Procter & Gamble, radio’s largest parent company advertiser, increased total ad spending 14% in its recently wrapped fiscal third quarter. The consumer-packaged goods giant boosted its ad spend as a share of sales by 1.8 percentage points, or more than $360 million, Chief Financial Officer Andre Schulten said in a media briefing, as reported by Ad Age.
Both earnings and gross margins came in above analysts’ estimates for the quarter and the company says it has lowered costs. However, organic sales for the manufacturer of Tide, Pampers and Bounty, rose slightly less than analysts expected. When asked if the company would boost ad spend or roll back prices considering margin growth and a deceleration in organic growth, Schulten said sales of P&G products remain robust.
“That reflects the strong marketing investment this quarter and in previous quarters,” he said. “Very strong gross margin progress the team has made in the quarter will enable us to stay fully invested for the balance of the year and going into next year, and that’s the plan.”
During the company’s earnings call on Friday, Schulten elaborated on P&G’s marketing spend. “We continue to invest in reach [and] frequency with strong quality of communication across the markets. We are very diligent in pre-ROI analysis and very diligent in post event analysis to ensure that we understand whether the spending is effective. And if you look at the results, I will argue it is.”
Because it manufactures products that consumers use every day, like toothpaste, toilet paper, dish soap and other household staples, P&G aims to reach close to 100% of adults for its everyday use products. Radio has played an important role in that, as John Fix, its former analytics and data guru, has publicly stated several times. P&G placed 17 household products in the top 100 radio advertisers for the week of April 15-21, according to Media Monitors, led by Febreze at No. 13, Swiffer at No. 16, Downy at No. 23 and Secret at No. 30.
Schulten added that a strong combination “of great product innovation with a very sharp consumer insight translated into a great copy drives strong results.” He pointed to P&G’s Skin and Personal Care business as an example of this dynamic. In fact, its Old Spice and Secret total body deodorant business is growing 11% in North America, Schulten said.
The Cincinnati-based manufacturer is famous in marketing circles for conducting rigorous and sophisticated research and analytics to ensure its marketing dollars deliver maximum return on investment. Said Schulten, “We will not spend if there's no ROI.”