With 7% Sales Growth, P&G Aims To Keep Ad Spend High.


Procter & Gamble, one of radio’s largest advertisers, upped its overall marketing spend and the consumer packaged goods behemoth likes what it’s seeing as a result. The Cincinnati-based company increased its ad spending by $850 million, year-over-year, in fiscal 2021 compared to 2020, CFO Andre Schulten told analysts and investors during the company quarterly results call on Friday. Noting it has “not reached the point of diminishing return” on its ad investments, Schulten said P&G will continue to invest at around the same level, which amounted to 10.8% of sales.


Schulten called the company’s ad spend “a significant source of future profitability, growth and productivity.”


Procter & Gamble has become a prolific radio advertiser. For the week of July 26-Aug. 1, the company had 11 different brands among the top 100 radio users based on spot volume, according to Media Monitors which tracks advertising in 110 markets. Leading the list is the Swiffer line of cleaning and household products, which moved up a notch to No. 8 with 34,766 spot occurrences during the 7-day period. Swiffer is one of six P&G products in the current top 50, along with Microban, Tide, Mr. Clean, Olay Body Wash, and Bounty.


P&G has championed its shift of more dollars to radio as part of its effort to spend more efficiently. It spent an estimated $131 million on radio last year, according to an analysis of Kantar Media data by Ad Age, ranking third among national radio advertisers. P&G was radio’s second largest parent company advertiser in 2020, per Media Monitors. It ran 22% more spots across all media tracked by Media Monitors in 2020, compared to 2019.


As the company “increased meaningfully” its investment in marketing, it has seen a corresponding lift in top line growth. “You have to help consumers understand what the product is, how to use it, and then help drive awareness and trial. And these investments have done that. It's evidenced and again, in the top line growth,” outgoing CEO David Taylor said on the company’s earnings call. If you go back four or five years ago, our average growth was about 2%. We moved up [during] the past four years. Past five years, we've averaged 4%. In the last three years 6%.”


Procter & Gamble reported fiscal year 2021 net sales of $76.1 billion ending June 30 and fourth quarter net sales of $18.9 billion, both 7% increases over 2020, as reported by MediaPost.


Calling it the company’s “strongest share growth we've seen in many years,” Taylor went on to say that P&G will “continue to invest behind both brands that are winning and invest to make sure we get the trial.”


Taylor said marketers should not be worried about his plans to step down as CEO by year’s end. Jon Moeller, the Chairman/Chief Operating Officer who will succeed him in the position, has supported the company’s advertising investments. “The marketer should feel wonderful, and that we've got a senior leadership that is maintaining a high degree of consistency,” Taylor said. “And you all know Jon very, very well. He has supported these investments in media, to the extent they grow the market and grow market share and are helping drive awareness and trial of superior products and brands. That's a good thing.”


Taylor said the organization is structured such that individual sector CEOs and their leaders decide how much to invest in their businesses. “This is not a decision we make at the headquarters. It's a decision made by each one of the business leaders and we hold them accountable to create the top and bottom-line growth and cash generation for their business,” he said. “And I think the results the last three years speak [for] themselves.”

5 views0 comments