Procter & Gamble, radio’s largest parent company advertiser, increased its ad spending by $453 million last quarter and the investment paid off. The consumer packaged goods giant grew its organic sales by 8% and reported a return to volume growth in the U.S. for the first time in five quarters, according to Ad Age.
The boost in ad spending during P&G’s fiscal fourth quarter ended June 30 marks a turnaround from a year earlier, when the CPG giant cut spending in its fiscal fourth quarter in the face of price hikes that were lagging cost inflation, Ad Age reports.
During its quarterly earnings call with analysts last week, P&G Chief Financial Officer Andre Schulten said the research-focused company continues to look for ways to improve its ad targeting capabilities. “As we further develop our ability to target more effectively and efficiently in the media space, we generally see a higher return on investment on every incremental dollar that we spend, so we will carefully push in that direction because we believe that more awareness on stronger innovation and superior products will drive the market and therefore will drive our growth in a constructive way.”
As company executives have said before, P&G uses radio for its massive reach. “When done right, radio works because of its reach, effectiveness and efficiency – exactly what P&G brands are looking for,” Chief Brand Officer Marc Pritchard said during the 2023 Radio Mercury Awards in June.
P&G’s uses radio, along with digital, online, OTT, TV, print and other channels as part of a holistic strategy that now includes the growing retail media channel made up of major retail chains, including Walmart, Target, Amazon, and Walgreens. “What we’re looking to do is optimize our reach effectively with a target and a frequency across all of those different touch points, and just like any other channel, retailer media needs to earn its place in our marketing mix model based on the relative return that it can provide,” Schulten said last week.
Cumulus Media singled out consumer packaged goods as a growth category during its Q2 call last week, even as many national advertisers either reduced their ad spending or remained on the sidelines completely. “This trend for the consumer packaged goods category is encouraging as we found success in leveraging Westwood One's unique position as the largest radio broadcast network to drive increased spending with top advertisers and not just in Q2, but on a forward-looking basis as well,” Cumulus CEO Mary Berner said.
Respected media and advertising consultant Brian Wieser also pointed to the CPG category as exhibiting stronger growth during the quarter ended June 30 – “both in terms of revenues and advertising-related spending,” in his Madison and Wall newsletter last week.
Wieser has been scouring earnings reports to make some informal estimates on the ad market. The former ad agency exec and media analyst looked at how much several of the world’s biggest marketers were investing in advertising and marketing: Unilever (brand and marketing investments up 10%), Kimberly Clark (marketing and related expenses up 12% with advertising expected to jump 20% during the course of the year), Nestle (advertising and marketing expenses up 7.5%), Hershey (advertising and related consumer marketing expenses up 14.9%), and LVMH (advertising and promotion spending up 24%). Others, including Coca-Cola, Danone, and Reckitt Benckiser, referenced increasing investments in marketing or related activities during their earnings calls.