Posted by Tracy Stokes on March 19, 2012
As the world’s largest advertiser, any move by Procter & Gamble (P&G) is closely watched. So much attention has been paid to its recent announcement that it will cut $10 billion from its marketing budget over the next five years. In an interview last week with The Wall Street Journal, P&G’s Global Chief Marketing Officer Marc Pritchard elaborated on the company’s intent to lean more heavily on digital media at the expense of higher-ticket TV advertising as part of its cost-savings strategy. The Wall Street Journal interview is part of a PR push from P&G around its digital ambitions, highlighted in a Signal event in Cincinnati last week that focused on brand building in a digital world. The event brought in digital players and experts from Facebook and Google to Buddy Media and Flipboard as well as Forrester’s own eBusiness experts Sucharita Mulpuru and Andy Hoar. So why is P&G making this digital shift, and what does it mean?
The public event and announcements are, as the event name suggests, a signal — a welcome signal to Wall Street that P&G will be faster and more efficient (the company’s stock rose 3% with the budget-cutting news). It's a return shot across the bow to competitors such as Unilever and L’Oreal, which are both making high-profile advances in their digital ambitions, and a signal to P&G employees around the world that their leaders are serious about digital and that they need to accelerate change in the slow-moving P&G ship.
But how will it play out in terms of marketing plans? Is it the end of TV? Unlikely. Recent data from Kantar Media showed that as of Q4 2011, TV was still the foundation of P&G’s brand-building efforts and it retains its crown as the No. 1 TV advertiser in the US. So Pritchard has plenty of room to shift money from TV to digital and not even make a dent in TV advertising. And the efficiency play is a red herring. Digital’s draw for P&G is to get closer to its consumers. P&G is a smart brand builder that is laser-focused on understanding its consumers’ every need. At the Signal event, Pritchard declared that the focus “is not on digital marketing; it’s about brand building in a digital world.” So it’s not about being digital; it’s about how digital technology can help the company better build its brand with consumers, which means that consumers’ behavior, coupled with brand portfolio investment and market growth priorities, will drive channel choices. What will this look like?
- The big digital push will be in emerging markets. Digital will fuel P&G’s growth in markets like Brazil, China, and India, where online and mobile offer the best ways to engage with consumers.
- In developed TV-driven markets like the US, household names like Tide and Bounty will continue to rely on TV, with digital integrated as part of a multichannel brand-building plan.
- P&G will look for opportunities to drive smaller brands with smaller budgets like Aussie and Old Spice through digital.
Ultimately, digital versus TV is a false choice of options. Everything is going digital. And as more consumers go online to catch their favorite show, leading marketers like Best Buy and Coca-Cola are pursuing an integrated TV and video strategy that engages with consumers wherever they tune in. There are still a lot of barriers to overcome, like cross-screen measurement, entrenched media buying silos, and lack of cross-channel buying skills, but ad sellers and ad buyers are starting to head in this direction. For more on this topic, check out my report, “Why Marketers Must Integrate TV And Video Strategies.”
What do you make of P&G’s digital move? Has this made you rethink your marketing plans? Or have you already made a digital switch?
P.S. If you want to learn more about how digital has moved from cool to critical in the age of the customer, join us in Los Angeles on April 18-19 for Forrester’s Marketing Leadership Forum.
Search Forrester's Blogs
Free On-Demand and Live Events
Latest events from Forrester analysts, online and in person »