P&G Defends 14% YOY Increase In Marketing Spend

An ad for Old Spice Gentleman's Total Body deodorant

P&G revealed just how heavily it invests in marketing its brands on an earnings call with analysts and investors today.

The CPG giant reported its Q3 fiscal year 2024 earnings today, reporting an organic sales increase of 3% year-over-year -- while also noting a 7% increase in selling, general and administrative (SG&A) expenses. In a call with investors discussing its earnings report, investors repeatedly raised questions about such expenses, with P&G CFO Andrew Schulten explaining that marketing costs were the “main driver” of the increase.

In response to a question from an analyst about the SG&A costs, and anticipated ROI on marketing expenditures, Schulten replied that the company continues to invest in “reach frequency” and high quality marketing investments across markets.



“We are very diligent in pre-ROI analysis and very diligent in post-event analysis to ensure that we understand whether the spending is effective. And if you look at the results, I would argue it is,” he added. “The strongest combinations of great product innovation with a very sharp consumer insight... drives strong results.”

Schulten pointed to P&G’s skin and personal care business, where he claims the “great consumer insight” driving messaging for its Old Spice and Secret deodorant brands helped drive 11% growth in North America. He also cited the importance of “expandable” categories, characterizing such categories as “a big investment area for us.”

“Swiffer PowerMop, for example, getting new users to use Febreze plug-ins, those marketing investments grow the market, and they grow our share within the market,” he explained. “We will not spend if there's no ROI. We're watching…to ensure that we remain on the right side of that line.”

In response to a subsequent question about SG&A expenses, Schulten reiterated the continued investment in marketing. “We [saw]  an increase in our marketing spend of about 14% year-over-year. That's the main driver,” he said. “It's offset by productivity on the SG&A line, but really I would point to continued…productive investments to drive market growth and push out our innovation, and that's the main driver of the SG&A increase that you're seeing.”

Elsewhere in the call, Schulten explained the company’s growth in Europe was thanks in part to P&G investing “probably more than ever” on marketing  in the region to promote product innovation. He also explained that the company is building out its digital capabilities in the region to increase its consumer targeting capabilities -- as it has done with U.S. marketing --  and “become more effective and efficient with our spend in Europe.”

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