around 10% of its three-monthly budget of $40m into the medium.

Bounce, the fabric care softener dryer sheets, also purchased $2.4m worth of web-based display ads, 35% of its outlay over this period, with Vicks similarly allocating 45% of its $8.7m spend to this outlet.

Furthermore, Head & Shoulders, P&G's shampoo brand, invested 18% of its advertising resources, which reached a total of $19.7m between January and March this year, on these graphical executions.

Pritchard said he had "a lot of passion for digital", and argued that "our media strategy is pretty simple: follow the consumer. And the consumer is becoming more and more engaged in the digital world."

This medium allows advertisers to forge "much deeper ongoing relations" with their audience than many other channels, Pritchard added.

While he praised the flexibility offered by digital communications, he added that P&G would be looking for all of its media "partners" to provide distinctive communications tools.

"We like innovation as well," Pritchard said. "Obviously digital has a lot of opportunity for that. But we've been looking for that from our print partners as well as from our TV partners."

The Interactive Advertising Bureau reported that consumer packaged goods companies increased their digital outlay by 60

Data sourced from AdAge; additional content by WARC staff