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12 August 2021
P&G invests in ‘superior communication’
Procter & Gamble, the consumer packaged goods giant, boosted its adspend for the second year in succession, its annual report shows, with a 12% boost to $8.2bn in the 12 months to June 2021 following the previous year’s 7.3% rise – and it is using this outlay to focus on brand superiority.
Why it matters
Two years of increased investment are a reversal of the preceding three years when P&G was focused on cutting marketing spend and agency costs. In a recent earnings call, David Taylor, P&G’s CEO, referred to a “superiority strategy”, whereby innovative products are backed by “meaningful investment” in marketing. This approach, he said, had trebled the company’s annual average growth rate from 2% five years ago to 6% today.
The financial details
P&G’s adspend in the fiscal year 2021 increased by $850m.
Advertising was 10.8% of sales (a year-on-year increase of more than 40 basis points).
P&G believes there are still significant productivity improvements it can make within its media spend.
Communicating brand superiority
P&G’s formulation for “superior communications”, according to its annual report, centres around messaging that “must create awareness, demonstrate superior performance, and create the desire to purchase”.
It suggests product and packaging benefits should be “communicated with exceptional advertising that makes you think, talk, laugh, cry, smile, act and buy – and that drives category and brand growth”.
As a case in point, P&G cited Charmin Ultra Soft toilet paper, which is 2x more absorbent, with the resultant proposition that consumers can use less than a leading discount brand. Highlighting this superior performance, its manufacturer explained, contributed to double-digit organic sales growth for the brand in the 2020 fiscal year.
“Superior communication is a core element of our superiority framework and we’ve not reached the point of diminishing return on those investments” – Andre Schulten, CFO, Procter & Gamble.