Last quarter, Proctor & Gamble eliminated $100 million in digital media spend without any noticeable change in revenues. This led P&G to decide that perhaps all of its digital spending was useless. And perhaps it was, if what the company was doing was programmatically and randomly buying impressions. The company needs to change the way it creates and buys ads, and the goals for its digital advertising dollars. TV dollars never were devoted to performance, but to brand. And now that TV is slowly going away, digital is the only place left to do branding.
“We got some data that said either it was in a bad place or it was not effective,” Mr. Taylor said of the digital cuts. “And we shut it down and said, ‘We’re not going to follow a formula of how much you spend or share of voice. We want every dollar to add value for the consumer or add value for our stakeholders.”
After cutting back on certain digital ads, “we didn’t see a reduction in the growth rate,” said Mr. Moeller during the call. “What that tells me is that the spending we cut was largely ineffective.”
P&G also said it reduced overhead, agency fee and ad-production costs in the quarter.
These numbers tell us that the performance advertising side of digital advertising wasn’t working for them, and that’s right. Performance advertising in digital is very tricky, as well as being plagued by fraud. But that’s not what P&G should be using its digital spend for.
Instead, it should be using most of its digital dollars, outside of the e-commerce dollars it allots to sites like Amazon, to branding. You see, in the future Amazon, and maybe Wal-Mart, will own all the e-commerce dollars, because that’s where people actually go to buy things. But 99% of the time we are on the web, we are not trying to buy anything! P&G was also smart enough to lower its spend to targeted consumers of Facebook, because Facebook is not a place where people go to buy either.
A company like P&G should realize this, and use its online dollars for building brand, which is ever more important in the age of discounts and bargains. We have to have Tide top of mind at all times, or when we DO go to buy something, we’ll select the least expensive product. We will only buy a brand if we are really engaged with the brand.
And that’s how CPG companies should be using their dollars: they should be taking them away from TV, which they use for branding now, and which they feel used to work very well, and putting them into digital video on sites consumers visit every day, like premium publishers, or in apps consumers use regularly, like casual games.
They also should be spending their creative dollars on interactive formats like our “Watch and Engage,” in which the consumer is rewarded for interacting with a brand, producing both a positive impression and a reason for engaging.