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P&G cuts digital spend

News, 28 July 2017

CINCINNATI, OH: Procter & Gamble, the fast-moving consumer goods manufacturer, cut its digital advertising spend in the last quarter as a result of concerns over brand safety and bot fraud.

The owner of Tide detergent, Pampers diapers and Charmin toilet tissue reduced its selling, general and administrative expenses by 170 points, excluding foreign exchange rates, in the last quarter overall.

While that total included “productivity savings” on agency fees and production costs, the company’s digital adspend also fell by $140m overall, according to estimates from Advertising Age, the trade title.

“In the fourth quarter, the reduction in marketing that occurred was almost all in the digital space,” Jon Moeller, Chief Financial Officer at Procter & Gamble – the world’s biggest advertiser – reported on a conference call with investors.

“And what it reflected was a choice to cut spending from a digital standpoint where it was ineffective, where either we were serving bots as opposed to human beings, or where the placement of ads was not facilitating the equity of our brands.”

This decision is in keeping with previous calls by Marc Pritchard, Chief Brand Officer at Procter & Gamble, to clean up the digital ecosystem and increase transparency.

Despite these worries, David Taylor, Procter & Gamble’s Chairman/CEO, suggested that investing in digital capabilities remains a priority for the company as it looks to “improve the consumer experience with our brands” via this channel.

“Digitisation and machine learning are helping us improve the presence of our brands online,” he reported during P&G’s earnings call with investors.

“Understanding consumer behavior in areas such as digital search can help us spot important changes in trends that we can use to modify how we present our brands online.”

Social media, Taylor continued, is also a vital outlet for the company, particularly as it attempts to deliver purpose-driven campaigns like Always’ “Like a Girl” or Ariel’s “Share the Load”.

“There will be those that talk about not only the ‘zero’, ‘first’, and ‘second’ moment of truth, and even after the in-home usage experience,” he reported.

“Now, there's another moment you have to worry about, which is what consumers say about you in social media – on Instagram, or Facebook, or any variety of different vehicles.

“I think that's true, which is all the more reason why you both have to have a superior product, but also communicate it in a [superior] way. And the brand has to stand for something.”

Data sourced from Advertising Age/Seeking Alpha; additional content by WARC staff