P&G Layoffs Signal Focus on Digital Industry

Last week was a tremendous change, giant marketer P&G announces 1600 layoffs as they reduce jobs in various roles, and instead shifting budget to digital marketing. The CEO, when pressed, indicates a strong focus on digital marketing, citing:

“In the digital space, with things like Facebook and Google and others, we find that return on investment of the advertising when properly designed, when the big idea is there, can be much more efficient” -Bob McDonald, Chairman-CEO, P&G

Yet this is a trend, as P&G had previously cut advertising spend on soap operas on traditional TV, and continues to grow their social marketing efforts such as the wildy successful Old Spice campaign franchise.

Three Industry Impacts:
The industry should see this as a bellwether moment. This spending giant has significantly shifted funding towards digital marketing, and marketers should take note as it indicates that digital marketing will:

See an increase in spend in overall digital marketing. Overall this is an indicator of continued growth towards digital which includes mobile, web and social. In fact, a recent report indicates the overall digital spend to be $40.6 billion. Yet within this, mobile is a fast mover with a growth rate of 50.2%, to a mere $1.8 billion, while social technology and service will rise by 33.3%, to $2.1 billion.

Makes marketing accountable, through analytics and tracking. Unlike traditional mass advertising and carpet bombing styles of marketing, digital marketing can be instantly tracked providing analytics to decision makers, and eventually helping marketers to course correct an effort in real time. Expect future generation analytics software will start to be predictive –rather than just historical.

Will need to integrate paid, owned, and earned. Yet despite the shift towards digital, the savvy agencies and marketers are already thinking in an integrated fashion to use these tools cross channel, cross experience, and cross audience. We even saw for one of the first times, P&G is experimenting cross-brand, by inserting Old Spice into the Bounce category.

As Jeremy Epstein notes, this all comes on the eve of this week’s massive Facebook IPO, where most revenues are generated by advertisements on this social network. The savvy already know to get with the changing times, or get ready to dust off the resume. Update: Thanks to Gerry Corbett for first bringing this to my attention during a conference we were both at.

  • http://www.gautamblogs.com Gautam Ghosh

    So true Jeremiah! Also have a feeling that social media will soon impact other departments within organizations like R&D, HR, Recruiting, Customer Service slowly 

  • Thuy Cuong

    “Yet within this, mobile is a fast mover with a growth rate of 50.2%, to a mere $1.8 billion, while social technology and service will rise by 33.3%, to $2.1 billion.”
    Thank Jeremiah Owyang

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  • http://www.facebook.com/profile.php?id=586578147 Jon Burg

    For many in the industry, this move lacks perspective.  This does not mean that P&G is cutting TV or Print.  It means that digital will likely be a closer second-place player to TV.  In terms of dollars spent, digital is still an “up and comer” and is not a leading channel in terms of actual spend (though is clearly is the category leader in terms of growth).

    TV, print and OOH remain essential channels in the branding world.  Old Spice started with a massive TV campaign.  And creativity played a huge role, which is something that is harder to quantify in P&Gs infamous black box marketing mix.  For the handful of Old Spice digital branding successes, there are thousands of failures.

    I wonder how much of this is justifying economic realignment and how much of it is driven by the true global impact of digital channels for the remainder of P&G sizable portfolio – beyond Old Spice.

  • Thabo Hermanus

    I am still trying to understand what the 1,600 people were supposed to be doing? They can’t all become “useless” as a result of a change in strategy! Surely to grow digital, requires people to derive the digital strategy and deliver on it.

    I am with Jon though in believing this makes digital a more recognised channel for P&G as they have insisted on increasing advertising budget while others cut historically. I don’t see mention of the traditional advertising budgets being cut, more the people whom I am not sure of as to what areas they work in.

  • Thabo Hermanus

    I am still trying to understand what the 1,600 people were supposed to be doing? They can’t all become “useless” as a result of a change in strategy! Surely to grow digital, requires people to derive the digital strategy and deliver on it.

    I am with Jon though in believing this makes digital a more recognised channel for P&G as they have insisted on increasing advertising budget while others cut historically. I don’t see mention of the traditional advertising budgets being cut, more the people whom I am not sure of as to what areas they work in.

  • http://twitter.com/jowyang Jeremiah Owyang

    You’re right Jon, an integrated approach to meet customers wherever they are is the key.  

  • http://twitter.com/jowyang Jeremiah Owyang

    I read several articles before writing this post.  There was a general nod towards mediums that are lower cost and measurable.  Does traditional media fit in those two requirement needs?  Frequently not.

  • http://twitter.com/marianne marianne richmond

    Jeremiah,

    As usual,, good analysis and absolutely agree with your “three industry impacts” but the headlines that seem to draw a straight line from  “1600 layoffs” to “shift to digital” over simplify the issue. 

    Many companies still seem to believe that “social media is free” and/or digital can simply replace traditional media and seem to forget, for instance that the commercial that consumers watch on YouTube still has the production costs of a TV spot and that designing and implementing the strategy that leads to the effective deployment of paid, owned and earned (and the analytics and monitoring) requires talented employees.

  • http://twitter.com/marianne marianne richmond

    Jeremiah,

    As usual,, good analysis and absolutely agree with your “three industry impacts” but the headlines that seem to draw a straight line from  “1600 layoffs” to “shift to digital” over simplify the issue. 

    Many companies still seem to believe that “social media is free” and/or digital can simply replace traditional media and seem to forget, for instance that the commercial that consumers watch on YouTube still has the production costs of a TV spot and that designing and implementing the strategy that leads to the effective deployment of paid, owned and earned (and the analytics and monitoring) requires talented employees.

  • http://twitter.com/tomcunniff Tom Cunniff

    It has been almost two decades since the first banner ads ran on HotWired, and the first pronouncements that “TV is dead”. I learned a long time ago to ignore the press releases and follow the money.

    When I read between the lines, here’s what I see. P&G tried boosting its ad spending; it didn’t pan out. The layoffs were needed to boost the profit number. The talk about shifting the spend to digital is an effort to put a positive spin on the pullback in ad spending. What we have here is smart PR, not a bellwether.

    I understand digital cheerleading, but we shouldn’t put so much energy into high-fiving ourselves for being visionaries. Instead, the industry needs to mature and recognize that he future is not an either/or proposition. It’s about both/and: aka, “integration”. Broadly speaking, this means TV for awareness and digital to drive action. View, then Do.

  • http://www.socialdon.com/ Social Media Analytics

    I completely agree, Some people just think they can go
    out in this industry and be successful. There is a lot to learn and
    different ways to do things. People should do their homework before
    specializing in this. Great post, thanks!

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  • http://profile.yahoo.com/RVBWDL2T56WI4RBTTHT2TZRPLE jose

    here’s a crazy thought, how about reducing the salary pay for the CEO and their top executives, if the company hasn’t been successful and is loosing market share against the competition it’s been clearly mismanaged from the top.

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