Procter & Gamble said it plans to save over $2bn in annual marketing spend, more than half of which will come from reducing media supply chain “waste”.
The world’s largest advertiser yesterday (26 April) revealed its third quarter results, and a net income of $2.52bn, down from $2.75bn from the same period last year.
P&G has been looking to cut its marketing expenditure for some time – last year promising to eliminate $1.5bn in agency-related costs in the 2017 financial year.
Earlier this year, chief brand officer Marc Pritchard issued a state-of-the-industry address, urging partners to clean up the “murky at best, fraudulent at worst” media supply chain.
Perhaps with his in mind, chief finance officer Jon Moeller told investors that the drive for marketing and media efficiencies would continue: “We see over $2bn of savings opportunity in marketing spending, with half or more coming from media rates and eliminating media supply chain waste.
“We’re targeting up to $500m more in savings from reduced agency fees and ad production costs, and we see about $500m of opportunity in spending for in-store materials, direct-to-consumer programs and improved efficiency in trial building and sampling programmes.
“We’re working to lead the effort on media transparency, eliminating costs in the media supply chain created by poor standards adoption, too many players grading their own homework, too many hidden touches, too many holes where criminals can rip us off, and unsafe places for our brands to have ads.
“We’re letting our spending talk, buying media from those that comply with the new standards we’re setting, so that we know our ads are experienced by consumers in the most productive and efficient way.”
Moeller also introduced a new corporate mantra – ‘Irresistibly Superior’ – which he claimed will help P&G to retain market share in slow-growth economic conditions.
When pressed on the definition of the tagline, he said P&G would strive to achieve “superior brand messaging” that makes consumers “think, talk, laugh, cry, smile, act, and, of course, buy”, and express views “on issues that matter and where the brand matters”.
“We’re raising the bar in advertising quality with a focus on superior brand performance claims that communicate the brand’s benefit superiority to create awareness and trial. We’re improving the quality of consumer insights, agency creative talent and production. We’re applying a body-of-evidence assessment to advertising quality,” he added.
“To be assessed as proven effective, our highest bar, a campaign must drive awareness, household penetration, and share growth for at least one full year, and be determined by a panel of objective experts to be effective advertising.”