Procter & Gamble increased its ad spending by $140 million in its most recent fiscal quarter (Oct.-Dec. 2022), compared to the prior quarter. But the consumer-packaged goods giant reduced media spending as a share of sales, senior management said last week on its quarterly earnings call.
“In the most recent quarter we've increased quarter-over-quarter, our total ad spend by $140 million,” Chief Financial Officer Andre Schulten told analysts on the call. “And that is a function of innovation timing. It's also a function of merchandising support and core timing advertising with that retailer support. So we -- you see us adhere to that principle of fully supporting our brands. If there are opportunities to create short-term ROI, we’ll continue to double down.”
While media investment grew in absolute dollar volume, it declined as a share of sales during the quarter. The company reported a 5% increase in organic sales as unit volume tumbled 6% while prices went up an average 10%.
As a share of sales, P&G’s marketing spend fell by 0.9 percentage points, or about $187 million, Ad Age reported. Narrowing the focus to just advertising, spending fell 0.5 percentage points compared to a year earlier.
According to data from the Ad Age Datacenter, P&G is the world’s fourth largest advertiser and its global ad spending fell 3% in fiscal 2022.
P&G held steady as the No. 1 parent company radio advertiser in the first half of 2022, according to Media Monitors, airing 3.55 million spots on U.S. broadcast radio from January through June, after commandeering the top parent company berth in full-year 2021 with a whopping 9.10 million spot occurrences. While full year 2022 data has not been released by Media Monitors, P&G continues to place multiple brands among the top 100 weekly radio advertisers. In the final tracking week of 2022 (Dec. 26, 2022 through Jan. 1, 2023), the CPG giant placed a record 15 of its products in the top 100 radio advertisers based on spot volume, led by Vicks, Bounty, Mr. Clean and Crest in the top 30.
During the earnings call, Schulten described two contrasting strategies P&G uses for different types of products. For Pampers the company has become more effective at targeting diapering households. But for fabric care products that everyone uses, its in-house media planning team found a way to reach more consumers at a lower cost, Schulten said.
“The fabric care team here in the U.S. has brought media planning and buying in house, developing proprietary algorithms to better place ads,” Schulten said, as reported by Ad Age. “That in and of itself has allowed $65 million of savings in one year, while increasing frequency.”
Both approaches work, Schulten said, and the company has open runway to use them for other categories and geographies in the future.