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Procter & Gamble is a giant in household products, for many years the world's biggest advertiser, and the company which defined many of the marketing strategies which we now take for granted. It was the first company to advertise nationally direct to US consumers (in 1880) and it literally created the concept of "soap opera" by sponsoring radio and television dramas targeting women. Other inventions included the first Fluoride-based toothpaste (Crest), the revolutionary synthetic detergent Tide, and the first mass-marketed disposable diaper (Pampers). Yet P&G found life in the last few years of the 20th century more difficult than it may have expected, with earnings below expectations and a series of management shake-ups as a result of under-performance. New CEO AG Lafley got the group back on track during 2002 with the purchases of Clairol and Wella and a renewed focus on core products. Following dynamic performance in 2003 and 2004, P&G demonstrated the strength of its recovery a year later with the acquisition of legendary personal care rival Gillette. The next few years delivered strong growth, and a push into prestige beauty. However Lafley's retirement in 2009 prefaced another slowdown in performance from which the group has yet to fully emerge. In 2013, in a surprise development, the board brought Lafley out of retirement in the hope that he could persuade lightning to strike twice. Two years later, that hadn't happened, and Lafley passed over control to rising star David Taylor, who oversaw the sale of a large collection of high-end beauty products (including several of Lafley's acquisitions) to Coty.
|P&G Beauty||P&G Health|
|P&G Baby, Feminine & Family Care||P&G Grooming|
|P&G Fabric & Home Care||P&G Latin America|
|P&G UK||P&G France|
|P&G Europe||P&G Japan|
Who handles Procter & Gamble advertising? Click here for a listing of P&G advertising account assignments from Adbrands.net. Including unmeasured media, P&G declared advertising expenditure for the year ending June 2019 of $6.75bn. In the US, Kantar (in Advertising Age) reported measured media expenditure in calendar 2016 of $2.49bn, out of an estimated total of $4.3bn. Biggest spending brands were Olay (measured spend $215m), Tide ($197m), Crest ($176m), Pampers ($143m), Febreze ($138m), Swiffer ($136m) and Gillette ($134m).
Procter & Gamble
1 Procter & Gamble Plaza
Cincinnati, Ohio 45202
Tel: 1 513 983 1100
Adbrands Daily Update 11th Jun 2020: "The Choice" Respect to Procter & Gamble for grasping the nettle so firmly. The packaged goods giant has delivered what is arguably the boldest statement to-date from any major advertiser over the burning issue of the racial divide in modern America. It's an incendiary debut for Keith Cartwright's new eponymous creative boutique, backed by Grey. To its considerable credit, P&G has form in this field. It has taken a firm stance for at least the past three years on issues of race, with ads such as 'The Talk', and last year's 'The Look', also overseen by Cartwright under the auspices of the Saturday Morning collective. While other advertisers including McDonald's and Nike have paid their respects to victims of police brutality, P&G dares to go much further: "Being white in America is not needing to state your life matters. And when your life matters you have power. Now is the time to use it..." Perhaps most surprisingly of all, this is an actual call to the barricades: "Words and feelings are not enough. Now is the time to take action." Stirring stuff.
Adbrands Daily Update 21st Apr 2020: The Coronavirus crisis is having a devastating impact on manufacturers of non-essential items, but there are some positives for other companies. Procter & Gamble reported soaring sales of some products, offsetting equally dramatic declines elsewhere across its portfolio. For the first quarter of 2020 - P&G's 3Q - the company reported the biggest organic sales increase it has experienced in the US for several decades. Revenues there jumped 10% overall as customers rushed to stock up on staples such as detergent, hand soap, toilet paper and healthcare products. That offset an 8% drop in the company's #2 market China, and came despite weak performance globally in P&G's beauty and grooming divisions. Combined organic sales rose 6%, helped by a 10% jump in fabric & home care, 9% in healthcare and 7% in family care. Beauty and grooming sales were flat or slightly negative, but net earnings in those two divisions plunged by 21% and 26% respectively, even as the other three units reported increases of between 13% (fabric & home) and a staggering 32% in family care. P&G CFO Jon Moeller said he expects demand to continue through the rest of the year. "Consumption of our products is not likely to dissipate. We will serve what will likely become a forever altered health, hygiene and cleaning focus for consumers." However, Moeller warned that there is likely to be considerable medium-term pressure later in the year. "We have never faced the level of unemployment that we're likely to see in this country and potentially in others, and we don't know how long that will occur for." That is likely to result in increased consumer sensitivity to prices.
