- Procter & Gamble is experiencing some of its highest quarterly and annual sales in years, while simultaneously decreasing its advertising spend, the company reported in a conference call on Tuesday night. However, while the company has cut creative costs, it increased its media spend and marketing reinvestment, as reported by Ad Age.
- P&G's efforts in performance marketing were highlighted during the call. The company said it now has more than 1 billion consumer IDs, enabling it to reach very targeted audiences to test new business ideas, products and propositions.
- In some negative news, P&G took a $8 billion writedown on Gillette during the quarter, citing currency devaluations, lower shaving frequency and increased competition from direct-to-consumer brands like Harry's, CNBC reported. During the call, execs said recent marketing efforts for Gillette have been well received by millennials and Gen Z.
P&G's quarterly earnings is the latest signal that one of the world's largest advertisers continues to revamp how marketing is done by a large CPG company, moving the focus away from traditional creative services provided by agencies and toward digital marketing. So far, the results look promising.
The company continues to shift its marketing work in-house while adopting a new media model in January, aimed at giving brands greater control and flexibility in how they manage their growth. This new system lets brands decide how to best conduct their own media planning, digital buying and investments in programmatic. It also recently announced a push to work with creators more directly in an attempt to reinvent the advertising ecosystem.
In April, the CPG giant revealed it had cut some $165 million in overhead including ad agency fees and production costs during Q2, about 59% more than in the prior quarter, and continues to reinvest savings into its marketing.
As P&G's creative spend lessens and its focuses on in-house work, it's upping its media spend and marketing reinvestment. During yesterday's conference call, P&G execs highlighted the company's growing strengths in performance marketing. The company has been investing in its own data and developing audiences based on first-party information that allows it to deliver more targeted campaigns.
David Taylor, P&G CEO, said on the conference call that the company now has more than 1 billion consumer IDs worldwide.
"Once you have the smart audiences, you can do propensity marketing with people that have similar characteristics," he said on the call.
Taylor revealed that P&G now has a much larger volume of cookie data that lets the company reach consumers on devices. In addition, when it has unique consumer IDs, it can ask consumers to opt-in to receive messaging and abide by privacy laws worldwide. In doing so, the brand can get very targeted audiences to test new business ideas, products and propositions, Taylor explained.
Taylor expects this mechanism to evolve.
"[It will get] more powerful as we continue to collect data refine it and become more accomplished at performance marketing to taking that data use it in a respectful way to serve consumers products and propositions and messages that meet their needs," he said on the call.
P&G reported that net sales during its Q4 for fiscal year 2019 totaled $17.1 billion, up 4% versus the prior year. The company saw an 8% increase in organic sales in the beauty segment, a 10% increase in health care and a 10% increase in fabric and home care, compared to the same period last year.