P&G Increases Ad Spends By 8%, First Time In Four Years

Annual report of Procter & Gamble showed the hike in its annual advertising expense of $575m (£441m) or 8.5% to $7.33bn in this year, till June 2020. Despite the onset of the coronavirus pandemic in March, it was the first annual increase since 2016. 

P&G’s decision to boost it’s spending is significant because it is one of the world’s biggest advertisers and, like some other consumer packaged goods companies, it has spent several years cutting spending in the face of lackluster sales.

In the most recent financial year, net sales rose 6% on an organic basis and the owner of brands such as Always, Gillette, Pampers and Pantene appears to be investing in advertising ahead of revenue. 

The annual report said it lifted its “investment in media and other marketing spending” while making “savings in agency compensation, production costs, and advertising spending” – an on-going trend since 2017 as P&G slashed the number of agencies with which it works.   

A spokesman told Campaign, “Advertising expense was up only slightly as a percent of sales (10.3% in FY20 versus 10% in FY19), as our sales also increased year over year”. 

David Taylor, chief executive of P&G, stressed the importance of advertising on its Q4 earnings call last week. “We strive to communicate product and packaging benefits, with superior brand messaging,” Taylor said, noting the company was named brand marketer of the decade by Cannes Lions in June. “Not only has our advertising been creative, but it has also been increasingly effective at growing markets and building our business,” he told investors.  

Annual ad spends now stands at its highest level since 2014. In the year to June 2019, P&G slashed its annual advertising expense by $350m (£290m) or 5% to $6.75bn. After the spend jumped to $11bn in 2019 Amazon is widely regarded as the world’s biggest advertiser.