Why P&G Decided Facebook Ad Targeting Often Isn't Worth the Money
Why is the world's biggest advertiser, Procter & Gamble, changing its Facebook ad strategy? Although it's not cutting back on advertising with Facebook, it plans to buy highly targeted Facebook ads less often.
Targeting to super-specific audiences was expensive but didn't result in a big difference to its business, P&G CMO Marc Pritchard told The Wall Street Journal. The company, whose massive portfolio of household brands includes Tide and Crest, had experimented with Facebook's most sophisticated targeting tools, which allow advertisers to reach a narrowly defined audience.
Some ad industry insiders said there could be more to the public challenging of Facebook, such as seeking leverage in price negotiations with Facebook and others. In 2012, General Motors publicly walked entirely away from Facebook advertising three days before the social network's initial public offering, but returned eleven months later.
Any potential posturing aside, P&G may well have a point for certain kinds of marketers. Big enough brands may not benefit from such narrow targeting, ad execs said.
"There is a bit of a sideshow going on," said one digital media executive, speaking on condition of anonymity. "You have two really large players in Facebook and Google that constantly remind advertisers how premium a value they are. Now, you have a really large advertiser saying, not so fast, I can do this somewhere else."
A Facebook spokeswoman said the company's business with P&G grows each year. "We learn from each other and iterate," she said in an email. "That has always been the spirit of how we work together and challenge one another. The cornerstone of our ad strategy is a mix of mass reach and personalized targeting that lends well to mobile consumption and is a strong complement to TV. Our clients tell us this strategy works because we can deliver relevant marketing to the right audiences, with unprecedented scale. It enables partners like P&G to drive the business metrics they care about."
Price of precision
Aiming ads at precise groups of consumers does cost more per impression, and P&G is saying that it found the same results from broader ad buys. That's going to be more true for some brands than others, of course.
"Targeting may have been an experiment, but at the end of the day a brand like Tide needs as many people to see an ad as possible," said Warren Zenna, managing director at Mobext, which is part of Havas. "They kind of don't need Facebook, except that it is another scale opportunity."
Facebook has 1.7 billion users, and advertising there soared 62% last quarter to $6.2 billion.
There are plenty of advertisers making similar calculations, said Noah Mallin, head of social at MEC North America.
"Facebook has enormous reach, so from a branding perspective, why wouldn't you go for the biggest audience possible," Mr. Mallin said.
"The inference is they are switching to TV but what's really happening is a shift to reach and frequency and away from highly targeted buying, but still on Facebook, which we've been doing on similar clients for the past two years," he added.