Should P&G’s new finance-focused boss worry its marketers?
P&G announced on Friday that chief executive of six years David Taylor would depart the organization with finance boss Jon Moeller set to take the reins in November. It prompted firm assurances that “marketers should not be worried”. Here’s what the move means for the world’s biggest advertiser.
Jon Moeller is set to become P&G’s chief executive officer in November
The ascension to chief executive at P&G was the likely path for chief operating and finance officer Jon Moeller. He’s been at the company for over three decades, holding the number two spot since 2009. Nonetheless, his promotion raised a few eyebrows within P&G’s marketing departments given it’s the first time that a chief executive has come to the top job having never spent any time in the function.
P&G has historically favored chief executives with a knowledge of sales and marketing. All of its leaders in the past 20 years have dedicated a portion of their careers to leading brands, including marketing and advertising, at the company.
During his stint at P&G, Taylor spent six years as head of brands in the US where he ran marketing for its diaper division, which includes Pampers.
“It fed my desire to connect with our brands and the people who use them,” he says on his LinkedIn profile of the importance of that role. “I learned how to build and grow brands. I learned about the creative process and about how important it is to listen to consumers.”
Under his watch, P&G made huge strides in its marketing as it embraced a "purpose" led approach to comms, setting a trend that's dominated the industry ever since. It's won nearly 250 awards from Cannes Lions judges over a 10 year period, leading it to be crowned the 'Brand of the Year' in 2020, whilst simultationsly in-housing swathes of processes it previsouly outsourced to agencies in a major cost-saving drive.
Before Taylor was chief executive there was AG Lafly, who served between 2000 and 2010, and then again from 2013 to 2015. He held various roles in the organization, among them head of its Global Beauty Care division and the company’s marketing for North America. After assuming the chief exec role he became a major advocate for market research and, according to a Forbes article from 2002, would continue to present himself at the homes of customers masquerading a product researcher in an effort to better understand P&G’s consumers.
“Too much time was being spent inside Procter & Gamble and not enough outside ... I am a broken record when it comes to saying, ‘We have to focus on the consumer,’” he told Forbes.
And in between those stints there was Bob McDonald, P&G’s chief exec between 2010 and 2013. He spent his early career in brand and marketing roles and during his short tenure as chief executive remained focused on what advertising brought to the company. At the time, he was criticized for efforts to make P&G less reliant on traditional advertising and instead tried to turn its attention to social media for the first time.
By contrast to Taylor, Lafly and McDonald, Moeller joined P&G in a cost analysis role before becoming finance manager for various divisions, and then finance director for Laundry in China and then Global Beauty and Health. He became chief finance officer in 2009 and chief operating and finance officer in 2019.
That P&G has appointed a chief exec with no marketing background was unusual enough to prompt a message of reassurance from Taylor to its marketers, promising they “should not be worried” by the new leadership and instead “feel wonderful” about Moeller’s appointment.
“We’ve got a senior leadership that is maintaining a high degree of consistency [in marketing]. You all know Jon [Moeller] very well – he has supported these investments in media to the extent they grow the market and grow market share, and is helping drive awareness of superior products and brands,” said Taylor on a call to investors for the company’s full year results.
“It’s about creating value, not reducing or increasing one element of cost, and Jon has been very engaged with me and the leadership team in these decisions.”
Ewan McIntyre, co-chief of research and vice-president analyst in the Gartner for Marketers practice, said it’s unsurprising there may be concerns within P&G on what marketing’s future looks like now the company will be under the steerage of a finance man.
“Marketing and finance have not always had the easiest of relationships. In a recent Gartner research, we asked chief marketers about the roles in the enterprise that are most likely to be supporters or detractors of the marketing strategy, and chief finance officers were flagged as major detractors,” said McIntyre.
“Part of the challenge lies in perceptions of the value that marketing delivers to the enterprise. Chief finance officers seem to have a tough time understanding the complex mix of the value that marketing delivers across the customer journey. This isn’t helped by the challenge that marketing has communicating value to non-marketing stakeholders.”
And this appointment comes at a time when marketers across the board are trying to prove their value as pandemic-struck businesses try to recalibrate. Gartner’s 2021 CEO and Senior Business Leaders research reported a situation where marketing budgets have been reduced in 2021, as the chief executive officer looks to fund other enterprise-wide growth initiatives.
Taylor has signed off a substantial increase in P&G’s ad spend to the tune of $850m in 2021 alone, a trend he assured will continue after he steps down.
“While it’s not a given that the appointment of a non-marketing chief executive at P&G will result in the same sort of budget re-prioritization, it certainly indicates that P&G’s marketing leaders will have to work hard to build a value-based business case to retain marketing’s scope and budget,” adds McIntyre.
However, Sucharita Kodali, vice-president and principal analyst at Forrester, was surprised that any question marks have been raised over Moeller’s promotion, saying it’s been on the cards for some time and the handover is a matter of formality.
“Usually companies like this have ‘tournament’ models for CEO succession where there are two or three insiders who are viable contenders, and the one that the board trusts most at the time of the decision is the one that gets the job. Clearly the board believes a finance person can do the job,” Kodali says.
“I don’t know why there is reason to be skeptical. It’s not uncommon for a finance person to be a CEO – they have lots of credibility with the street. This seems honestly like a ho-hum, business-as-usual, nothing-will-be-massively-disrupted decision to me.”
Moeller’s promotion has been widely accepted by Wall Street. The succession plan was announced as P&G sales rose 7% to $18.9bn from $17.7bn a year earlier, leading to a 1% hike in its share price.
Moeller: an advocate for marketing
Jo Vaughn spent 22 years at P&G in various brand and marketing roles before leaving earlier this year to join marketing agency Team Eleven as head of strategy.
She has no worries over the future of marketing at P&G under Moeller’s watch, saying that despite his lack of marketing experience he is a “spectacular choice of CEO” who has been an advocate for advertising and brand building within the company.
“Whilst his background is finance, he’s a passionate brand builder and advocate for the brand function. Alongside David, he has already delivered outstanding sustainable growth for the company, and I have no doubt he will continue to be a consumer champion and continue P&G’s pledge to be a force for good. A superb appointment.”
Likewise, Federica Bowman, global chief executive officer of media and marketing contract compliance specialists FirmDecisions, was positive about the impact Moeller will have when he takes over.
Bowman has worked for many years with both the finance and procurement departments at P&G and said that, though cost- and risk-aware, Moeller is highly respected within the corporation and “will transition to thinking how he can grow their business and look forward by being cost-aware, but perhaps now having to take some risks”.
“As marketing is often a significant expenditure item for an organization, it is key that as a function it is seen as accountable – driving real value for a business and its shareholders. [Moeller’s] appointment to CEO signals a clear focus by P&G to ensure that value or return on investment is being delivered right across the organization. This will be critical for the future growth and value creation of this global consumer goods corporation.”