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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.
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|P&G Beauty||P&G Health|
|P&G Baby, Feminine & Family Care||P&G Grooming|
|P&G Fabric & Home Care|
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 fiscal 2017 of $7.12bn. 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 25th Jan 2019: P&G is one of more than 20 major packaged goods companies who have signed up to Loop, a sustainability program organised by recycling company TerraCycle. Along with Unilever, PepsiCo, Mondelez International, Nestlé, Danone and others, it will begin marketing selected products in reusable packaging. P&G's Pantene, Tide, Cascade, Crest, Ariel, Febreze, Oral B, Gillette, Venus, Pampers and Always brands are all included in the initial pilot program, which launches in New York and Paris in May. London is set to follow later in the year, and Toronto and Tokyo in 2020. Shoppers will be able to sign up for a subscription-based service under which TerraCycle will deliver participating products and collect empties after use. Unilever, however, plans to launch refillable containers for Haagen-Dazs ice cream, Axe and Dove deodorants and other products so that consumers can top-up their own supplies in participating retailers.
Adbrands Daily Update 24th Jan 2019: P&G delivered a strong final quarter to 2018, showing that the packaged goods giant's long-awaited recovery may finally be here to stay. For the second consecutive period, organic growth was up 4%, after several quarters when that metric struggled to reach even 2%. Only the Gillette grooming division reported a decline. That offset especially strong uplifts in Beauty - up 8% - and Fabric & Home Care - up 6%. The group noted "disproportionate growth" from skincare brands SK-II and Olay. However currency headwinds held back reported revenues to around the same level as last year. Freed from the year-ago quarter's tax write-offs, net income jumped almost a third in the quarter, which represents 2Q of P&G's fiscal year ending June.
Adbrands Daily Update 17th Jan 2019: Precise details have not been disclosed, but P&G is reported to have transferred a larger share of its North American media budget from Hearts & Science to Carat, and another sizeable chunk of responsibility to its inhouse team. The latter is understood to have taken control of the bulk of media for the company's oral care products. A separate inhouse team already manages much of the media for fabric care under the internal name of Woven.
Adbrands Weekly Update 15th Nov 2018: Under pressure from activist investors, Procter & Gamble announced plans to streamline its structure to enhance regional and divisional flexibility. It will reduce the number of operating divisions from ten at present to six, and decentralise additional responsibilities to the CEOs of those six departments, including areas such as sales, product innovation and supply chain for the group's top ten global markets. Those six leaders will report directly to group CEO David Taylor. Responsibility for the group's other geographical markets will be centralised under current CFO Jon Moeller, who adds the title of COO. Taylor said the company doesn't anticipate any departures from the management team, simply a realignment of reporting lines.
Adbrands Weekly Update 25th Oct 2018: Finally some good financial news from Procter & Gamble. The long-suffering packaged goods giant reported its best quarterly results in five years for the first quarter of its new financial year. Organic growth excluding currencies and M&A was up 4% year-on-year (compared to 2% or less for the preceding seven quarters), led by a 7% leap in beauty. "Beauty had a very good quarter, but the story is not beauty," said CFO Jon Moeller. "If you look at the difference between the prior quarters and this quarter, the most defining difference was simply the number of businesses that were growing, and that reflects the implementation of our strategy." Nine of out the group's ten global reporting categories delivered growth, with baby care the only disappointment. Reported revenues were $16.7bn, while net profit rose 12% to $3.2bn.
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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