P&G's digital plan is possible, but not easy and not cheap

On Jan 27, P&G announced that it would have to eliminate 1,600 non-manufacturing jobs, including marketing positions—primarily through attrition and “selective hiring”. Its CEO also said that the FMCG manufacturer would moderate its advertising budget—which increased 8 per cent last year — by moving to a marketing mix that focuses on digital. 

"In the digital space, with things like Facebook and Google and others, we find that the return on investment of the advertising, when properly designed, when the big idea is there, can be much more efficient," said McDonald during a press question-and-answer session at P&G's  second quarter earnings call. "One example is our Old Spice campaign, where we had 1.8 billion free impressions and there are many other examples I can cite from all over the world." 

While McDonald is not wrong in banking on the potential for engagement in social media, he shouldn't regard it as a cheap, quick fix, cautioned president of IPG Mediabrands Audience Platform for G14 markets, Arun Kumar. "On the surface, it can appear that social marketing is the less expensive decision, but there will be a need to invest considerably in content—particularly non-commercial content," Kumar said in an interview with Campaign.

P&G, which has a long and successful history in traditional advertising, may actually need to hire talent with the requisite skills to manage online content and communities the like of the Old Spice campaign across its stable of brands, he added. "From what I know, they're very well staffed for this approach in the US, but perhaps not in Asia [or for] a global push."

OgilvyOne Worldwide's digital lead for Asia-Pacific, Barney Loehnis believes that much of the media coverage surrounding McDonald's statement is misleading as it implies a cause and effect between the affordability of digital advertising and employee layoffs. "The truth is, P&G's ad spend budget growth had to stop somewhere and it's true that the cost of a TV ad could produce a hundred online spots," he said. 

While other costs will need to be factored in, including community management and building listening platforms, Loehnis is confident that digital advertising can "make clients' money work harder through creation of smaller bits of content that plays through loyal brand fans and advocates online".

Nik Lim, CEO of Tribal DDB Malaysia doesn't quite see eye-to-eye with Loehnis on this point however.  While media buy would be cheaper, the cost of creation, activation and programme development on digital platforms could amount to that of a TVC budget, he pointed out. "Having said that, the savings you reap come from the sustainability of the content you create on digital which can be used to build relationships and communities in the long-term.”

The problem faced by FMCG companies like P&G is the overlap between marketing departments and the tactical approach they adopt. “For example, you have a different team for toothpaste, for toothbrushes, for dental floss, and for mouth wash—and they’re all creating TVCs that target the same people. Whereas if you choose to build an online community of the target audience, all these products can be promoted via a platform that will reach a community of fans,” explained Lim.

The danger lies in expecting an instant drop in spend from this approach, cautions Lim. “There is definitely long-term return-on-investment, but immediate cost-savings may not be apparent. There’s the cost of hiring, of building the platform and the client may even need to advertise to drive people to the community. But once it hits a turning point, the community gains a life and momentum of its own and can be a means to introduce new products to a group of fans.”

“Bottom line is, if the entire point of the approach is to save money it won’t work,” said Kumar. “It can’t be approached piecemeal. To truly benefit investments in integration, content creation and community development must be made.”