P&G slashes digital ad spending

Consumer goods giant Procter & Gamble (P&G) has become the latest global retailer to reduce online advertising.

P&G said it cut US$140 million (S$190 million) in digital ad spending in the June quarter because of concerns over brand safety and fake traffic. It added that the move has had little impact on its business and proved that some online advertising was largely ineffective.

Finance chief Jon Moeller said in a results briefing on July 27 that fake traffic driven by software known as "bots" prompted the company to pull back on advertising spending.

He 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."

Mr Moeller noted that figures indicated the move did not affect sales, leading him to conclude "spending that we cut was largely ineffective".

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

Several major advertisers said in March that they would pause or even cancel their YouTube advertising because the media company was placing ads on obscene or hateful videos that firms regarded as damaging to their brands.

The Straits Times reported in February that ads for local brands and organisations - including a government agency - have appeared on websites with extremist content.

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, and are instead generated by bots or automated algorithms that do not buy anything.

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

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

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

A version of this article appeared in the print edition of The Straits Times on August 03, 2017, with the headline 'P&G slashes digital ad spending'. Print Edition | Subscribe