CINCINNATI, OH: Procter & Gamble, the world’s largest advertiser, reduced its annual expenditure by $125m, representing a year on year decline of 1.7%, the lowest level in 11 years, due to cuts in digital spend.
The significant reduction came in the first quarter of the financial year 2017/18, after it cut digital adspend by $140m following worries around brand safety and ad fraud, Campaign reported.
From a high of $8.19bn annual ad expenditure in 2013, the consumer goods giant had, over the intervening two years, reached a low of $7.18bn – a cut of over a billion in just two years.
By Q2 2017, however, overall ad expenditure has dropped even further, down to $7.12bn, a level not seen since 2006.
Cuts in digital adspend followed the company’s Chief Brand Officer, Marc Pritchard’s comments in March, where he criticised the lack of transparency in digital advertising.
“We have a media supply chain that is murky at best, and fraudulent at worst. We need to urgently clean it up, and invest the time and money we save into better advertising to drive growth.”
The company explained at the time that the decision was taken “to temporarily restrict spending in digital forums where our ads were not being placed according to our standards and specifications,” meaning that the company wanted to pay for human eyes, not robot eyes.
The cuts don’t seem to have affected organic sales, however. CFO, Jon R. Moeller told investors that “we targeted about 2% organic sales growth, which is ultimately what we delivered.” A significant achievement, he said, given slowing growth across both developed and developing markets.
"We want to spend money in digital and we will continue to spend money in digital, but we are not going to make bad investments for our shareholders," a spokesperson said to Campaign.
Data sourced from Campaign, SeekingAlpha, WARC; additional content by WARC staff