P&G Commits to Marketing Cuts

P&G Commits to Marketing Cuts

Procter & Gamble’s chief brand officer Marc Pritchard says the firm will continue to drive efficiencies across a number of operations, including its advertising and marketing supply chain, production costs and other media spending.

“Even after saving $1 billion in the past five years in agency fees and production costs, we still see a long runway in a number of areas,” Pritchard addressed attendees at the Morgan Stanley Global Consumer & Retail Conference in New York this week.

“First of all, we still see there’s more room for agency fees. There are still ways in which we can reduce the amount of effort we put and where, and how we co-locate people, because that takes time, touches and distance out, which takes costs out,” he went on, adding that the company will also be seeking cuts in production, as the “supply chain in the industry is an expensive one.”

P&G claims to have already ushered in substantial cost savings after deciding to transfer in-house advertising for US deodorant brand Secret. The consumer goods giant has been on a cost-saving and efficiency campaign since 2014; P&G has made no secret of the firm leadership’s opinions over major inefficiencies in the advertising industry.

“One of the biggest [wastes] we see is media. There’s an enormous amount of waste in media,” said Pritchard, citing the reality that many consumers are often confronted by the same ad more than a dozen times. “That’s one of the biggest inefficiencies in media. We’re really working on driving that out —  and taking that excess frequency out and reinvesting it in more reach.”

Pritchard made similar comments during Marketing Week at the Cannes Lions International Festival of Creativity earlier this year. Reach, not spend, he said, was a far more important metric for businesses to measure their success by.

“We’re finding that we’re reaching more people and we’re trying to reduce the number of times we reach the same person over and over again,” he said, “Excess frequency is the biggest waste and in every aspect of our media we’re finding waste to allow us to be able to invest back in creating reach.”

When Pritchard discusses reach, he is really talking about direct-to-consumer brand building, and on a major scale.

“Many of our brands still are only reaching 60% of their target audiences, and they pretty much use our brands every day,” he continued. “Everyone brushes their teeth, hair and does their laundry, so we can get up to 90%, and that’s what we’re going to try to get to – keep digging the waste out and reinvesting to get more reach.”

Pritchard’s campaign for marketing industry transparency is a vital one for digital marketers and public relations pros everywhere. On the one hand, he’s spot-on: effectiveness is not an issue of spending or bombarding consumers with the same message. On the other hand, marketing professionals should take his warnings to heart. The world of digital marketing might be heading for a shake-up.