Dive Brief:

• Procter & Gamble, reporting strong sales and increased costs during its 2022 fiscal first quarter, will continue to invest in marketing at the same level going forward with the goal of supporting growth as consumers seek out trusted brands, executives said during a conference call with analysts this week.
• Marketing spend during the July to September period rose more than 5% in absolute dollars, reflecting the company's overall sales growth. However, executives said P&G can offset some of its incremental investment through efficiency, greater digital reach and better targeting. P&G also reported that e-commerce now accounts for 14% of its total sales.
• "The more efficient and effective we can make our marketing spend be, and ... there's lots of opportunity to continue to do that, the more attractive it becomes to make those investments," Jon Moeller, P&G's vice chair, said during the call. Moeller is set to become P&G's president and CEO on Nov. 1.

Dive Insight:

A key takeaway from P&G's earnings call is that one of the world's largest advertisers sees plenty more opportunity to drive efficiency and effectiveness in its marketing efforts despite having already prioritized this approach over the past few years. As long as the CPG marketer continues to see a strong return on investment for its incremental spend, executives said they will continue on the same path.

Marketing efficiency becomes a kind of virtuous circle, per P&G executives. As digital becomes a greater percentage of media investments, this means a larger optimized targeting pool, which helps the company further optimize its targeting algorithms.

"When you think about our marketing spend, we estimate there's still significant opportunity to optimize in the ability to reach consumers more broadly and more effectively at significantly lower cost as our digital reach increases," Andre Schulten, CFO at P&G, said during the call.

However, scaling up digital reach isn't without its challenges. P&G's Chief Brand Officer Marc Pritchard recently called attention to the ongoing measurement and transparency challenges related to digital marketing, a problem that has proved difficult to address but that hasn't prevented the CPG marketer from investing. This week, P&G was named one of Snap's first clients for a new creative studio focused on branded AR across platforms. The company has also jumped on the NFT trend.

P&G is experiencing strong sales, posting a 5% increase in net sales during its fiscal first quarter for a total of $20.3 billion. Its investments in digital marketing are at least partially responsible for the results, according John Boylan, consumer staples analyst for Edward Jones, in a research note emailed to Marketing Dive. At a time when prices are widely rising — and could continue to go up amid supply chain challenges — and consumers are being more thoughtful about their purchasing decisions, investments in digital marketing as well as supply chains and data analysis likely helped P&G gain market share during the quarter, and could help it fare better than some smaller competitors going forward, per Boylan.

During the pandemic, consumer preference has shifted to brands they trust to perform, including for the daily use products that P&G offers, Moeller said. This is evident in how private label market shares are declining, he noted.

P&G's e-commerce business, which grew 16% globally and 11% in the U.S. during the fiscal first quarter, is also on strong footing, per Schulten. P&G brands often show up on the first page in search results and the company can provide more detailed product content online than it can on store shelves, he noted.

"So generally, e-com, we believe, plays to our strengths and we can support our e-com business with strong marketing and brand building to sustain that level of growth," Schulten said.