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Op-Ed: Others should follow digital lead of world's largest advertiser Special

By Lori Weaver     Aug 2, 2013 in Internet
Few would characterize Procter & Gamble Co. as an online innovator or cutting edge techie. But the consumer goods giant is poised to take advantage of a digital society as it bets more of its massive advertising spend on online marketing pursuits.
It's no secret that the consuming public is turning to the Internet in droves to perform such traditional marketplace tasks as product research, price comparisons, consumer reviews and retail store location navigation, among other steps in the buying process. It also probably comes as no surprise that some companies have been adopting more aggressive online marketing strategies and budgets to answer to these trends.
But what you may not have guessed is that the company blazing new trails, announcing plans to devote about 35 percent of its U.S. advertising budget to digital media, isn't a high-tech company or an online upstart. It's Procter & Gamble.
Budget-friendly Options
Home to a multitude of time-honored, familiar household brands, such as Tide, Crest and Duracell, the company will be upping the advertising ante with plans to devote over one-third of its U.S. advertising budget to digital channels, including mobile, according to an Aug. 1 report by The Wall Street Journal.
That's no small spend. On June 23, AdAge noted that Procter & Gamble retained its position as the world's largest advertiser in 2012 with $9.3 billion spent globally, or about 11.7 percent of what it realized in net sales. Chief Financial Officer Jon Moeller remarked at an investor conference earlier that month that the company plans to shift a greater portion of its advertising spend to digital efforts, including social media strategies.
But it isn't so much acknowledgement of changing consumer habits that has the consumer goods giant shifting advertising dollars so much as the allure of low-cost marketing, according to Moeller. The move, he explained, was due in large part to the company's desire to stretch its advertising budget.
WSJ reports that newly returned P&G Chief Executive A.G. Lafley confirmed the company is spending 25 to 35 percent on social media and digital advertising globally, stretching to 35 percent in the U.S., its largest market. Lafley took back the reins of P&G in May following lackluster performance since his 2009 departure as CEO.
According to the Journal's report, which cited research by IRI Group and Kantar Media, spending over a third of its marketing budget on digital efforts puts Procter & Gamble well above the average 22.2 percent of advertising budget spend devoted to digital media by consumer packaged goods companies in the U.S. last year.
Increasing Budget Share
Procter & Gamble's redirected focus comes as no surprise to online marketing experts, who have increasingly urged companies to integrate greater emphasis on online advertising into their overall marketing plans.
"We recently took the time to look at advertising spend for online marketing from a broad range of small- to large-sized companies operating across a range of economies around the globe," says Dan Vassiliou, international Internet marketing specialist and CEO of the U.K.-based Endurance SEO. "What we found was that about 36 percent of marketing spend is now being targeted to online advertising, including search marketing, digital display advertising, email campaigns, social media and mobile advertising."
Vassiliou says search marketing, which includes SEO strategies, continues to take the biggest bite out of online marketing spend, with his company's informal study providing evidence that companies are typically allocating over 60 percent of online marketing budgets to such efforts. He adds that categories like social media spend and mobile advertising are likely to gain greater traction in the coming months.
Digital Versus Competing Media
Companies would be wise to follow Procter & Gamble's lead if recent predictions by eMarketing hold true. The digital marketing data firm predicts that the average daily time adults in the U.S. spend with digital media will surpass television viewing for the first time this year.
eMarketing expects the average adult in the U.S. to spend over five hours per day on digital media, including non-voice mobile use, an increase of 15.8 percent. However, daily TV time is expected to garner only four hours and 31 minutes of daily time, down slightly from a year ago. Significant growth is anticipated in mobile use, including smartphones and tablets, which is expected to jump nearly an hour compared to a year ago, surpassing time spent on desktop and laptop computers.
Repercussions for Non-Adopters
Many in the industry seem to agree that the expected growth in digital media use warrants greater attention by marketers, particularly the anticipated rise in use of smartphones and tablets. Companies that fail to get their digital advertising house in order could increasingly find themselves at a disadvantage to competitors.
Those disadvantages may be coming in ways non-adopters were not expecting. In June, search engine giant Google announced that after providing strong advice to site owners on how to create a better experience for mobile users, it is now rolling out a number of ranking changes in response to sites that have failed to adequately configure their sites for mobile users.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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