P&G Eyes Global Growth Through Transformation, Consolidation
Procter & Gamble plans to generate more savings in marketing expenditure by cutting its agency roster.
in October, the FMCG giant announced it was reassessing its promotional budget. And at last week’s analyst day, chief brand officer Marc Pritchard said, “We see more savings runway ahead using digital technology for production, pooling more production and also using open sourcing and creativity in our work to create advertising, both within and outside of existing agency networks.”
P&G is using open sourcing for its skincare brand SK-II, and Pritchard said those ads have been produced at half the cost of traditional methods.
P&G spends $500 million on advertising production worldwide. “We are also improving the efficiency and the effectiveness of our media investments by increasing media reach and continuity while optimising the mix across mediums,” added Pritchard. “To make sure that our brands are top of mind when it’s time to buy, we need broad media reach to create awareness among all potential category buyers.”
Category-by-category, market-by-market, P&G consolidated to reduce the roughly 6,000 agencies it uses for advertising, media, public relations, package design and in-store materials by about 50%.
Pritchard said P&G is increasing media reach by 10% to 20% for brands like Tide in the US by shifting to popular TV shows and higher reach digital platforms. Febreze is broadening reach in social media and online video by using a broader target audience definition to reach all potential hair care buyers. Pampers continues to deliver mass reach, but with greater targeting to the right people at the right time, such as moms at the start of pregnancy to birth and through the diaper years.
Pantene’s “Strong is Beautiful” campaign, launched at the Super Bowl, has become part of the pop/social conversation, nearly doubling reach through free earned impressions from social media and PR and celeb ambassadors like Selena Gomez and Jillian Hervey and a POV that strong and beautiful daughters come from time spent with Dad.
“We have one very clear objective,” stated chairman, president and CEO David Taylor. “Balanced top- and bottom-line growth and strong cash generation that delivers total shareholder return that returns P&G back to consistently in the top third of our peer group. Our long-term growth algorithm is aimed at delivering organic sales growth modestly ahead of the underlying growth of the markets where we compete.
To deliver this objective, Taylor added, “we’ve been focusing on our big opportunities within our control. First, building and investing in business plans to grow our categories and attract more users to our brands, to accelerate topline growth. Second, driving productivity improvement in cost savings to fuel investment and margin improvement. Third, streamlining and strengthening our portfolio (of brands) and fourth, transforming P&G’s organization and culture.”
Taylor concluded, “Our focus will continue to be on driving cost savings to fuel investments needed to win in our top priority markets with product superiority and with new forms that delight consumers and grow our categories.”
P&G’s portfolio of household and personal care brands are used and purchased every day by about 5 billion people worldwide.
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