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Sales Rise Despite P&Gs Slashing Its Ad Spend by $140 Million

The biggest news of the last quarter was about Procter & Gamble digital cuts. The company announced a $140 million cutback in its digital ad expense previous quarter. P&G called the cost cut a move to tackle ineffective ads and brand safety issues.

Despite the budget trim, their business results remained free of any negative impacts. Much to the industry’s surprise, organic sales grew by 2% to $16.1 billion in spite of the ad support drop. The net earnings increased by 15% to $2.3 billion for the June quarter.

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Jon Moeller, P&G Finance Chief, said that fake traffic, the involvement of bots, and offensive content fueled the company’s decision to pull back on its advertising budget. White Moeller didn’t point at Youtube, the underlying indication was evident. Moeller mentioned being disappointed with the ignorant placement of ads and overlooking of their standards.

P&G’s upcoming fiscal year forecast expresses the possibility of increasing marketing spend. However, it also clarifies that the ad budget cuts could grow further if digital media agencies refuse to verify their third-party audience measurement by the Media Rating Council by the year end.

P&G also implemented other expense cuts like overhead reduction, agency fee deduction, and ad-production cost clipping. Moeller mentioned that the spending that was clipped was mostly ineffective since there was no effect on the growth rate after the expense was rolled back.

A year ago, P&G had mentioned moving away from Facebook ads because of findings that revealed how ultra-niche targeting had limited effectiveness

. Since P&G also remains the largest advertiser in the world with reputed brands like Crest, Bounty Pampers, TIde, etc. under its wings, every ad spending decision it makes is watched and analysed closely. At present, P&G is demanding transparency from all media agencies related to it.

   

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