Will P&G’s slash in digital ad spend a precedent for big brands?

31 July 2017

It looks like we may see lesser digital ads by Procter & Gamble (P&G) online in the near future. 

After their recent fourth-quarter earnings call, P&G announced it would be downsizing its digital ad spending budget by up to $140 million. 

Their reason? Brand safety concerns and questioning the effectiveness of their online ads. 

Finance Chief Jon Moeller cited “fake traffic driven by bots and objectionable content” as key factors in the corporate giant’s decision to scale back on its ad spending. 

“Digital ad spending was lower versus a high base period and due to current period choices to temporarily restrict spending in digital forums where our ads were not being placed according to our standards and specifications,” stated P&G’s earnings report. 

Along with their digital cuts, P&G will also be reducing agency and production budgets, which inevitably will effect revenues of other companies. 

In January, chief brand officer Marc Pritchard called for agencies commissioned by P&G to be more transparent and demanded all platforms provide third-party measurement this year. The cuts are timely with this call and threaten partners who pull a blind eye to it. 

Last year, P&G spent $2.4 billion on US advertising, making it the biggest advertiser in America. 

MARKETING reached out to local media agency heads to get their thoughts on whether this move could set precedence for large advertisers.

Fresh of his win at the recent Malaysian Media Awards Bala Pomaleh, CEO of IPG Mediabrands Malaysia shared that advertisers fhould first focus on getting the right tools to gather the right insights to make better decisions.

“We think advertisers should fully understand the attribution of media touch points to make this decision, and what works for one advertiser may not work for another. On the flip side of this, there are also countless cases of how an increase in digital spend yields better sales outcomes.”

“The point we want to make is that advertisers need to know what works for their brands both in terms of media channels and placements as well as creatives. This is why investing in analytics is important, to better understand the causal relationship between spend allocation and sales performance. Once you have more insights, decisions and outcomes can be enhanced.”

For Prashant Kumar Senior Partner at ENTROPIA, Prashant Kumar digital just like any other medium had its good side and bad,

"It would seem that P&G ramped up their digital investment without due process rigour (which is very un-P&G). Going by Marc Pritchard’s statements earlier, it seems they worked themselves into a bubble by reaching the same cheap-to-reach guy over and over again, who probably already loved P&G brands. 

Their call for transparency earlier is excellent, and their call for qualified viewable inventory (which is not a bot, is in the brand safe context, and is actually viewed) is absolutely justifiable, and in line with what we have stood for.

We do not see budget cuts happening in the name of brand safety per se, but yes, brand safety is a major issue, and major inventory owners must do their utmost to help advertisers manage that. There is a lot that can be done on that front."



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