Just when you thought the recovery might really be here and the corporate purse strings might loosen a bit, the world's largest advertiser announces it wants to cut expenditures by $10 billion in four years.
Say it ain't so, screams the entire marketing industry in unison. Welcome to the relentless push for efficiency and effectiveness. This started almost 15 years ago with talk of disintermediation during the dotcom boom. Yes, lots of interesting ideas emerged along with the sock puppets and babble about stickiness.
Let's be clear: P&G is as much or more about building brands as about cutting costs. But all good corporations are paranoid. They can not afford to become complacent - and they have to innovate to stay ahead of the competition, wherever it may come from. And to do so entails risk. The lack of reliable metric and good comparable data from the digital realm is a problem. And has been for years. So P&G will have to create its own. Because they can - and because they have to. They, more than any other marketer, understand that their customers are migrating online. That is where attitude formation is happening. If they are not there on the ephemeral space, however uncertainly, then it is certain that before long they will not be on the very tangible shelves. JL
Emily Glazer reports in the Wall Street Journal:
As head of marketing for Procter & Gamble Co., it's Marc Pritchard's job to figure out how the world's biggest advertiser can spend less on advertising.
The consumer products giant said last month that it aims to save $10 billion by 2016, cutting $1 billion from its marketing budget. Mr. Pritchard says those cuts will come by thinning the ranks of marketing executives and spending more efficiently, leaning more heavily on lower-cost digital marketing and easing up somewhat on pricey broadcast ads.
.He says P&G will also craft more marketing campaigns for multiple brands around a single event, such as the Olympics.
Mr. Pritchard, 51 years old, became chief of global marketing in 2008, after more than 20 years at P&G. He spoke with The Wall Street Journal about the company's digital-media and other marketing plans. Edited excerpts:
WSJ: How is P&G staffed to support digital media?
Mr. Pritchard: I took a small group of people when I first got here to learn everything we can about digital and get that through the company. Search was the first thing; we mastered it, sent it up. The same thing is happening with digital banner ads, same thing is happening with social media—Twitter and YouTube.
WSJ: Which brands tried it first?
Mr. Pritchard: Some of the brands that I think are farthest along on this journey: Pampers, Old Spice, Secret, [skincare products] SK-II business in Asia. We're really brand agnostic. It's who's interested, who wants to push it. We love to see people try different things and watch it explode.
WSJ: Some of your top performers in digital marketing have left P&G to go to Google, Pepsi, start-ups in Silicon Valley and in Cincinnati. How will you retain that staff?
Mr. Pritchard: People leaving P&G is part of the business. To build a brand, you have to have great ideas. Now apply that to digital and all the new technology that's available. We have a much greater degree of opportunity to innovate. Some people's interests may be on the technology front, but when it comes to P&G you have to apply that technology onto a brand. That's what we're looking for: people who can do both.
WSJ: P&G has strategic partnerships with several tech firms, among them Google, Microsoft, Yahoo and Facebook. What's resulted from those partnerships?
Mr. Pritchard: We're all around the world. The same thing with Google, Yahoo, Microsoft. The deal with these partnerships is that we grow together. They exchange ideas, new approaches and technology with us. We exchange our ideas and insights. It's mutually beneficial.
We go out and meet with venture capitalist companies to look at the new things they've got. Just recently we looked at [music identifier application] Shazam and [online influence scorer] Klout.
WSJ: How do you determine ROI [return on investment] on social-media marketing initiatives?
Mr. Pritchard: What will revolutionize the industry, what we're working on an industry basis, is to define EGRPs [electronic gross rating point, a measure of audience reach]. You can look at what an impression from Google, or Facebook or Twitter is actually worth. Once we get that, we will start to get a common platform measurement...that the [Association of National Advertisers] is working on. We're pushing them to go faster. [Mr. Pritchard sits on the board of the Association of National Advertisers.]
WSJ: How are brands responding to smaller, more digital marketing budgets?
Mr. Pritchard: Some brands that have very little money get very innovative. Aussie [Hair Care] is 100% digital. Secret [deodorant] is 100% digital. Old Spice [deodorant] didn't have that much money. They didn't advertise "Smell Like a Man, Man" at the Super Bowl, it was before the Super Bowl. Then they got this huge lift on YouTube, then they amplified it in PR, amplified it on Twitter.
WSJ: Which digital campaigns have driven a brand or a manager to take a new approach?
Mr. Pritchard: In India, for example, for the fourth year in a row now, we have Shave India. We ask questions for people to debate. Are clean-shaven celebrities more popular than non-clean shaven? Are clean-shaven men sexier than non-clean shaven? Are clean-shaven men more likely to get a job? It creates all this discussion around the brand. We just introduced MACH3 and Fusion [ProGlide Styler] razors behind this.
WSJ: How will P&G integrate social media during its Olympics campaign?
Mr. Pritchard: You'll see some very heavy-duty digital activity for our Olympics program. It'll be Twitter, Google, YouTube, Yahoo. Those are going to be some pretty essential parts of the whole program. There's nothing more I can tell you about it now because I want to save our powder. Suffice it to say, you'll see a lot of activities, not just on Twitter but across our digital partners.
We have more than 30 brands doing Olympics activities, 150 athletes, all those brands have Facebook pages, all those athletes have Facebook pages. Then we go out, create an event, talk about it, push it out, through broadcast and digital. Then we have community managers who are amplifying the discussion, engaging on Facebook, on YouTube, things like Twitter. That's the way it'll work.
WSJ: Some competitors are more nimble and can bring campaigns and new digital strategies to market faster than P&G. Are you ramping up?
Mr. Pritchard: We've tried to accelerate time and cut time with virtual design of packaging, virtual design of products, virtual design of processes, virtual design of ads, those kinds of things. It has to come down to not what the entire company does in total but what each brand and category does on a one-to-one basis.
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