P&G Makes Its Numbers, Slashes Ad Expenses

Procter & Gamble released Q4 earnings results today that beat analysts’ expectations, in part because the company cut a chunk of its digital ad spending. And throughout its fiscal year (which ended June 30), it also cut ad production costs and agency fees.

In other words, the company is walking the walk that its top marketing officer, Mark Pritchard, has been talking about all year—cleaning up the waste and inefficiencies in the ad sector, particularly in the digital space.

Sources tell me the firm probably whacked $200 million out of its ad expenses in the just ended fiscal year, much of it coming in Q4 and most of it coming from the digital side.

On a call with analysts and investors earlier today, company CFO Jon Moeller said the Q4 marketing cuts were mostly related to spending on the digital side, and “was a choice to cut spending where it was ineffective. Where we were serving bots as opposed to human beings.”

Importantly, Moeller stressed, the cuts did not result in “a reduction in the growth rate” of company revenues. “And what that tells me is that spending that we cut was largely ineffective.”

The good news for Adland is that P&G doesn’t necessarily see the reduced spending as permanent, if inefficiencies can be eliminated from the digital ecosystem.

“What we'd love to do, and what we're working with our media partners to do,” added Moeller, “is create a very efficient supply chain that helps us build our brands. And we'd love to invest more in doing just that.”

Hard to argue with that, right Adland?



1 comment about "P&G Makes Its Numbers, Slashes Ad Expenses".
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  1. Ed Papazian from Media Dynamics Inc, July 28, 2017 at 10:01 a.m.

    It may be hard to argue with the last statement by the P&G guy but were I a digital media ad seller I would be pretty concerned about this development as it reflects what a grwoing number of branding advertisers have come to think. Time for some serious rethinking on the digital side---- and some tangible action towards becoming ad-friendly.

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