Adbrands Daily Update 31st Jul 2019: Procter & Gamble reported its best quarterly growth for more than a decade in the final quarter of the year to June 2019; an organic uplift of 7%, fed almost equally by higher prices and higher volumes. For the year as a whole, the organic increase was 5% to reported revenues of $67.7bn. That was the good news, but problems remain in some areas, especially P&G's grooming division: in other words Gillette. With overall growth at its highest level since the 2008 credit crisis, P&G took the opportunity to take an $8.3bn impairment charge against Gillette, which is still struggling to fend off the impact from online rivals like Dollar Shave Club and Harrys. That charge left the group nursing a shock $5.2bn net loss for the quarter, while full year net income plunged 60% to $3.9bn. Fabric & Home Care remains the group's biggest business by far with revenues of $22.1bn. Baby Feminine & Family Care came next with $17.8bn followed by Beauty ($12.9bn), Health Care ($8.2bn) and finally Grooming ($6.2bn).
Adbrands Social Media 27th Jun 2019: "The Look". Here's Procter & Gamble's excellent follow-up to "The Talk", the promotional film from 2017 which presented the ways in which black Americans have, for the past 100 years or so, had to explain to their kids how to deal with everyday racism. This latest - not this time from BBDO but from creative collective Saturday Morning - takes a slightly different tack. The prejudice is even more insidious here by being unvoiced. White viewers can get a small taste of what it feels like from the point of view of just one black American running the daily gauntlet of unspoken bias.
Adbrands Daily Update 24th Apr 2019: There was another quarter of solid growth from P&G, underpinned by a new strategy adopted last summer of raising rather than cutting prices. Previously the company had believed it could kickstart sales growth by slashing prices; it turned out that wasn't the case. Instead it tried the opposite approach, pushing through rises of between 4% and 10% on key products, and has been rewarded with much better results. Organic growth of 5% for the group's 3Q, split more or less equally between price hikes and volume increases, was its best performance for eight years, and only the second time P&G has hit that target for more than a decade. It was also the group's third consecutive quarter of solid growth. The best performance came from beauty, up an impressive 9% organic, offsetting continuing weakness in the grooming division, down 1%. P&G said sales of Gillette blades and razors were flat but that there had been a sharp decline in sales of Braun shavers.
Procter & Gamble defined the nature of packaged goods brand marketing in the second half of the century, and despite an alarming wobble during the crossover from the 20th to the 21st centuries, it was by 2004 once again setting the pace for other marketers to match. Between 2003 and 2010, CEO AG Lafley consistently delivered strong growth and accumulated an unbeatable line up of products, virtually all of which occupied the #1 or #2 position in their respective markets. No other company could (or can) boast as dynamic a line-up of brands, including 25 worth more than $1bn a year in sales. But with sales topping $80bn, and performance slowing in several areas, a serious question began to emerge regarding future development. It became hard to see just where P&G could go next before the sheer size of the company pushed it towards demerger. That dilemma coincided with a dramatic slowdown in performance under a new management team, leading to a complete overhaul of P&G's portfolio during 2015 and 2016.
Procter & Gamble is a giant in packaged consumer goods, the worldwide #1 in baby care, fabric care, feminine care and haircare, and a major force in virtually every other sector in which it operates. At its peak the company controlled around 300 brands in total, marketed across over 160 countries, but the portfolio is led by a collection of what were, in 2013, 25 billion-dollar brands. The biggest of these were: Pampers (gross sales of around $11.25bn in 2013, according to Euromonitor/Sanford Bernstein estimates), Tide (around $5bn), Ariel ($4bn), Pantene ($3.8bn) and Olay ($3.4bn). They are in turn supported by Always, Bounty, Charmin, Iams, Downy and Crest. Wella, Actonel and Head & Shoulders joined the Billion Dollar club in 2004; Dawn topped $1bn in sales in 2005. Gillette Mach 3 razors, Gillette Series grooming products, Duracell, Braun and Oral-B were added to top table in 2006. Gain was a new member in 2007, followed by Gillette Fusion during 2008, Ace in 2010 and Febreze in 2011. More recent additions to the billion-dollar-club are SK-II skincare and Vicks, both of which surpassed that level for the first time in 2012. In 2014, another 14 brands had sales between $500m and $1bn per annum, including Cover Girl, Herbal Essences, Swiffer and Tampax.
