Procter & Gamble makes US$140m cutback on ineffective digital ads

P&G'S move is significant as it is the biggest advertiser in the United States, with US$2.4 billion spent in the US last year.
P&G'S move is significant as it is the biggest advertiser in the United States, with US$2.4 billion spent in the US last year. PHOTO: FACEBOOK/P&G

SINGAPORE - Consumer goods giant Procter & Gamble has become the latest multinational firm to back away from casting a wide advertising net online.

P&G said last week it cut US$140 million (S$190.3 million) in digital advertising spending in the June quarter because of concerns over brand safety and fake traffic - a move it said had little impact on its business and proved that some online advertising was largely ineffective.

P&G's move is significant as it is the biggest advertiser in the United States, with US$2.4 billion spent in the US last year.

Its finance chief Jon Moeller said, in a July 27 earnings call with analysts, that fake traffic driven by software known as "bots" and having ads placed with objectionable content led the company to pull back on its advertising spending.

Mr Moeller added: "In the fourth quarter, the reduction in marketing that occurred was almost all in the digital space. And what it reflected was a choice to cut spending from a digital standpoint where it was ineffective - where either we were serving bots as opposed to human beings or where the placement of ads was not facilitating the equity of our brands."

He went on to say that sales figures indicated the marketing reduction did not affect growth, leading him to conclude "that the spending that we cut was largely ineffective".

Online advertising has come under global scrutiny recently due to indiscriminate automated ad placement.

Several major advertisers revolted against YouTube in March, saying they would pause or even cancel their YouTube advertising because the company was placing ads on obscene or hateful videos, content deemed brand-unfriendly. The Straits Times reported in February that advertisements for local brands and organisations - including at least one government agency - have appeared on extremist websites.

Another worry is that online marketing spending may not be translating into consumer dollars.

Tech giants like Facebook and Google make the bulk of their money by charging advertisers for every click their ads receive online. But many of these advertising "clicks" may not be coming from humans but are generated by bots or automated algorithms that do not buy anything.

P&G is not the only multinational company to have shied away from a catch-all Web marketing strategy.

In June, rival Unilever halved the number of marketing agencies it works with and called for changes in the way online platforms, such as Google and Facebook, report ad performance to clients.

Said its chief marketing officer, Mr Keith Weed, who oversees an annual marketing budget of some US$8 billion: "We want to buy eyeballs of viewers not bots. If it is too good to be true, it probably is."

In March, JPMorgan Chase's chief marketing officer, Ms Kristin Lemkau, said that the bank had slashed its Web ad offerings to just 5,000 pre-approved sites, down from 400,000 websites previously through automated services.

She told The New York Times at the time that "we haven't seen any deterioration on our performance metrics" since the change.