Cannes 2008

'Advertiser of the Year' P&G's 'Scrimp and Splurge' Strategy

Lafley at Cannes: Says Marketer Will Cut Overhead to Save Money for Advertising

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CANNES ( -- You might expect A.G. Lafley's current favorite ad to have something to do with soap. But the chairman-CEO of Procter & Gamble Co., the International Advertising Festival's Advertiser of the Year, instead picked Vespa's "Built for Love" from Dentsu, Toronto. In the ad, a hapless daredevil badly misses a stunt jump in his low-powered scooter but still gets the girl.
A.G. Lafley
A.G. Lafley

Mr. Lafley drove a Vespa in high school in 1963, and currently has four of the scooters. (An Audi R8 owner, he also bought a Smart Car recently -- noting he likes their ads, too.)

Tightening belt
But Mr. Lafley is aware that many consumers may be thinking of trading their SUVs for Vespas out of necessity rather than love, and that rising fuel prices will likely make this the toughest year for cost increases P&G has faced in decades, so he is tightening P&G's belt to afford advertising.

"We're seeing a lot of scrimp and splurge behavior" among consumers, said Mr. Lafley in a press conference in Cannes. In P&G's case, he noted the company is scrimping on overhead, including thinning ranks of senior management from around 360 to 300 "using retirements and resignations for the most part." But he said P&G will continue to spend at the roughly 10% of sales range it always has on advertising.

Nothing impossible
Perhaps fittingly then, Global Marketing Officer Jim Stengel said his current favorite advertising is from Adidas' "Impossible Is Nothing" campaign. He, too, believes it's important to keep spending, hard times or not.

"At a time when people are under pressure, the value of our brands is more important than ever, so why would we stop communicating about the value and quality of our brands?" Mr. Stengel said. "It's more important to be communicating in these times than ever."

Of course, P&G is also looking for better return on that spending, and sees creativity, including awards at Cannes, as a step in that direction. Mr. Lafley likened building creative capability for P&G to building a muscle.

Importance of creativity
"On one hand [creativity is] a spark," he said. "On the other, it's a discipline. In the end the better we are creatively with our agency creative partners, the more chance we'll have to create the kind of brands ... that end up being purchased."

The relationship between creative awards and market share isn't always direct, Mr. Lafley said, but creativity is still an important capability to develop. Mr. Stengel said he and Mr. Lafley launched the effort to start sending executives to Cannes in 2003 after seeing research by former Leo Burnett creative chief Michael Conrad that linked creative awards to market share.

And he noted the attendance this year not only of Mr. Lafley, but also Chief Operating Officer (and leading candidate to succeed Mr. Lafley) Bob McDonald as evidence of a widespread commitment across the company.

Cannes success
To that end, it would be nice for them bring home the hardware. P&G had a decent haul this year through today -- a total of nine Silver and five Bronze Lions from outdoor and press competitions in addition to a whopping 100 short-listed entries.

Of course, as a P&G brand manager might tally things, the company's shortlist-to-Lion conversion rate remains a tad low. Rival Unilever, through this morning, had converted about 50 short-listed ads into three Gold, two Silver and three Bronze Lions. Unilever also bested P&G in the film shortlist 18 to 10 and the titanium shortlist two to nothing (P&G also was shut out of the cyber shortlist, while Unilever won a gold and Silver from 10 short-listed entries).

But who's counting? Well, realistically, both companies. "I'm not sure we merit Advertiser of the Year," Unilever Chief Marketing Officer Simon Clift said in a separate interview. "But I'm pretty sure who doesn't. I have to say candidly I wonder what the criteria were."

P&G vs. Unilever
Unilever last year won three Grand Prix -- cyber, film and titanium -- to P&G's one in press. But Mr. Clift believes P&G's honor stems from "marks for progress rather than achievement" while acknowledging that both companies "have some strong stuff in contention" this year.

More broadly, almost all of the package-goods industry appears to be raising its creative game. While perennial creative winners in the food and beverage industry, such as Anheuser-Busch, Mars and Coca-Cola Co. continue to do well, some other players that traditionally don't make a strong Cannes showing, such as Henkel and Heinz, have been winning multiple honors. Energizer beat Unilever and P&G alike in taking the press Grand Prix for work on the battery brand in South Africa by DDB, Johannesburg.

Package-goods players have had no choice but to value creativity more, Mr. Clift said. "It's not for creativity's sake. It's because with the fragmentation of media, if you don't get noticed, it's pointless. People are finally realizing you can't bore people into submission."

You try making detergent fun
In the past, he said he knew of a planner who had written into her contract that she didn't have to work on detergents. "Now, and I've heard lots of agencies talking about it, there's a kind of renewed pride in working with big accounts with big budgets," Mr. Clift said. "Anyone can make a compelling road-safety film or a pro-bono thing for child abuse. Actually, it's a much tougher, greater challenge to work on a lavatory cleaner or a deodorant. ... It may be great to win a gold for something seen three times at three in the morning in Oslo, but actually it's more gratifying if it's something seen on prime-time TV in dozens of countries."

Though P&G's Mr. Stengel said earlier this month he'd "like to take a few more past the goal line," he's happy with the company's 100 short-listed ads this year, each falling into the top 5% of entries, with much of the strength coming from developing markets. Mr. Stengel also believes ads for Head & Shoulders and Crest from Saatchi & Saatchi could fare well in the film category.

Cyber shutout
As for that shutout in cyber, P&G hasn't given up raising its profile there either. Among its efforts in the space is an employee-exchange program with Google.

"We want to see life through their lens," Mr. Stengel said. "They want to see life through our lens. And when both sets of employees come back from that experience, they [will be] full of ideas, and that will take us to the next level."
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