P&G finance chief: ‘we really need to shift focus’ on media spend

Procter and Gamble is looking to shift focus on its approach to media investment, according to senior executives at the consumer packaged goods company, which is one of the world’s biggest advertisers. 

Why It Matters 

As one of the world’s biggest advertisers, Procter and Gamble is a bellwether in the consumer packaged goods category for marketing and advertising trends, and how other brands may look to move. 

A more targeted approach in search of higher quality reach is a longstanding aim of major advertisers even if certain digital channels had struggled to replace the kind of reach offered by TV. Since then, new forms of targeted digital advertising, whether alongside high-quality online content on streaming services, or in a retail environment selling to in-market individuals, have developed in light of the mistakes of the past and promise to deliver significant reach. The fortunes of such brand-led companies will be a critical guide to successful investment strategies for the mass market. 

Shifting focus toward more precise reach

Procter and Gamble now has more than 50% of its media spend in digital channels, Schulten noted, and is increasing its first party data capabilities. 

"On the media investment, I think we really need to shift focus”, said Andre Schulten, Chief Financial Officer, on the company’s recent Q1 2023 earnings call in a response to a question on advertising investment. 

“It is difficult to describe media sufficiency in dollars, especially when we are actively shifting our spending from linear non-targeted TV into programmatic and into digital spend that is a lot more targeted and a lot more precise in terms of delivering reach and quality of reach where we need it".

“Spending reduction might not necessarily correlate with this investment. We continue to be committed to drive superiority of our brands. We will not step back from that, and that for us means higher reach, higher quality of reach and higher targeting capability which we've built around the world. 

“That's the measure of success for us. If we deliver that, the dollars are an outcome, not the determining factor of efficiency of investment.”

Thinking differently 

The change in philosophy means P&G executives are demanding marketing teams think differently about advertising spend. The company is also moving “a lot” of its marketing in-house, including how it buys advertising.

"We had a discussion with the North American team a couple of weeks ago… they had prepared a perspective by category on dollar spend versus a year ago. And I walked into the room and said, ‘this isn't helpful’,” said Jon Moeller, P&G’s Chairman and Chief Executive Officer. 

“What we need to understand is what are our reach objectives, and are we sufficient and spending to achieve those reach objectives. What are our objectives in terms of the number of weeks on air achieving that reach? And that's how we'll measure sufficiency," he explained. 

“We want to do that as cost effectively as possible… We went through and ensured that category-by-category, we had sufficient reach and we had sufficient weeks of media and where we determined that we might not, there was a discussion with the business leaders on what we could do to ensure that happened.” 

Sourced from Seeking Alpha