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After 48% drop in profit last quarter, P&G will shift its focus - and budget - onto digital

P&G has announced that as much as 35 per cent of its advertising budget will now go to digital media after the company reported a 48 per cent drop in profit to $1.9bn for the quarter ending June 30.

“The bottom line is we need and want to be where the consumer is, and increasingly that is online and mobile,” A.G. Lafley, CEO of P&G said in a statement.

Historically, P&G has relied heavily on TV advertising, however Americans are now expected to spend more time online than watching television, according to an eMarketer study.

In response, the global company has increased its ad budget (it spent $9.3bn on marketing last year) and has devoted between 25 – 35 per cent of it on digital, including online ads and social media.

Most companies will spend between 20 to 25 per cent on digital.

However this spend will be focused on certain brands, with P&G’s Pampers diapers, Secret deodorant and Old Spice men’s toiletries commanding a larger share of the digital budget.

P&G has also announced it will sharpen its focus on product innovations and cost cuts, as well as revive its Pantene and Olay brands, which have been losing share to rivals in recent years.

“We know we’re not consistently winning now,” Lafly said. “It’s going to take a couple of years before we’ve got everything in place so that we’re hitting on enough cylinders to perform to our full potential.”

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