Will P&G’s performance pivot pay off? 5 experts on the brand's new ‘reach metric’

After a splurge in the pandemic, the world’s biggest ad spender is bulking up its in-house performance marketing as it slashes budgets. PMW quizzed five experts to see if the new frugal data-led approach will pay off…

Procter and Gamble is asking its marketing teams to think differently about advertising spend while moving “a lot” of its marketing in-house, including how it buys advertising, according to its latest quarterly earnings call.

The FMGC giant is also the world's biggest spender in advertising, with brands including Pampers, Tide, Gillette, Tampax and Olay. This means any shift in strategy is eyed with keen interest as an unofficial bellwether for the marketing industry’s health.

Its new measurement approach, centred around its own concoction - a ‘reach metric’ - is behind a new strategy of lowered media spend.

It follows a marketing splurge during the pandemic, when the Gillette owner increased media spend by $1.2bn over three years since 2019.

"We are actively shifting our spending from linear non-targeted TV into programmatic"

"On the media investment, I think we really need to shift focus”, said Andre Schulten, Chief Financial Officer, on the company’s recent Q1 2023 earnings call in a response to a question on advertising investment.

“It is difficult to describe media sufficiency in dollars, especially when we are actively shifting our spending from linear non-targeted TV into programmatic and into digital spend that is a lot more targeted and a lot more precise in terms of delivering reach and quality of reach where we need it".

P&G now has more than 50% of its media spend in digital channels, and is increasing its first party data capabilities.

Jon Moeller, P&G’s Chairman and Chief Executive Officer added: “What we need to understand is what are our reach objectives, and are we sufficient and spending to achieve those reach objectives. What are our objectives in terms of the number of weeks on air achieving that reach? And that's how we'll measure sufficiency.

“We want to do that as cost effectively as possible… We went through and ensured that category-by-category, we had sufficient reach and we had sufficient weeks of media and where we determined that we might not, there was a discussion with the business leaders on what we could do to ensure that happened.”

So will the new leaner P&G pay off? PMW spoke to a panel of five experts in the performance marketing industry to explain the change in direction for one of the world’s biggest consumer brands.

Claudia Struzzo, CMO, Acceleration

“P&G’s move is a thoughtful approach to challenging economic times. The emphasis on first party data future proofs their strategy from a privacy perspective and - if well orchestrated- will lead to a more holistic understanding of their customers. “The challenge is getting the most out of this data in practice. To deliver precision marketing at scale, brands such as P&G need to build a culture of innovation that encourages experimentation, combining the right tech with a robust measurement framework to enable always-on media optimisation.”

Bridget Arik, Chief Operations Officer at Redmill Solutions

“Traditionally, linear television was the most efficient way to have substantial reach, and FMCG markets capitalised on this – especially those with a vast brand portfolio. So it makes sense to cater to the changing consumption and shift the media dollars. In doing this, P&G are leading the industry by not blindly investing in the latest trends, and instead ensuring media decisions marry with business objectives. Every marketer should be looking at efficiency and sufficiency right now; the best way to control that narrative is to in-house or ensure your media data is in a central place that you can access in order to make meaningful, informed decisions”.

Jamie Barnard, CEO, Compliant

“You have to read between the lines to see the real story here. Why double down on digital spend when ad fraud is rampant, when adtech is under fire, and when tracking, targeting and personalisation are under threat from the deprecation of third-party cookies?

“While the complexity of the media supply chain and the high risk of privacy compliance failures are making brands cautious, P&G seem to be leaning into the problem: in-housing media-buying suggests more control (more selective inventory from fewer publishers); greater reach suggests a heavy play for first and second-party data to compete with the much-anticipated loss of third-party data, and both combined suggest a leaning towards the logged-in/opted-in walled gardens. P&G is increasing its investment in digital because higher reach, higher quality of reach and higher targeting come at a higher price. But if P&G can balance precision and reach with privacy and data ethics, then this could be a smart move.”

Irem Isik, Head of Marketing, Storyly

“Historically, FMCG brands that rely on retailers as sales intermediaries have struggled to secure enough high-quality first-party data. As a result, they have relied on the abundance of available third-party data, much of this derived from advertising platform intermediaries. However, with increased consumer privacy expectations, rising data regulations and the upcoming death of third-party cookies, a new approach is required.

“By taking their media-buying in-house and increasing their digital advertising investment, it seems clear that this is high on the P&G agenda. While high quality first-party data is difficult to acquire at scale, this increased focus on digital channels will also enable P&G brands greater opportunities to acquire zero-party data, proactively shared by its customers. With brands like Pampers providing due-date calculators, Olay offering online video skin-care consultations, and many of their brands creating interactive, mobile-first experiences, P&G will be able to go beyond marketing engagement metrics and convert zero-party customer intelligence into an ongoing business growth strategy.”

Kevin Joyner, Director of Data Strategy at Croud

"As some marketers still grapple with how to move investment from TV to digital ad platforms, digital marketers have already moved on quite far from managing campaigns. The most competitive digital marketers used to be the smartest ad platform tacticians; now, they're the teams that can feed ad platforms with the smartest data.

“[P&Gs] in-house digital marketing teams will need to include data engineers, data scientists and adtech solutions architects. Digital marketing is a customer-data-driven data engineering and data science product, not a media buy. And someone will need to be able to explain it all to compliance too."