Commentary

P&G Steps Away From Targeted Ads On Facebook -- Why?

by Tobi Elkin , Staff Writer, August 11, 2016

Earlier this week, Procter & Gamble, the world’s largest advertiser, announced a surprising move. It decided that buying targeted ads on Facebook didn’t make a material impact on the consumer packaged goods giant’s business.

P&G CMO Marc Pritchard told the Wall Street Journal that the company won’t necessarily buy less ads on the social network, but it plans to purchase highly targeted ads less often.

Why?

Well, according to Pritchard, buying these highly targeted, granular audiences was costly and didn’t necessarily result in a material difference to its business. "We targeted too much and we went too narrow," Marc Pritchard, P&G's chief marketing officer, told the Journal. "And now we're looking at: What is the best way to get the most reach but also the right precision?"

P&G was an early participant in experimenting with Facebook’s targeting tools, which enable advertisers to reach very specific audience segments.

Some industry observers say that massive companies like P&G, with their many brands, may not benefit from hyper-targeting. Yet anyone you talk to is bullish on buying super-granular audience targets. Or there could be a simpler reason: Larger brands simply don’t see advantages in such narrow, specific targeting.

Targeting very specific audiences does tend to cost more for marketers. P&G has said that it got the same results from making broader ad buys. It seems that P&G may be shifting to placing more emphasis on an online ad's reach vs. its targeting abilities.

ad targeting, audience targeting, behavioral targeting, facebook, programmatic, targeting

8 comments about "P&G Steps Away From Targeted Ads On Facebook -- Why?".

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Ari Rosenberg from Performance Pricing Holdings, LLC, August 11, 2016 at 9:32 a.m.
VERY interesting and something to watch. This flies in the face of the core value proposition programmatic brings to the table. Thanks Tobi.
Reply

Henry Blaufox from Dragon360 replied, August 11, 2016 at 10:27 a.m.

Actually, the P&G CMO stated what they are doing, and why. They are NOT abandoning online audience segmentation and ad targeting. Instead, they will reduce the extremely narrow "hypersegmentation" they had tried, and expand the targeted audience sizes somewhat (how much is tbd, based on further trials, I suppose.) P&G discovered that a global behemoth doesn't get enough return on overly narrow targets, even if conversion percentages are high. The product purchase volume isn't enough to move the needle in too narrow segments. That's a way to define the segment as too narrow - small revenue growth even with high conversion (purchase) rates. The goal is to avoid "a burp in a blizzard." So, apply the technology to wider segments, keep trying till the optimal balance between targeting efforts and purchase results is achieved.

Mike Merna from Quotient replied, August 11, 2016 at 10:30 a.m.

Not exactly. Programmatic executions can be very broad-based or very granular.

And, I agree that going too narrow in audience buys for big brands is a mistake. I would recommend a dual approach of broad reach and targeting heavy buyers of the category, who tend to be 10-30x more valuable than the average person (in the CPG world).

Ed Papazian from Media Dynamics Inc, August 11, 2016 at 10:36 a.m.

That's right, Henry. From what I've been hearing, a number of the larger TV-style branding advertisers are concluding the same thing we see in this P&G story. Targeting relative handfuls of super prospects ---which is fine for direct merketers----may not be cost effective for brands that count their users in the millions let alone the tens of millions. This does not mean that refined trageting is a bad idea for digital ads, but going too granular without considering total target group reach ---even without individual user specifity---may be a more practical way to go. In other words, use digital's superior targeting capabilities where they apply but do so as in the TV branding model by factoring in reach and, prsumably, frequency control factors.

Tom Cunniff from Tom Cunniff, August 11, 2016 at 10:39 a.m.

IMO there are two major use cases for programmatic that do not always overlap. The first (and most commonly understood) is to drive efficiency by reaching the right consumer with the right message at the right moment. The second (and less obvious) is to find the right consumer at all -- in whatever medium he or she is using at that particular moment. As media continues to atomize into tinier audiences, the second use case becomes more pressing: marketers are less able to trust mass media to find their audience. The question each marketer must ask is whether the juice is worth the squeeze -- in other words, do the costs of media optimization exceed the results it can drive? The answer is not always yes. P.S. P&G can retreat to TV for now, but this may not be the case for much longer. The rise of OTT and programmatic TV will further cripple TV's ability to deliver mass reach -- with the obvious exception of events like the Super Bowl.

Ed Papazian from Media Dynamics Inc, August 11, 2016 at 10:45 a.m.

Makes sense, Mike, but few brands can take the risk on directing all of their ads at heavy category users---even if such persons can be singled out with absolute precision. By doing so you would be sending all of your ads to 20% of the product buyers who account for 50% of all buys, but conceding the other half to the competition---not a good idea. Also, if you take your current media plan, which is hitting the average product category user 15 times a year and redirect the same budget exclusively to heavy users, they would be hit 75 times per year which would result in accelerated campaign wearout and many heavy using consumers simply tuning you out due to the reducnancy. From a media planning standpoint, a far better solution is to apply some sort of value weighting to the various product category users and cover them all, but with different frequency levels and, perhaps, varying media mixes.

Mike Merna from Quotient replied, August 11, 2016 at 11:01 a.m.

Point it is, there's a balance between precision and scale that is always necessary and throwing out targeting all together is over-reacting, and not what P&G is actually doing.

brad berger from aim high tips, August 11, 2016 at 2:43 p.m.

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