Advertising and Marketing

P&G Plans to Spend More on Advertising

Emphasis on effectiveness and digital learning 8/01/2013 03:08:44 PM Eastern

Procter & Gamble, the world's leading advertiser, said
it will spend more on marketing this year, though its spending will represent a
smaller percentage of sales.

"We will again increase advertising spending pretty
significantly year-on-year, but we'll do it probably 20 basis points lower than
the rate of sales growth," CFO Jon Moeller said, speaking on P&G's earning
call with analysts. "That does not mean less advertising. It does not mean less
reach, less frequency. It means more effective advertising, the right mix of
media and importantly reducing non-advertising costs that the consumers never
see."

Last year P&G was the top advertiser in the U.S., but
its spending was down 15% to $4.8 billion, according to Ad Age.

P&G CEO A.G. Lafley added, "We're interested in
effectiveness. We know brand by brand in the U.S and in a lot of other markets
the range of effectiveness we can deliver and it's wide. And so we are holding
all of the businesses to a minimum ROI."

The P&G executives did not specifically address
television spending, which usually gets the largest share of the giant marketer's
ad budget. But they talked about the growing importance of digital.

Lafley said that digital is now up to a 35% share of
P&G's ad spending in the U.S. "It goes up and down, 25% to 35%," We have
some businesses and brands where digital is incredibly effective, and we're
doing more. We have other brands that are on the learning curve. They've got to
get up the learning curve faster," he said.

"But it's a brand by brand, category by category, consumer
segment by consumer segment set of decisions. Our problem is not the total
amount we are spending. Our problem is the mix, our opportunity is the mix and
we are going to get the mix better and better and better and there is a lot of
opportunity there," Lafley said.

 

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