P&G: Marketing Efficiency Drives Efficiency, Leading to More Investment

An important conclusion from the P&G conference call is that one of the world’s largest advertisers sees many more opportunities to increase the efficiency and effectiveness of their marketing efforts, despite this approach has been a priority in recent years. As long as the CPG marketer continues to see a strong return on investment for their incremental spend, executives say they will follow suit.

Marketing efficiency becomes something of a vicious circle for P&G executives. As digital becomes a larger percentage of media investments, it means a broader and more streamlined audience, which helps the company further optimize its targeting algorithms.

“If you think about our marketing spend, we estimate that there is still a significant opportunity to optimize our ability to reach consumers more broadly and effectively at a significantly lower cost as our digital reach grows,” said Andre Schulten, Chief Financial Officer of P&G. during the call.

However, the growing digital reach has its challenges. P&G Brand Director Marc Pritchard recently highlighted the ongoing measurement and transparency challenges associated with digital marketing, an issue that is difficult to solve, but the CPG marketer hasn’t stopped investing. This week, P&G was named one of Snap’s first clients for a new creative studio targeting brands across all platforms. The company also followed the NFT trend.

P&G posted strong sales, increasing net sales by 5% in the first fiscal quarter to a total of $20.3 billion. Their investments in digital marketing are at least partially responsible for the results, according to John Boylan, consumer analyst at Edward Jones, in a research note sent to Marketing Dive. At a time when prices are skyrocketing – and may continue to rise amid supply chain challenges – and consumers are thinking more about their purchasing decisions, investments in digital marketing, as well as supply chain and data analytics, likely helped P&G grow its market share during the quarter, and that could help it outperform some smaller competitors in the future, Boylan said.

During the pandemic, consumer preferences shifted to brands they trust, including everyday products offered by P&G, Moeller said. This is reflected in how private market share is declining, he noted.

P&G’s e-commerce business, which grew 16% globally and 11% in the US in the first fiscal quarter, is also solid, according to Schulten. P&G’s brands regularly appear on the front page of search results, and the company can provide more detailed product content online than on store shelves, he noted.

“Overall, we believe that e-com builds on our strengths and that we can support our e-com business with strong marketing and brand building to maintain this level of growth,” said Schulten.