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P&G's Lafley

P&G’s Lafley

Two weeks ago P&G CEO A.G. Lafley sent a shot across the digital marketing bow by telling shareholders that 35% its US marketing budget was being spent on digital marketing. The reaction from brand marketers, however, was decidedly muted. Part of that comes from the mutual respect among the branding community. Part of it came from the fact that many large brand marketers weren’t surprised by that number. In face, many brands are very close to that 35% number, or will be there by the end of the year.

If you missed it Lafley said, according to the WSJ that the company is near the top end of the 35% number and that the company is planning to spend more on advertising in its current fiscal year. That emphasis reflects both the shift in where consumers are focused and a desire to increase the effectiveness of media buying. According to the Journal, company executives say digital media in many cases is proving to be a faster and cheaper way for P&G’s brands to reach consumers, and feedback is also faster.

Although they were not responding directly to the Lafley’s comment several brand marketers contacted by Brand Innovators indicated that their spending was accelerating online. Ford global head of social media Scott Monty said that Ford’s spending was 25% of its marketing budget. Bob Arnold, associate director, Global Digital Strategy at the Kellogg Company, didn’t put a number on his company’s percentage of total spend, but did say that the proliferation of digital usage for offline assets has added to the total digital number.

“I think the shift to digital is accelerating, across the industry we are seeing brands that are 100% digital marketing,” he said. “Additionally, we are seeing traditional TV spots being used in home, online, etc. Net in the future I think we won’t refer to TV advertising, rather it will be called “video” advertising where our TV spots play across many mediums.”

Lafley’s 35% solution may turn out to be the benchmark for digital spend when the fourth quarter of 2013 goes into the books. It’s no surprise. In March, Econsultancy, in association with Responsys, reported that UK and EU marketers were spending an average 35% of their total marketing budgets on digital. Gartner’s report, also in March, put the US average at 25%. Gartner’s report also reflected Arnold’s comment about the blend of online and offline assets.

“It is becoming more difficult to count and allocate digital marketing spending as digital and traditional marketing techniques are merging,” it said. “For 20% of companies, digital marketing activities have already been incorporated into each function within marketing, and budgets are no longer broken out separately. We expect this trend to continue growth as areas such as second screen TV, social TV and QR codes integrate with traditional channels.”

Looking at recent major brand campaigns, digital is serving as the foundation and will undoubtedly take a larger share of total marketing spending for 2013 than predicted. Brands that viewed social, mobile and display as an add-on now feature digital as the base. Bass’s Weejuns re-brand, launched last week, puts digital front and center. Back-to-school campaigns from Macy’s, Chico’s, jcpenney, Staples and The Gap all hinge on social media.

 

 

 

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by Brandon Gutman
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Brandon is an expert connector and seasoned business development professional. As Principal of Brand Approved, he's led the advisory to become the bridge between brand marketers and best of breed service providers that are reshaping the industry.

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