Executives of Procter &
Gamble Co. and Mondelez International both said their companies
now spend about a quarter of their U.S. media budgets on digital
and plan to keep growing that share as they see improving return on
investment.
Mondelez President-North America Mark Clouse said the company
wants more than half its spending to be digital by 2016,
because it's getting twice the return on investment from digital
that it is from other media.
Jean-Paul Agon, Chairman-CEO of L'Oreal, the world's
third-biggest ad spender behind P&G and Unilever, said digital
is now 12% of the beauty giant's global spending and trending
upward because of its efficiency and synergy with fast-growing
e-commerce in beauty. E-commerce sales grew more than 20% for
L'Oreal last year, about quadruple the rate for the rest of the
company.
General Mills CEO Ken
Powell said his company has increased the digital share of its ad
budget from 8% of spending in 2008 to 17% in fiscal 2013 and
expects the shift to continue, even if 79% of its budget today is
spent on TV.
P&G is looking at hiking digital to help lower the share of
sales it spends on advertising without hurting effectiveness. "The
beauty of the digital, search, mobile, social media worlds is
they're fundamentally more efficient," said Chairman-CEO A.G.
Lafley in a CAGNY presentation. "So if you really know which
consumer matters most to you, and that's our job ...then you can
run a mix that gets a lot more efficient."
But digital isn't just for cutting marketing. Clorox Co. Chairman-CEO
Don Knauss said in an interview he's wants to cut costs in overhead
and supply chain in the long run to free more funds so Clorox can
go from spending 9% to 10% of sales on advertising today to as much
as 11%.
Burt's Bees "certainly has led the way" for Clorox as it looks
to shift more funds to digital, particularly mobile, Mr. Knauss
said. But Clorox is also using analytics on Twitter to track
mention of cold and flu by Zip Code, then "make sure stores in
those Zip Codes have adequate supplies of Clorox Disinfecting
Wipes." Walmart, he said, has
been particularly open to that idea.
One factor likely to fuel more CPG digital spending is new
research indicating the marketing-mix models most of the companies
use to measure ROI have been under-counting the impact of digital
ads. P&G and Mondelez are among seven CPG companies to
participate in the Digital Media Consortium along with Nielsen,
which recently issued a report to that effect focused on Facebook
display and Google search.
One reason CPG companies may be getting so much efficiency:
They're getting more than they pay for. While much digital media is
still largely bought based on clicks, the study found digital
impresssions, not clicks, are what drive offline purchase of
packaged goods products.
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But marketers have the option of buying either clicks or
impressions on Facebook, and Google search is sold entirely through
bids on clicks. Marketers can thus try to game the system by paying
only for clicks and designing ads that get few of them while trying
to get as many free impressions as possible.
Brad Smallwood, VP-measurements, insights and monetization
analytics of Facebook, however, said it's virtually impossible for
consumer products marketers to buy all the impressions they need
simply by bidding on clicks in the social network.
A spokeswoman for Google said in an email that her company has
acknowledged several times that search ad impressions have value
not reflected in pay-per-click but that Google also sells other
types of ads that can be bought based on cost-per-impression.
Contributing: E.J. Schultz