Skip to comments.Proctor & Gamble To Lay Off 1,600 After Discovering It's Free To Advertise On Facebook
Posted on 01/30/2012 1:48:43 PM PST by SeekAndFind
Reality appears to have finally arrived at Procter & Gamble, the world's largest marketer, whose $10 billion annual ad budget has hurt the company's margins.
P&G said it would lay off 1,600 staffers, including marketers, as part of a cost-cutting exercise. More interestingly, CEO Robert McDonald finally seems to have woken up to the fact that he cannot keep increasing P&G's ad budget forever, regardless of what happens to its sales.
He told Wall Street analysts that he would have to "moderate" his ad budget because Facebook and Google can be "more efficient" than the traditional media that usually eats the lion's share of P&G's ad budget.
This is coming from the man who increased P&G's adspend by a staggering 24 percent over the two years through October 2011, even though sales rose only 6 percent in the same period.
Note that P&G's revenues were up 4 percent to $22 billion in the quarter but the company's costs for sales, general and administrative work were flat.
P&G's staggering ad budget has become a bit of an issue among analysts. On the call, McDonald and his crew were asked about ad costs three different times. McDonald eventually said:
As we've said historically, the 9% to 11% range [for advertising as a percentage of sales] has been what we have spent. Actually, I believe that over time, we will see the increase in the cost of advertising moderate. There are just so many different media available today and we're quickly moving more and more of our businesses into digital. And in that space, there are lots of different avenues available.
(Excerpt) Read more at businessinsider.com ...
well one more commercial I won’t have to watch.
I refuse to place my life out there on facebook.
I communicate with friends by email...and thats it.
That’s going to be a big hit to the cinci. area.
bad news for the dinosaur member?
bad news for the dinosaur meedia?
Marketing is heavily over-rated.
Important to note that more and more pg products are being made in china. Food,medicines, and personnal care included. Check labels and buy USA.
FB advertising isn’t free. You can put up a page for free, but running an ad campaign costs $.
Absolutely. P&G is considered the bellwether in advertising. It’s about time they figured it out.
P&G to Cut 1,600 Jobs, Bank on Digital for Long-term Savings
Chairman-CEO McDonald: ROI in Digital ‘Much More Efficient’
Yeah, that’s gonna hurt.
OK. Your post #4 was just a little scary.
Same here. My buds keep saying “talk to me on FB” and my response is “why would I talk to you on FB when a text or e-mail will do?” I’m having the same daily conversation with my GF about her acct as well.
You are the perfect example of why this is a stupid strategy on the part of P&G. Facebook ads are not free, and Facebook business pages only reach people who want to be reached. It’s preaching to the choir. The number of people who join a FB business page is hundreds of a percent of those who can see a print ad in a major publication. Sounds like they really don’t know much about how social media marketing works.
I totally agree. I do have a FB account under a fake name from a throwaway email account to scoop up communiques from various folks in the VRWC who are using it. (Cain, Palin, etc), And get various manufacturer discount deals.
Wow. I guess no one told him that businesses that cut their advertising budget in hard times tend to see their profits and market-share shrink.
This strikes me as ironic because it was P&G that created soap operas on radio as a means of advertising during the Great Depression and realized tremendous growths in revenue in the face of declining personal incomes. Advertising pays and by that I mean advertising to the maximum number of buyers, not FB participants. Gee, how dumb.
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