While the CPG giant has said that it won’t be reducing its Facebook ad spend, it will be doing less targeted advertising, instead opting to spend more on TV campaigns.
So why would P&G be making this move in the face of trends that suggest TV viewership is going down, while Facebook and its catalogue of apps continue to eat up more of our attention?
Facebook targeting is amazing: if you aren’t selling to everyone
You only need to look at your Facebook newsfeed to appreciate how well Facebook shows you content you want to consume, organic and paid.
While many consumers continue to be entertained by family and friend updates, news on their favourite sports teams and media links, Facebook continues to work at its business, improving ad impressions by 49%.
However, the most unique aspect of Facebook (and Instagram’s) ad offering does no favours for the likes of P&G.
According to P&G CMO Marc Pritchard, the ability to deliver extremely targeted Facebook ads over-serves its needs:
We targeted too much, and we went too narrow and now we’re looking at: What is the best way to get the most reach but also the right precision?
This WSJ article goes on to illustrate this perfectly:
P&G two years ago tried targeting ads for its Febreze air freshener at pet owners and households with large families.
The brand found that sales stagnated during the effort, but they rose when the campaign on Facebook and elsewhere was expanded last March to include anyone over 18.
Targeting on Facebook had minimal impact for P&G, but removing targeting revealed its unique reliance on a more blunt from of advertising.
P&G’s apparent need to reach “everyone” flies in the face of the general approach taken by many in the digital marketing community, but does provide a welcome lifeline to a stalwart of marketing past and present.
TV still has a place in the marketing mix, at least for now
Facebook’s over-serving of P&G’s need highlights the inherent value in television, despite its general decline in viewership.
P&G knows TV extremely well. The top advertiser in terms of adspend in the US (and the second after BSkyB in the UK), spent $1.4bn on US TV adverts in 2015 and plans to increase this number in future.
More broadly, the CPG leader has built its business over the decades in large part by mastering brand awareness through television, such that when consumers go to the supermarket, they are highly likely to buy a P&G product.
The ability to laser-target consumers has rarely been seen as a problem, but this shows that it is relative.
Facebook’s granularity “issue” makes it difficult to reach the masses effectively, whereas the effort and effectiveness of television advertising is a known entity to marketers with general use products and extremely large target audiences.
The investment in ROI doesn’t just refer to money
Of course, none of the above is to say that Facebook cannot deliver quality advertising.
Its most recent financial results ($6.2bn in advertising sales in Q2, $2.1bn profit) and the countless case studies of businesses of all sizes being built on Facebook speak for themselves.
However, in order for P&G and similar organisations to truly make use of Facebook’s unique capabilities, it would have to create unique campaigns and creative for several different segments and sub-segments within its target market.
The time, effort and resources that would be required to invest in creating the hundreds of thousands or millions of permutations of creative across all of its product lines, likely doesn’t seem to be worth it when television can reach roughly the same audience in one fell swoop.
Much how P&G has set up its entire business around the television, a similar effort and dedication would have to be made to fully utilise tools such as Facebook at that scale.
It’s likely that P&G may even be on its way to this: the organisation is known to have extensive relationships with both Google and Facebook, with the latter saying that its relationship with P&G “grows each year”.
Despite that growth, it would likely take a reorganisation of its business, alongside continued advances in AI and programmatic in order for P&G to truly utilise Facebook’s platform at the required scale.
Will Facebook ever steal some of your TV ad spend?
It’s obvious that Facebook is gunning for at least a portion of the budgets allocated to television.
Despite the continued growth of the digital advertising industry from $17bn in 2007 to $60bn as of last year, as well as Facebook’s own top and bottom line growth, television still garners the largest part of the advertising pie, estimated to be worth $579bn globally.
While its innovations around video (in particular Live) are seemingly directed at increasing user engagement, it’s not hard to imagine Facebook using this to wade further into the higher echelons of marketing budgets.
However, if this episode between P&G and Facebook is any indication, this won’t be easy.
While Facebook video ultimately looks the same as TV, the back end is fundamentally geared towards Facebook’s trademark granularity.
In addition, will users who have always seen a feed that is tailored to their interests all of a sudden be prepared to sit through the same blunt advertising as on TV, just because it looks the same?
The chances of Facebook gaining a share of TV ad spend may have slipped slightly, but it certainly won’t stop trying. And we certainly won’t stop watching.