Two years ago, P&G consolidated marketing-mix-modeling
efforts with Nielsen and brought on DemandTec, an IBM company that worked with
Nielsen to deliver monthly ROI reports supplementing the annual or
quarterly analyses the company used in the past. P&G scrapped
DemandTec after getting readings that varied widely month to month
and sometimes didn't gibe with analyses by Nielsen and others,
according to people familiar with the matter. (P&G and Nielsen
declined to comment.)
The U.S.-focused review looks to try something beyond the
marketing-mix modeling P&G and many others have for years used
to judge marketing efficacy. According to people familiar with the
matter, P&G has been talking to MarketShare Partners, ThinkVine
and Marketing Evolution, all of which at
least in part use approaches other than marketing-mix modeling.
The effort aims to better capture impact of digital
media—including social and search—and explain sales
trends P&G's models sometimes can't. The idea is to start
relatively small—with five brands—then expand to as
many as 20 before rolling out any system companywide.
The impact could be huge. P&G spent $2.8 billion last year
in U.S. measured media, according to Kantar Media, but ROI models
also cover broader spending, including another $3 billion to $4
billion in trade and consumer promotion.
While P&G's measured spending fell 5% last year, according
to Kantar, the company plans to hike spending this quarter and
through the balance of the fiscal year ending June 30, Chairman-CEO
Bob McDonald said last month. Globally, P&G's reported $9.4
billion in ad spending last year, which was up 25% in three
But P&G's organic sales growth continued to lag behind
Unilever, L'Oreal and Colgate-Palmolive Co. last quarter.
Hedge-fund manager and P&G investor Bill Ackman said at an
investor conference earlier this month that Mr. McDonald may need
to go if P&G's results, including the top line, don't improve
within three quarters.
Sanford C. Bernstein analyst Ali Dibadj said P&G is under
pressure to improve the impact of its marketing spending because
investors are questioning whether it can improve its top-line
growth. "The question is no longer can they cut costs ... but as
they're spending more and more money, it doesn't look like they're
helping the top line."
But P&G Chief Financial Officer Jon Moeller at a Goldman
Sachs conference May 14 pointed to steady improvement in
market-share trends in the U.S. and globally in recent quarters and
predicted better things still from coming product launches.
Leading the ROI review is Patrick McGraw, P&G's director of
consumer and market knowledge. He also directed the effort two
years ago to consolidate work with Nielsen and DemandTec, according
to people familiar with the matter.
Marketing-mix modeling has always had critics, but is getting
increased scrutiny. CBS Chief Research Officer David Poltrack has
been leading a Council for Research Excellence examination of
issues surrounding use of the models and plans to push the
Advertising Research Foundation, which he chairs, to launch a
quality inquiry into the models.
A P&G spokesman said the company "anticipates some industry
analysis on marketing-mix models in the coming weeks" from the CRE
and ARF, and after that "we'll consider if there's anything we
would say publicly." But he declined to comment on relationships
with individual suppliers.