Procter & Gamble (P&G) is adjusting its sampling strategy after taking a view that was “too myopic” on its return on investment (ROI) and comparing it to other advertising activity, which it admits “was a mistake”.
Speaking at the Consumer Analyst Group of New York conference today (23 February), the company’s chief financial officer Jon Moeller said the FMCG giant was “careful” to look at how sampling affects the business and its ROI. But he admitted that the company had expected sampling to have an immediate impact on sales, much like TV advertising.
However, it found that instead it should be looking for longer term impacts.
“We might have taken a too myopic view on sampling [in terms of ROI]. We looked at it in the same time horizon as advertising, which was probably a mistake,” he said.
P&G increased its focus on sampling three years ago as it began to see the practice as a “point of market entry”. It has focused in particular on efforts to increase sampling of products such as Pampers and Gillette.
Moeller also spoke about how P&G’s marketing has improved through efforts led by its chief brand officer Marc Pritchard and agency partners.
He said: “In terms of our overall marketing effort, all credit goes to the line leaders of our business and Marc Pritchard. It’s not an area I spend a lot of time on, but there has been a lot of improvement. It’s partly due to the agencies we’re using. We’ve been very clear on what we’re trying to achieve, which has helped a lot.”
So far, P&G has reduced the number of PR and advertising agencies it works with by around 50%, as it looks to make further efficiencies around its promotional spending.
The FMCG giant has been on a mission to become “simpler and more focused” over the past decade. In just over two years, it has divested, discontinued or consolidated 105 brands, reducing the number of categories it competes in by 60%.
It also reassigned several brands to “higher quality partners” and cut the workload to produce far fewer, but “much better”, advertising and marketing campaigns. So far, P&G claims to have saved $620m, which has been reinvested in media and sampling.
“We see more savings runway ahead using digital technology for production, pooling more production and also using open sourcing and creativity in our work to create advertising, both within and outside of existing agency networks,” Pritchard said during an analyst day in November last year.