However that collection of trophies has been whittled down over the past couple of years by the disposal of non-core businesses. Iams and Duracell were divested in 2014 and 2015. The biggest change came with the decision to divest a large chunk of the beauty portfolio, culminating in the transfer of Wella, Cover Girl and others to Coty. By the end of 2016, the portfolio had been whittled down to around 65 brands in total.
Several other brands had already been sold by then. In the second half of the 20th century, P&G assembled a sizeable portfolio of food products, but this business was quickly overshadowed by more attractive market segments such as beauty or family care. The Snacks & Coffee division gained a largely unexpected new lease of life in the 1990s from the sudden popularity of Sunny Delight and Pringles, yet it remained an uncomfortable fit with P&G's other interests. Plans were announced in 2001 to spin these brands off into a joint venture with Coca-Cola, but these foundered as a result of objections from shareholders. That same year, Jif peanut butter and Crisco cooking oils were spun off into JM Smucker. After several months looking for a buyer, Sunny Delight and German juice brand Punica were sold to venture capital firm JW Childs in 2004. Folgers coffee, too, was transferred to Smucker during 2008, leaving Pringles as P&G's last remaining food product. A plan to transfer that business to snack company Diamond Foods collapsed in 2011, and the brand was eventually sold to Kellogg's. Petfoods division Iams was sold in two parts in 2014 and 2015 to Mars and Spectrum Brands.
Another major divestment was the Duracell battery business, which was transferred to Berkshire Hathaway in 2015. Warren Buffett agreed to take over the standalone business from P&G for a net value of around $2.9bn. The deal was structured as a slightly unconventional but highly tax-efficient asset swap. Berkshire surrendered its existing shareholding in P&G, then worth $4.7bn, back to the company, which in return injected $1.8bn in cash into the Duracell Company as a parting dowry. As a result, both companies avoid a sizeable tax penalty that would have been generated by a straight sale of assets.
Procter & Gamble's corporate structure has undergone a series of changes since the late 1990s. In 1998, the group abandoned its arrangement as a collection of separate geographic businesses in favour of global divisions specialising in specific sectors. This greatly accelerated the worldwide roll-out of key products with what was ultimately considerable financial gain. Since then, these divisions have been steadily consolidated, from seven to five to four to three global business units (GBUs) by July 2007, and then to just two in February 2011, when P&G Health & Well Being was split and absorbed into its two partner groups, P&G Beauty & Grooming and P&G Household Care. In another group reshuffle in June 2013, P&G was reordered once more into four divisions: Beauty; Fabric & Home Care; Health & Grooming; and Baby, Feminine & Family Care. A separate GBU provides worldwide marketing, market development and other corporate functions.
Long renowned for its marketing prowess, P&G also has a cast-iron reputation for exceptional strength in research and development, not just of new products, but also component ingredients and packaging design. The group still comes up with more new ideas than even it can develop commercially. As a result, since 2000, it has greatly increased its willingness to form mutually beneficial "innovation partnerships" with other companies. In one such arrangement P&G licenses technology it developed for plastic wrappings to smaller company Clorox for use in products sold under the latter's Glad brand. In 2008 it agreed to lend a wide range of other packaging technologies, including non-splatter nozzles for plastic bottles, to food company ConAgra.
Recently, the group has established a major presence in sports sponsorship. It signed up as an official sponsor of the US national team in the 2010 Winter Olympics, promoting several individual products, mostly family-oriented brands, in a wide-ranging and imaginative campaign. The apparent success of that campaign led to the group signing up in summer 2010 as top-line sponsor of the main Summer games. Commencing with the 2012 London Olympics, that ten-year deal covers three summer and two winter Olympics. In addition, P&G became the first corporate sponsor with rights to promote multiple different brands under its IOC partnership agreement. Its 2012 "Thank You Mom" campaign, celebrating the support given to athletes by their mothers, was widely regarded as one of the year's standout campaigns, and won a Creative Emmy as the Best TV Commercial of the Year.
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