P&G CEO pledges ongoing support for marketing as brand spend ramps up
Procter & Gamble promises to maintain its investment in “brands that are winning” following the departure of CEO David Taylor, who credits innovation and superior brand communications for driving a 7% boost to net sales.
Outgoing Procter & Gamble president and CEO David Taylor said marketers “should not be worried” about former CFO Jon Moeller taking the reins, pledging marketing will continue to be a key channel for investment as the business looks to maintain its “superiority”.
Currently COO and was CFO, Moeller was announced as his successor yesterday (29 July), with Taylor shifting to the executive chairman role in November where he will lead the board of directors and provide council to Moeller.
Taylor says the FMCG giant has invested heavily in marketing this quarter by 170 basis points, in addition to the increase of 270 basis points in 2020.
“Marketers should not be worried. Marketers should feel wonderful [about Moeller’s appointment],” said Taylor on a call to investors today (30 July) announcing the company’s full year 2021 and Q4 results.
“We’ve got a senior leadership that is maintaining a high degree of consistency [in marketing]. You all know Jon [Moeller] very well he has supported these investments in media to the extent they grow the market and grow market share, and is helping drive awareness of superior products and brands.
“It’s about creating value not reducing or increasing one element of cost and Jon has been very engaged with me and the leadership team in these decisions.”
Marketers should not be worried. Marketers should feel wonderful [about Moeller’s appointment].
David Taylor, P&G
Taylor also applauded the company’s decentralised approach to marketing, which places the responsibility with business leaders across its territories and holds them accountable for creating “top and bottom-line growth”.
The outgoing P&G CEO explained that not only has the business increased its marketing investment, it has also ramped up the rate of “meaningful innovations” that go to market, which has driven growth across nearly all the company’s sales categories.
This has contributed to a higher annual growth rate for the company. Five years ago P&G had an annual growth rate of 2%, which has risen steadily to 6% over the last three years.
P&G says innovation has allowed it to adapt well to consumers’ ‘heightened needs’
“We’ve got the strongest share growth we’ve seen in many years, which tells me the combination of our superior strategy and the brand execution by our people is really working, and we’ll continue to invest behind brands that are winning,” said Taylor.
P&G increased its ad spend in 2021 by $850m and given the company has “not reached the point of diminishing return on those investments”, the plan is to continue to invest at “around that level”.
Net sales for the FMCG giant for the whole of 2021 grew 7% to $76.1bn (£54.4bn), as organic sales increased 6%.
The role of innovation
Innovation was highlighted by P&G as the key driver of sales across its categories. Beauty sales increased 6% year-on-year, success attributed to innovation and the “disproportionate growth” of its super premium brands.
In healthcare, organic sales rose by 14% in Q4, “primarily due to innovation”, increased pricing and positive growth of premium products. Meanwhile, fabric and homecare sales increased 2% in the quarter. Baby, feminine and family care were the only loss-makers, with a drop of 1%.
Taylor added sustainability is increasingly becoming a factor for consumers when making shopping decisions, which is a big reason why P&G moved to address these issues through its brand communications during in Q4.
“The environmental aspects of a product offering are taking on increased importance in their [consumers’] assessment of superiority,” he explained. “We are offering superior performing products that are more sustainable and educate consumers on the benefits of those products with superior brand communication.”
Taylor pointed to laundry brand Ariel, which has been encouraging consumers to reduce their carbon footprint through its ‘Every Degree Makes a Difference Campaign’. The Ariel marketing strategy has focused on advocating for washing at lower temperatures and highlighted product innovation offering a superior clean in cold water.