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P&G'S $140 Million Lesson on Transparency

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The industry had a seismic reaction to the news that Procter & Gamble slashed digital ad spend by $140 million last quarter, and did so without any negative impact on their business results. P&G cited brand safety and "largely ineffective" ads as the reasons behind the massive cut.

Many in the industry reacted with trepidation and anxiety -- likely because of what it portends to their own business model -- but P&G'S move shouldn't have come as a surprise. The company started making waves in 2016 when it put the industry on notice (first privately to its partners; then publicly at an IAB event) about their new standards for digital advertising transparency. After examining all of its agency partner contracts, as well as taking a broader look into its media supply chain, P&G didn't like what it saw. (Or, rather, what it didn't see, due to the lack of transparency throughout the supply chain.) In April, P&G announced it would cut spending by $2 billion over the next five years. So the news of a $140 million cut follows what P&G has been promising for about a year now.

It looks like P&G had some fat to trim from its media plans, mostly due to inefficient ad campaigns. That shouldn't be news to anyone, since not all digital media spend is accretive, especially when advertisers don't have viewability benchmarks for their channels. Given that reality, advertisers of all sizes need to move away from black-box technology providers, publishers and agency partners that rely on opacity as an advantage. Additionally, sophisticated marketers need to develop their own marketing-mix model, powered by data-driven, multi-touch attribution, so that they can accurately evaluate how each channel impacts the overall mix.

Marketers need to ask their publishing and agency partners the following questions, and if you have a partner whose priority is your brand's business health, you shouldn't have to compromise on any of these.

  • Are they measuring the effectiveness of your digital spend? Anyone who tries Jedi mind tricks on you about the inability to tie any type of spend -- whether it be direct response to branding -- to performance should immediately be put on notice.
  • Beyond measurement providing quantification, do you understand your partner's methodology? How are they ensuring the accuracy of those numbers, and managing consistency across myriad publishing and programmatic partners?
  • What are the actual results of your spend? P&G did not invent the concept of "ineffective spend." If your agency isn't already constantly trimming the proverbial fat, then there's a ton of low-hanging fruit to grab (though you may want to consider getting a new partner to do the harvesting).
  • Beyond cutting spend in ineffective or brand unsafe areas, you should also look to see if your media mix allocation is optimized for desired results. This doesn't just mean low-funnel acquisition, but also audience-expanding brand building.
  • Do they maintain a dynamic list of brand-safe publisher partners, and how are they actively managing adherence of those partners to your brand's standards? In this post-truth era, you need to be sure your ads are running alongside appropriate content.
  • Lastly, demand that your agency clearly illustrates the results of where each dollar is spent. If they can't, it either means they don't have the capabilities in-house to do so, or they are more interested in serving their business than growing yours.

By taking these proactive steps, brand marketers have the unique opportunity and a second chance to reevaluate their digital ad spend, get more value for their investments, and ultimately create a better experience for their customers.

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