As Procter & Gamble reported fiscal year 2021 net sales of $76.1 billion ending June 30 and fourth quarter net sales of $18.9 billion, both 7% increases over 2020, outgoing president/chief executive officer David Taylor vigorously defended the company’s marketing expenditures, which increased $850 million -- 11.6% in the fiscal year -- to $8.18 billion
Taylor directly attributed P&G’s top-line growth over the past five years -- an increase of from 2% to 6% annually -- to marketing investments touting the company’s innovations: “You have to help consumers understand what the product is, how to use it, and then help drive awareness and trial. And these investments have done that.”
Taylor pointed to a new “Every Degree Makes a Difference” campaign from its European laundry detergent Ariel, saying that educational push about the environmental benefits of lower washing machine temperatures had “helped contribute to Global Fabric Care’s 1.2% value share growth over the past 12 months.
Expect P&G’s increased ad spending to continue. “We’ve not reached the point of diminishing returns on these investments,” declared chief financial officer Andre Shelton, “so we will continue to invest at around…8% of sales.”
Shelton said he foresees “significant” productivity improvements in media spend effectiveness “to improve quality and quantity of reach,” based on “the shift into digital media, improved targeting capability with first’ or third-party audiences” and “the ability to sharpen our focus, even on TV audiences with our own data…We are also striving to improve production costs and agency structure.”
“We’re improving the efficiency of our advertising investments,” Taylor explained, ”bringing some media planning work in-house to achieve greater cost efficiency, while also enabling us to place ads with greater precision based on more granular analytics to reduce waste and increase effectiveness.”
Besides Ariel, other specific brands highlighted in P&G’s earning report and subsequent earnings call included:
-- SK-II cosmetics, a Japanese-based luxury skin-care brand also sold in the U.S., whose disproportionate growth “due to pandemic-related travel disruptions in the base period” helped the beauty category achieve a 6% organic sales increase YtoY
-- Vicks Nyquil Honey and Dayqull Honey, which launched last summer, with the former described by Taylor as the “#1 new item in the U.S. respiratory market.” P&G’s Vicks share rose 0.9 % over the past 12 months, Taylor said, “despite the soft market due to a very weak cough/cold season.
-- Oral B iO PowerBrush, launched last summer, which helped lead to a 2 ½ point gain in “brushing segment power share over the past year,” with iO contributing more than half of the growth to a 14 point rise in P&G’s U.S. powerbrush category, according to Taylor.
-- Crest Whitening Emulsions, launched last September, which was deemed a leading contributor to organic sales growth of more than 20% in P&G’s tooth whitening businesses during 2021, and the driver of two-thirds of all U.S. growth in whiteners.
-- Ninjamas, launched in September 2020, which helped propel P&G’s Baby Care category to a 12% increase in the bed-wetting segment.
Prior to issuing the earnings report, P&G announced that Taylor will step down Nov. 1, to be replaced by Jon R. Moeller, vice chairman/chief operating officer and former chief financial officer.
Shailesh Jejurika, currently chief executive officer of P&G’s Fabric & Home Care sector, will replace Moeller as chief operating officer a month earlier.
Kind of hilarious: P&G execs say their marketing is working, and how well. Well, they've been at this for more than a century and P&G marketing should work. It would be newsworthy if P&G marketing didn't work; among other outcomes, stockholders, involved ad agencies, etc., would not be happy, to say the least.
Equally hilarious are the "media" comments" of the P&G folks. For example, what's a "third party audience"? Or bringing some "media planning" in-house improves "cost efficiency" by virtue of better---or "granular"---- targeting. And "improvements in media spend effectiveness" will improve the "quality and quantity" of P&G's reach. I wonder if advertisers who compete with P&G are taking notes as these secrets of success are laid out for all to see. Perhaps they will follow suit and become even more successful---at least where media planning and buying are concerned.