CINCINNATI, OH: Procter & Gamble’s robust approach to media transparency and cost reduction is far from easing as the FMCG company has indicated it will continue to address digital advertising issues and review agency relationships.
Media transparency has been improving, Jon Moeller, CFO at Procter & Gamble, acknowledged in a Q2 earnings call.
And as it has done so, he added, it has become clear to the business that “there is more opportunity to eliminate waste by reducing excess frequency within and across channels, eliminating non-viewable ads, and stopping ads served to bots or adjacent to inappropriate content”.
The work it has already done on this front has not only reduced waste and cut losses, it has also increased reach: Moeller reported that the number of consumers the business is connecting with has risen about 10%.
“Looking ahead, we see further cost reduction opportunity through more private market-placed deals with media companies and precision media buying, fuelled by data and digital technology,” he said.
Moeller gave more specific figures when discussing agency relationships, noting that the number of agencies P&G uses has been slashed by 60%, from 6,000 to 2,500, with resulting savings of $750m in agency and production costs (as well as improving cash flow by over $400m additional through 75 day payment terms).
“In the next phase, we’re targeting to save another $400m reducing the number of agencies by another 50% and implementing new advertising and media agency models,” he stated.
“We need the contribution of creative talent and are prepared to pay for that,” he added. “We don’t need some of the other components of the cost.”
In response to questions about discounting, Moeller said that pricing and promotion were not seen as priorities to grow the business.
“We'll do it when we need to do it but there’s nothing proprietary in promotion, there’s nothing proprietary in price,” he pointed out.
“We would much rather invest in items that where we can derive proprietary benefits over long periods of time.”
Sourced from Seeking Alpha; additional content by WARC staff