Marketers are collectively a little obsessed with P&G (this author among them).
It’s not necessarily a reflection of their innovation as marketers, though they’ve produced some exceptional examples of brand storytelling—think “The Talk,” Ariel’s “Share the Load,” Always’ “Like a Girl,” and the recurring “Thank You Mom,” tied to their sponsorship of US Olympic teams. Most of their over 300-brand portfolio is far more staid in terms of marketing.
Nor is it necessarily because of their history, even though they were the first to advertise directly to consumers on a national scale at the end of the nineteenth century. And while the fact that P&G was behind the original soap operas may come in handy on trivia night, it’s not enough to justify our collective attention today.
It’s not even their ubiquity, though I challenge you to find an American household today without a single P&G brand lurking in the medicine cabinet or beneath the kitchen sink.
Instead, it’s P&G’s sheer size that keeps them top-of-mind: The multinational CPG behemoth has been the world’s biggest advertiser for many years. Whither P&G goes, a whole ecosystem of agencies, media companies, and tech providers follows—which is why chief brand officer Mark Pritchard’s pugilistic stance towards the prevailing digital media model has everyone watching closely. The trends he is setting in motion are not about to go back into the bottle.
Image attribution: Dylan Nolte
Pritchard began making waves last January with a speech to the Interactive Advertising Bureau in which he laid into ad tech vendors, agencies, and advertising platforms, advocating for vastly greater transparency, an end to unscrupulous pricing practices, and common standards and third-party verification for measurement. He decried the media supply chain as “murky at best, fraudulent at worst,” and reportedly left a roomful of advertising leaders openmouthed.
He happily put P&G’s money where his mouth is, slashing more than $200 million from their digital advertising spend over the course of 2017 and saving another $750 million in ad agency and production costs. Next on the chopping block: halving the number of agencies they work with and ultimately saving some $400 million.
P&G also pulled away from YouTube entirely in response to their ads appearing alongside offensive and derogatory videos, joining a number of brands in putting pressure on Google to make needed changes to their ad placement algorithm and to create additional tools to give brands greater control over excluding objectionable content.
And, of course, Pritchard continues to speak on similar themes to bodies such as the Association of National Advertisers, of which he is chairman.
As powerful as Pritchard is, he’s still beholden to shareholders. While P&G may appear to be an unshakeable giant of the CPG world, upstart challengers are chipping away at their market share. No one is poised to topple P&G, but any number are in a position to make P&G hurt, and they’re doing it with a fraction of their marketing budget and even less name recognition.
With start-ups hacking away at his ankles, it’s no wonder Pritchard faces immense pressure to prove ROI—a decidedly difficult task in a convoluted landscape that spans traditional and digital media, never mind the disconnect between viewing content online and buying products in store. Opaque, unstandardized, and unverified measurement stands in direct opposition to gauging the effectiveness of marketing investments, so it’s unsurprising that Pritchard is bringing his weight to bear by pushing their advertising partners to comply with P&G’s transparency requirements.
Cynics might point to the trend of cutting costs to produce short-term profits—not a ridiculous theory in the age of the activist investor—to explain the steep cuts in agency spend and digital media buying. Still, P&G’s actions go well beyond simple budget cuts. Their extensive agency review on its own would only suggest belt-tightening, but in the context of Pritchard’s high-profile PR tour it reveals a broader agenda of eliminating inefficiencies that extends beyond P&G itself to include its extensive network of partners and vendors.
Image attribution: Brooke Lark
Perhaps the most obvious outcome is a new expectation of heightened scrutiny of advertising partners by brands. Pritchard has taken direct aim at so-called “walled gardens”—platforms that provide self-reported data without transparency or third-party verification—a complaint brands have been lobbing at social media platforms for some time.
Performance reporting isn’t the only aspect of external partnerships coming under scrutiny. Writing in response to Pritchard’s January 2017 speech to the IAB, Mark Ritson of Marketing Week commented on the revelation that P&G had unwittingly found itself scammed by an agency tacking on undisclosed commissions to media buys:
“. . . [T]he implications for marketers are enormous. If P&G—the biggest, smartest and usually most fastidious advertiser in the world—can find itself on the receiving end of sur-commissions it’s clear that any client company could also fall victim.”
The cat’s out of the bag—if brands weren’t scrutinizing ad buys before, they are now. And as brands renegotiate their relationship with media companies, they’re likely to accelerate the trend toward brand-owned media, expanding the role of content marketing to include high-quality multimedia content: online publications, video series, podcasts, and more.
P&G has responded not only with a massive review of their contracts but with plans to move a portion of their media buying in-house in order to exert greater control over the process, counting on their size to enable the economies of scale that ad buyers bring to the table. While very few brands will be in a position to emulate them, vendors would be wise to consider the desire on the part of brands for greater oversight of their processes.
P&G may be ushering in a period of discomfort for not just the vendors and agencies that work with them directly but, as other brands feel empowered to make similar demands, the marketing and advertising ecosystem as a whole. Still, the end goal is worth the temporary discomfort: a more transparent, more effective mediascape that is less vulnerable to fraudulent behavior.
The subtler outcome is no less important. These changes in digital marketing are not the end state; they are only meaningful if they result in a better experience for the consumer.
Pritchard is making a strategic bet that with vastly improved transparency into the effectiveness of their marketing, P&G will be able to reach consumers with the most meaningful message at the most optimal time, rather than crudely bombarding potential consumers with what may be an unwelcome message. The way to give a customer a better experience with your brand, the world’s largest advertiser is implying, is to advertise to them less—and to tell them the perfect story when you do.
Image attribution: Rob Hampson
What might the post-revolution world look like? The days of ads following you from site to site across the Internet are probably numbered as brands reduce their reliance on programmatic advertising, instead using it to support finely callibrated, highly targeted interactions, or “one-to-one marketing” in Pritchard’s parlance. A decrease in the overall quantity of content will place a premium on the quality of content—not necessarily in production value, but certainly in its ability to convey a meaningful story that creates a connection between the brand and the consumer.
“We’ve been giving a pass to the new media in the spirit of learning,” Pritchard opined in his IAB speech. “We’ve come to our senses. We realize there is no sustainable advantage in a complicated, non-transparent, inefficient, and fraudulent media supply chain.”
Pritchard’s frustrations reflect the coming of age of digital marketing: The heyday of its adolesence is over, and it has adult responsibilities now. With P&G as the self-appointed disciplinarian, digital marketing may be in for some growing pains, but the outcomes—less opportunity for fraud, transparent marketing practices, and a better customer experience—will be worth it for all involved.
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Featured image attribution: Matthew Kane