P&G to cut marketing spend this year in efficiency drive

Procter & Gamble says it has cut marketing spend in its current financial year as it continues its quest to improve efficiency through a shift to digital, social and mobile channels that it claims enables it to target consumers more effectively.

P&G CFO says the company plans to be more ‘effective and efficient’ in its marketing investment.

Speaking on a conference call today (23 April) after the FMCG giant unveiled its latest quarterly results – its third – chief financial officer Jon Moeller says P&G has cut marketing costs by reducing “non-working dollars” and running a tighter operation across its design, creative and marketing programmes.

This will be helped by recently announced plans to reorganise its marketing department under a “brand management system” that incorporates design, consumer and market understanding, communications and marketing.  

He said: “We have improved marketing effectiveness and productivity through an optimised media mix. Marketing spend will be below the prior year but overall effectiveness will be well ahead.

“We are at a point where looking at dollars is not representative of the strength of a marketing programme in a rapidly changing marketing landscape.

“Are we underinvesting? We look at this very carefully and there are some categories where we reduced spending and somewhere we increased.

”We are not going to underinvest; we are going to be effective and efficient in our investment.”

P&G spends about 30 per cent of its budget on digital channels, where media can be bought at a cheaper rate than traditional channels such as TV. The shift has already led to a drop in UK ad spend, which fell 9.18 per cent year on year in 2013, according to Nielsen’s Ad Dynamix.  

P&G’s third quarter sales were flat at $20.6bn. Profit rose 1.7 per cent year on year to $2.61bn, driven by a combination of marketing efficiencies and overhead productivity savings.

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