Marketing Transformation of P&G: Why is it shifting 35% of its ad dollars to digital advertising?

The (r)evolution of the market has begun and video rules!

According to Videology, CPG/FMCG is the biggest player when it comes to ad digital video impressions - these could be live (meerkat, Periscope and more new startups that will explode this scene as VC/Investment scene is getting hotter), established multi-speed channel video content (youtube, vine and many others) and the emerging trend (360 degrees videos) and platforms such as Facebook that are looking to extend their content empire.

Why? Take a look how ad view share and consumption of "motion content" is evolving in this space (courtesy freewheel report for Q3 2015):

Long form ad view share shown seasonally...

...while laptops still seem to be devices where this consumption takes place, overall consumption is happening across these devices. Most important is to understand the converged consumption patterns the ad view battle is being fought for the "more than a gaze or glance" which you'd want from your consumer.

and finally it is easy to see the CPG/FMCG and Retail are the biggest players here (you can see in the Freewheel report for more details of the breakup of marketshare)

So, once again, what got P&G interested?

• Consumer insights and customer centricity at your fingertips - P&G executives say digital media in most cases is proving to be a faster and cheaper way for P&G's brands to reach consumers, and feedback is also faster.
• Agile and measure rather than planned rote routines - According to their CFO, it is about spending dollars in real-time, event-based and appropriately in/and from each spend bucket to maximize reach and frequency. In simpler words: move with the consumers, with his life and day journey and win his/her heart with right media mix and remove ridiculous ad costs which consumers despise, leave alone see.

What P&G has started doing?

• Slashed 40% of its agencies! (and more reduction is coming)

Best way to get a better control of a full 360 degrees view of your consumers, you need to get closer to the relevant "consumer journey" data. All non-working costs from the marketing is being removed from the mix.

It's also about costs though, It has been reducing its promotional spend bucket drastically: 50% reduction in Brazil overall, 20% in U.S for just one brand, in one beauty category it pushed costs down as much as 75%! All in all, this axing of agencies could lead to savings of as much as $500M.

• Programmatic buying and targeted digital channels becoming a key strategy, according to the CEO

Under the new CEO's (David Taylor) strategy, P&G announced that it expects its own digital marketing and media strategy to invest 10 - 20% more in media budgets and plans to buy almost 70% of its online ads programatically.

• Consolidation of brands, advertising dollars and regions

Obviously killing all may not help, so it is consolidating its category brands such as "Golden Dish" collection. This it has given to Publicis Worldwide, which will handle a handful of brands such as Yes, Joy, Salvo, Ayudin, Magistral, Dreft and Jar globally in 32 countries across six regions.

• Brand reinvention - The firm also has a plan to revive its Pantene and Olay beauty brands, which have been losing share to rivals in recent years.

I won't go into further detail of P&G's overall strategy to also stream line its brand business such as its Duracell sale to Warren Buffet's Berkshire Hathaway, as we go out of context here but this gives a pretty good picture of where P&G is moving today. I do however miss TV ad spend in P&G's story as this is still an attractive area to reconsider.

 In closing

We have officially entered the intention economy. A marketplace where you need to have a digital and appropriate social channel to get closer to your consumer and earn their love. Providing immersive experience to consumers with their friends and community is where they will feel most informed and comfortable in buying your products and services. 

Scraping data from web is the beginning of the data driven validation of where the consumer is going, what she is eating and with whom he is watching a movie and so on. Predicting what they will do as next step is a nice thing to have but honestly,  you just have to earn your consumers trust and love before they begin to love your brand. This is where the magic begins.

Agencies have traditionally held that area pretty well. They had (still have) their ecosystem and ensured the engagement to the finest detail. Ok, so not everyone was watching the spend budgets all the time for returns,  but it worked well for marketers. Explosion of social media and the way people started connecting digitally to each other revealed that a lot of the theories and even consumer tales/confessions were wrong and a total lie!

Platform owners such as Google, Facebook, Baidu, Tencent etc seem to be getting a pretty good hang of the digital and social connections of people and communities (see my post regarding the FOAF model most social networking sites use), they simply get the digital connection which people are making. This is what corporations need to do. Nuff said!

Disclaimer : Views are my own and should not be attributed to employers who I work for. I have advised global VCs, P/E firms of tech investment and portfolio management some of them managing assets over $250 Billion. I advise startups actively to help develop algorithms in fintech, foodtech and healthtech.

Image Courtesy  : P&G Facebook Page "Mean Stinks"

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