P&G’s multimillion dollar cutback on ‘ineffective’ digital ads hasn’t hampered its growth

A still from Herbal Essences 'Bio Renew' ad - one of P&G's brands

Procter & Gamble’s cutback on marketing spend hasn’t had a negative impact on the business, with the FMCG giant’s chief marketing officer Jon Moeller saying “almost all” of the marketing budget reductions the company has enforced in the past three months were in the digital space.

The choice to clampdown on spending from a digital standpoint, Moeller said, coupled with the company’s robust 2% growth for the most recent quarter of the financial year, indicated that ads P&G had stopped investing in were “ineffective”.

Ad Age has placed the company's ad cutback total at $140m for the most recent quarter. Over the past three months to June, P&G's organic sales rose 2% to $16.1bn, all-in net earnings rose 15% to nearly $2.3bn for the quarter.

During the firm’s most recent earnings call on Thursday (27 July) Moeller didn’t say which platforms the brand had cut spend from, but did hint that the company had stopped investing in areas where “the placement of ads” was not facilitating the equity of P&G’s brands; hinting at problems faced by YouTube and Google around brand safety earlier this year. He added that cuts were also made to arenas in which ads were being served to bots, as opposed to being seen by humans.

He said the business was working with media partners to create “very efficient supply chain that helps build the brands” under P&G’s watch, and that it would focus on settling a higher standard on ad quality. He also said the brand propositions marketed by P&G needed to be “communicated with exceptional brand messaging, advertisement makes consumers think, talk, laugh, cry, smile, act and of course buy”.

“We are improving the quality of consumer insights, agency creative talent, and production. We are applying a body of assessment on advertising quality,” he added.

P&G - which owns the likes of Oral-B, Ariel and Herbal Essences, announced it was to review all marketing contracts earlier in 2017. Its top marketer Marc Pritchard has previously stated his desire to bring transparency to the “murky at best, fraudulent at worst” media supply chain. It announced last August that it was cutting targeted Facebook spend, because hyper targeting on the platform did not prove as effective as the company initially thought it would.

Rebecca Stewart

Rebecca Stewart is a reporter at The Drum. Based in London, she writes news, analysis and features around brand marketing and digital innovation. She has interviewed key figures from the likes of Airbnb, Amnesty International, Unilever, Facebook and Spotify, as well as covering international events like Ad Week Europe, Dmexco and Ciclope.

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