P&G sets its marketing investment levels based on cost effectiveness to drive its strategy and create value, rather than a fixed budget to meet, and will do so even as economic conditions improve.
Consumer goods giant P&G will remain "100% focused on ROI" when setting its marketing budget, investing based on need and cost effectiveness, its chief financial officer said.
The company, which owns brands such as Fairy, Pampers and Herbal Essences, will avoid setting a predetermined budget for its investments, instead deciding how much to invest based on cost effectiveness, regardless of savings. The country in which he works.
In a call to investors today (July 28), the company's chief financial officer, Andre Schulten, was asked about the prospect of further investment in areas such as marketing in the next financial year if pressure on commodity prices eases.
“We're all about return on investment, and really less about whether we get more or less product support? Are we within target range but not out of range? The debate is: Is this the right investment to execute strategy and create lasting value? " she said.
He added that the company will focus 100% on investing in both short-term and long-term investments.
P&G has improved the effectiveness and efficiency of its media spend and is now seeing "a higher ROI for every additional dollar," he argued.
This approach determines how to invest in each channel, including new retail media channels.
P&G combats rising costs by improving marketing performance
"We're trying to maximize our reach ... across all these different touch points, and like any other channel, retail media have to take their place in our marketing mix model based on the relative return they can deliver," Shoulders said.
While the company believes retail media should have a place in its mix like any other channel, CEO John Moeller is optimistic about its prospects.
"I just think most branding decisions are made at retail," he said. "And so ... it represents a significant opportunity."
The company released its full-year results for the 52 weeks ended June 30. Net sales rose 2% year-on-year to $20.55bn (£15.98bn). Profits rose 14% to $9.9bn (£7.7bn). Volume fell 3% over the course of the year; However, there was little improvement in the last three months of the year, with volumes down 1%.
Moeller praised the company's "very strong results" for fiscal 2023. The company welcomed the growth, which was driven "structurally" and not by short-term initiatives such as promotions.
"It's hard to grow category, volume and value through advertising," Schulten said, adding that the company prefers to use innovation and communication to drive growth.
"When we advertise, we want to do it strategically," he adds.
In this financial year, the company has committed to increase its marketing investment. During the conference call, however, he was careful to remind his investors that the impact would not be "immediate," adding that they would assess the effectiveness of their spending over the "longer term."
