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Will P&G Use Canada as Testing Ground?

Marketer Says It Will Put 'Up to' 20% of Budget in Digital in the Great North

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BATAVIA, Ohio (AdAge.com) -- Procter & Gamble Co. is talking about dramatically shifting funds from traditional media to digital. And this time, it may just do it -- if only in Canada at first.

Tim Penner, P&G's president in the country, has vowed to boost online spending from 3% of its media budget to as much as 20% for the company's fiscal year that starts July 1. The promise, first reported on Canadian Marketing Blog, was confirmed last week by a P&G spokeswoman, who noted that the proportion would likely vary from brand to brand.
P&G's Global Marketing Officer Jim Stengel

P&G's Global Marketing Officer Jim Stengel

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Of course, in and of itself, Canada isn't a big deal compared with the U.S. media market. The bigger deal is that Canada frequently has served as a testing ground for initiatives that P&G eventually rolled out elsewhere.

Mr. Penner should know: He led the launch of Swiffer WetJet in Canada a year before its U.S. rollout in 2001 and poked fun at P&G's stodgy ways in at least one media interview during that launch. Before that, as general manager in the U.S., he greenlighted a radical-for-P&G father-son Bounty ad with no sound and minimal product identification in the late 1990s.

The "up to" 20% solution in Canada culminates two years of rumblings from people close to P&G that the company was preparing to shift one-fifth of its U.S. budget to "experimental media."

'Disinformation campaign'
P&G has denied any such mandate or guideline repeatedly, though a spokeswoman at one point acknowledged that Lisa Hillen-brand, a P&G marketing director, had brought up during one of Global Marketing Officer Jim Stengel's webcast "Marketing Hours" the idea of earmarking 20% of marketing funds for experiments, echoing a call by consultants Rex Briggs and Greg Stuart in their 2006 book "What Sticks."

But P&G will have to scale a tall wall of skepticism before some people believe it will make such a dramatic move, even in Canada.

"The Procter disinformation campaign continues," said one competitor's marketing executive, who joked that his own company plans to spend "up to $100 million" online in Canada next year, too. He noted that P&G's Canadian TV spending appears to be heavier than ever right now.

The advantage for P&G, of course, is that its executives could safely state details of their digital spending plans publicly without fear of tipping off competitors, who wouldn't believe what they heard anyway.

"If they really do shift 20% of their spending online," added the competitive marketing executive, "that would be profound."

Big talk
P&G's record of talking big but doing less on interactive marketing goes back 14 years, when former Chairman-CEO Edwin Artzt issued his clarion call for the ad industry to wake up to the future of interactive advertising. It's been 10 years since P&G hosted the Future of Advertising Stakeholders summit, inviting competitors to Cincinnati to discuss the brave new world of interactive advertising.

Since then, P&G's spending on measured internet media has "soared" to 2.2% of its $3.5 billion U.S. media budget last year, according to TNS Media Intelligence. That was a P&G record, but less than a third of the 7.6% allocated by advertisers on average.

Of course, digital marketing means a lot more than simply online display advertising -- and depending on the definition, can encompass everything from websites to search advertising, mobile marketing, gaming and more.

Since Mr. Stengel gave his "marketing model is broken" speech in early 2004, P&G's measured spending on TV is up $450 million to $2.4 billion (2003 to 2007); its spending on print is up $361 million to $1 billion; while its measured spending on the internet is up $65 million to $79 million.

Glacial pace
In terms of media mix, this does reflect a gradual shift from TV to print and online -- but far slower even than that of some rivals, such as Unilever and Kimberly-Clark.

Of course, P&G's internet tally doesn't count all of its websites, some large e-mail relationship programs or search marketing. But given the costs of such programs or the limited extent of P&G's involvement in search, it would be hard to get past the mid-single digits by the most generous estimate.

Still, the ramifications of what happens in Canada could be huge, and just what data-driven P&G would need to shift major funds from TV and print to digital in the U.S. and beyond.

Years of "experiments" in digital media by P&G and other big package-goods players haven't yielded usable comparisons to TV or print effectiveness, because the marketing-mix modeling P&G uses to evaluate its bigger media outlays usually can't measure the effects of low-budget digital efforts dispersed over lengthy time frames.

Big ifs
Measuring results of a meaningful media shift in a defined market such as Canada, however, could yield some meaningful comparisons that would validate a broader media shift in the U.S. and globally, all without putting too much of P&G's $80 billion-plus global business or its roughly $35 billion U.S. business on the line.

If P&G's digital adventure in the great north works -- and leads it to shift 20% of measured media online in the U.S. -- that could mean more than $600 million moving from TV and print into digital media within two years.

Those, of course, are all big ifs.
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