P&G does not 'like' targeted ads after all

World's biggest ad spender notes limited effectiveness of targeting Facebook sub-sets

SAN FRANCISCO • Consumer goods firm Procter & Gamble, the world's biggest advertising spender, said it will move away from ads on Facebook that target specific consumers due to their "limited effectiveness".

P&G, the maker of household items such as Tide and Pampers, said it will now employ targeted advertisements only where they make sense - like pitching diapers to expectant mothers - while scaling back on ads on smaller websites that do not have the reach of Facebook, Google and YouTube.

"We targeted too much, and we went too narrow," P&G's chief marketing officer Mark Pritchard told The Wall Street Journal in an interview published yesterday.

"Now we're looking at: What is the best way to get the most reach but also the right precision?"

P&G had initially jumped at the opportunity to market directly to sub-sets of shoppers - from teenage shavers to first-time homeowners on Facebook.

However, case studies show that companies can receive bigger sales increase if they reach a significant portion of a platform's overall audience, according to Mr James Douglas, executive director of social agency Society.

REACH AND SCALE

If you could run an ad and reach a million people or run a targeted ad to reach 5,000, you have to have pretty impressive returns on that 5,000 to make it worth it.

MR PETER DABOLL, chief executive of Ace Metrix, which tests ads for effectiveness and works with Facebook.

P&G had tried targeting ads for its products like Febreze air freshener at pet owners and households with large families, but found that sales stagnated during the effort. They only picked up when the campaign was expanded to include anyone over 18 years old, WSJ report said.

P&G has reportedly spent roughly US$7.2 billion (S$9.7 billion) on advertising globally in the year that ended in June, company filings show. In recent months, it has shifted money back into television advertising, WSJ reported unnamed sources as saying.

"If you could run an ad and reach a million people or run a targeted ad to reach 5,000, you have to have pretty impressive returns on that 5,000 to make it worth it," said Mr Peter Daboll, CEO of Ace Metrix, which tests ads for effectiveness and works with Facebook.

A Facebook spokesman told WSJ its partnership with P&G "grows every year" and the two companies learn from one another.

Facebook started working on its targeted ad system in 2007, when it was an unprofitable three-year- old start-up with fewer than 60 million active users, and has since emerged as a marketing platform raking in US$17.08 billion in ad revenue last year.

On Tuesday, it also flipped a switch on its desktop website that renders all ad-blocking software useless, a move that is perhaps the strongest such measure by a technology company that serves advertising to more than 1.7 billion monthly users globally, The New York Times said.

The change allows the Silicon Valley company to serve ads on its desktop site even to people who have ad-blocking software installed and running.

A version of this article appeared in the print edition of The Straits Times on August 11, 2016, with the headline 'P&G does not 'like' targeted ads after all'. Print Edition | Subscribe