Commentary

How Much Digital Advertising Is Too Much?

It’s been almost two years since Marc Pritchard, Chief Brand Officer of Procter & Gamble, told the digital advertising industry to clean up its act. The e, currently the world’s second largest CPG company, was tired of what he perceived as massive waste in the digital advertising supply chain. He was referring to the lack of transparency between advertisers and digital agencies and the alphabet soup of ad-tech players that created complexity without always clearly defining value.

Since Pritchard was the man holding the purse strings of one of the single largest advertising budgets in the world, the digital industry stood up and took notice.

Getting Tough

Since that time agencies, publishers, and the ad-tech industry have all taken steps to increase transparency, both around media quality and around where and how advertising dollars are actually spent.

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In mid-2017, Pritchard declared the job of cleaning up digital roughly half done citing reductions in fraud and increased transparency. However, he didn’t stop there.

Between April and July of 2017, P&G cut more than $100 million in digital advertising spend, citing the continued prevalence of bot traffic and brand safety challenges presented by risky content. These reductions remained in place from July until December, removing roughly another $100 million from the market by the end of the year. The reduction was meant to reduce waste, pulling dollars away from risky, fraudulent, and non-viewable inventory. But the final impact went much further than reducing waste.

The Result

According to P&G, the result of these dramatic cuts to its digital spend was a 20% reduction in ineffective ad spend. In some cases, P&G reduced its spend by as much as 50% with specific big-name partners with no reported negative impact on ROI. 

Perhaps more surprisingly, the CPG leader measured a 10% increase in overall reach of its campaigns. On the surface, this result is counterintuitive, P&G reduced its spend and the overall number of placements, but reached more consumers. The result was likely driven by the increased efficiency of carefully pruning ineffective inventory and reallocating remaining budget to higher quality placements.

P&G competitor Unilever, which likewise commands market-shaping amounts of ad spend, similarly reduced its total advertising budget. The CPG giant reduced spend by nearly 51% across digital channels. While Unilever doesn’t break out its ad spend, the company similarly reported no ill-effects on ROI from the dramatic spending cuts.

What next?

Experiments by CPG leaders like P&G and Unilever have made waves in the market, revealing that ad spend alone doesn’t drive value when not tied to quality metrics like viewable inventory.

By pushing the envelope on quality these advertisers learned that some of the seemingly immutable paradigms of digital -- the scale is king, and quality is beyond our control -- weren’t as unshakable previously assumed.

So how should advertisers proceed based on this information? Three tips to keep in mind:

  1. The platforms can be moved. When advertisers put pressure on the digital advertising ecosystem, the ecosystem gave way. Agencies and ad platforms previously assumed to be immovable made a concerted effort to provide quality. That’s a powerful lesson, especially for brands that feel powerless in the face of the duopoly platforms of Google and Facebook. Collective action can reshape the ad ecosystem for the better.

  2. Measure the things that matter. Pure scale, as measured by impressions, has been the standard metric for advertising success, but P&G’s experiment proved that quality of impressions had more impact on ROI than brute number of impressions.

  3. Budget isn’t everything.  For marketers who don’t have P&G-sized ad budgets to play with, the numbers indicate that it’s still possible to drive meaningful results. A focused media strategy that prioritizes context and quality can carry the day even in the face of smaller budgets.

1 comment about "How Much Digital Advertising Is Too Much?".
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  1. Mike Cherepko from n/a, November 13, 2018 at 2:05 p.m.

    "While Unilever doesn’t break out its ad spend, the company similarly reported no ill-effects on ROI from the dramatic spending cuts."

    If P&G and Unilever are cutting I, and ROI remains the same, that implies big reductions in R. "Dramatic" reductions in R, even.

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