P&G Shifts Marketing-Mix Biz to Nielsen, DemandTec for Faster ROI Reads

Work Pegged at $15-$20M Will Shape Marketing Budget of Billions

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Procter & Gamble Co. has consolidated its giant U.S. marketing-mix modeling business with Nielsen Co. and analytics software provider DemandTec to get faster reads on how marketing spending is performing and shift toward continuous monitoring and scenario planning from the old after-the-fact audit-based approach.

The account was estimated by one person familiar with the matter at $15 million to $20 million and influences the biggest marketing outlay in the U.S., including $3.3 billion in measured media, per Kantar Media, and $4.6 billion in total advertising outlays, per Advertising Age estimates. The marketing-mix work also covers another roughly $3 billion to $4 billion in trade and consumer promotion spending, such as the redemption value of coupons or funds P&G pays retailers to promote its products in stores, which aren't counted as advertising outlays in P&G's financial reports or by Ad Age .

Globally, P&G reported $9.3 billion in advertising outlays for the fiscal year ended June 30, up 8% and representing records both absolutely and as a share of sales (11.3%).

The deal, which took effect July 1, comes as P&G faces pressure to get more bang for those billions. While P&G has bumped up marketing spending 24% the past two years globally, some analysts and the market haven't been that impressed by the results. P&G's 4% organic sales growth rate last year trailed global competitors such as Unilever, L'Oreal and Reckitt Benckiser, and its stock price has trailed both the Standard & Poor's 500 and leading competitors for the past two years, though it closed almost all the gap with the former this past week, holding up far better than the broader market.

While P&G has used marketing-mix modeling for more than a decade to evaluate returns on marketing spending, analyses often came six months after the actual spending, according to people familiar with the matter, too late to change much in midstream. P&G has been pushing to get analyses faster -- more like six weeks after the fact, or as soon as permitted given availability of sales and competitive and media spending data. That was one factor behind the shift to M-Factor, a marketing-mix analysis system acquired by DemandTec in March.

"In the ROI field, and across much of our work, we're moving toward continuous measurement and scenario planning," said a P&G spokesman in an email regarding return on investment. "We're driving faster insights and faster in-market action this way, rather than focusing, for instance, on once-a-year, episodic measurement. While we work with more than one supplier, we work closely with Nielsen to reduce cycle times, often from months to weeks, in our marketing-mix work in order to move in the direction of real-time consumer and market response to our campaigns and promotions."

P&G's shift comes amid a big shift for ROI measurement -- as Walmart, which represents a third or more of most P&G categories -- prepares to make scanner data available to syndicators again for the first time in a decade. That should provide marketers such as P&G with more complete data on how competitive brands are performing, and availability of historical data from that 10-year gap could change outcomes of prior marketing-mix analyses and affect the projections made by scenario-planning systems like M-Factor.

Marketing-mix modeling uses complex econometric analysis to attribute sales affects to various marketing inputs ranging from temporary price reductions to TV and digital ads. In doing so, it takes into account a wide range of sales and spending data both for a marketer's own brands and those of competitors.

P&G ramped up marketing-mix work a decade ago under Clairol veteran Joe Auriemma, who later moved to positions at Mars and most recently Colgate-Palmolive Co. The new P&G marketing-mix deal was shepherded by Joe Schroeder, associate director of market research, according to people familiar with the matter.

P&G's move parallels those by other marketers toward more scenario planning and continuous monitoring "so they can quickly assess whether a campaign works or not," said Sunny Garga, principal of analytics firm MPhasize, which also provides scenario-planning software similar to M-Factor. "Most of the big companies we are working with, we're also moving them in this direction."

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