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Procter & Gamble wants to buy 70% to 75% of its U.S. digital media programmatically by the end of this year, according to people briefed on the company's plans. That's an ambitious goal for the world's biggest media spender and sure to cause brand marketers that have resisted automated trading to reconsider. Until now P&G's use of programmatic buying has been mainly limited to relatively small tests.
These people said P&G next year plans a similar shift of mobile-ad buying to programmatic buying -- auction-based systems where ads are bought and served across the web to a specific audience in real time.
The move follows a goal recently announced by American Express in an advertising-technology request for proposals to shift 100% of digital buys to programmatic (later called a "theoretical strategic thought" by AmEx VP-U.S. Media Jill Toscano).
A move by P&G would be more groundbreaking. First, AmEx is largely a direct-response advertiser that can more easily monitor the immediate impact of its ads based on customer acquisition, and it has no firm stated timetable like P&G's. Second, it's a leap for a brand advertiser like P&G, which sells most of its products via retailers and needs more time and advanced analytics to know whether its digital ads are producing sales. That's a major reason why the category has generally been more cautious about plunging into programmatic.
P&G, which declined to comment, spent $235 million of its $3.2 billion in measured media last year on internet display advertising, according to WPP's Kantar Media, whose data don't include mobile and some social-media advertising. The company's huge portfolio of consumer brands includes Tide, Charmin, Gillette, Pantene, Cascade, Crest, NyQuil and Olay.
The company traditionally has been a buyer of premium online inventory, and hitting its goal means getting publishers to make more premium inventory available for programmatic buying.
How hard that will be is debatable. Rex Briggs, CEO of marketing analytics firm Marketing Evolution, said his research has found that more premium digital inventory is available than many people think -- but placed by ad networks into bundles of similar quality without the option of buying specific properties. Generally, however, advertisers get better ability through such networks to target consumers than with traditional buying, he said.
$142.5B 2015 U.S. ad spending for 200 LNA
"It's a little counter-intuitive for a brand marketer," he said. "But it actually gives them greater control."
While more premium inventory from "ComScore 100" online properties is ostensibly becoming available for programmatic trading, it's often not as "programmatic" as billed, said Bill Lederer, CEO of MediaCrossing, a programmatic trader that operates independently of agencies. "Some of this inventory being showcased as programmatic is being bought with a whole lot of phone calls and emails," he said. "There's a certain amount of phoniness in the discussion."
Growing use of viewability, brand safety and fraud-prevention technology to weed out undesirable inventory will inevitably drive up prices of programmatic buys, Mr. Lederer added.
In 2008, P&G started to develop and test an in-house programmatic trading system called Hawkeye, according to several people familiar with the matter. P&G has repeatedly declined to confirm Hawkeye's existence.
Global Brand Building Officer Marc Pritchard has pushed for a faster shift toward programmatic digital buying in recent months, said people familiar with the matter, which comes as P&G has been under investor pressure to get more from its ad budget amid slower growth.
P&G Chief Financial Officer Jon Moeller said following the company's quarterly earnings release in April that, thanks largely to more cost-efficient digital media, the company has moved from growing ad spending slower than sales to cutting it in absolute terms this year, without sacrificing impact.
It is unclear how this will affect Starcom MediaVest Group, which handles P&G's digital buying. The agency declined to comment.
Most brand advertisers remain wary of programmatic trading. A survey released last month by the Association of National Advertisers and Forrester Research of ANA members, a group dominated by brand advertisers like P&G, found only 28% felt they understood programmatic well enough to use it, while another 10% understood it but still wouldn't use it.
One of the biggest concerns, the survey found, was about transparency of the complex deals that wind though agency trading desks and other third parties, with ANA citing estimates that publishers get as little as 25%-to-50% of the dollars.
With its own trading desk, P&G essentially eliminates middle players, though not ad networks. But it has an ally, or at least a familiar face, at Google, owner of one of the biggest networks. Late last year Google recruited well-regarded P&G executive Kirk Perry as president-brand solutions. Mr. Perry was at least tangentially involved in developing Hawkeye as VP-North American marketing from 2008 to 2011, leading the group that approved digital media buys tested in the system, according to multiple executives.