---
title: "P&G: Why Are Huge Ad Spendings Not Translating into Sales Growth?"
description: "As early as August 2016, P&G announced it would reduce its targeted advertising on Facebook due to poor results. Recently, it has pushed for transparency in digital marketing, suspecting that ad effectiveness is compromised by fraudulent practices in channels and media. According to P&G's 2016 financial report, the company spent $7.2 billion on advertising last year, yet this massive investment did not lead to rapid brand sales growth. What are the underlying reasons?"
author: "皮特先生"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-02-28"
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# P&G: Why Are Huge Ad Spendings Not Translating into Sales Growth?

> As early as August 2016, P&G announced it would reduce its targeted advertising on Facebook due to poor results. Recently, it has pushed for transparency in digital marketing, suspecting that ad effectiveness is compromised by fraudulent practices in channels and media. According to P&G's 2016 financial report, the company spent $7.2 billion on advertising last year, yet this massive investment did not lead to rapid brand sales growth. What are the underlying reasons?

**Click the image for details**
As early as August 2016, P&G announced it would reduce its targeted advertising on Facebook due to poor results. Recently, it has pushed for transparency in digital marketing, suspecting that ad effectiveness is compromised by fraudulent practices in channels and media.
**According to P&G's 2016 financial report, the company spent $7.2 billion on advertising last year, yet this massive investment did not lead to rapid brand sales growth.**
What are the underlying reasons? Setting aside the small fraction of fraud in the media supply chain, there are several points P&G has not realized:
**P&G's Problem One: Advertising Effectiveness Has Diminished**
Marketing guru Ries mentioned in his book *Positioning*: This is an era of information explosion, and the human mind has limited capacity, remembering at most seven brands. The effectiveness of advertising itself is diminishing; it can no longer, as in the industrial era, capture consumers' attention and occupy their minds with a single placement on centralized media.
Per capita advertising expenditure has increased eightfold compared to before; people's attention is fragmented, and information is explosive.
P&G is still constrained by the industrial-era model of "mass production + mass retail + mass channels + mass brands + mass logistics," like the Ford Model T, producing a good product at a good price and reaching national consumers through national advertising and distribution. Consumers had no other choices.
But now, the industrial era is over, and the information age has arrived, especially with the rise of mobile internet, allowing information to flow freely on everyone's phone screens. The rise of many small brands has become inevitable. Therefore, not only in the daily chemical industry but also in other industries, the market is oversupplied. Traditional supermarket shelves are stocked with various homogeneous products that, despite different packaging, offer similar functions. P&G may rely on advertising or be better than average traditional companies in channel management—to put it bluntly, spending money—but it cannot defeat the enemies it cannot see.
**P&G's Problem Two: Not Realizing Where Consumers Are**
Another harsh truth: Does P&G really know where consumers are today?
Its invisible enemies are choosing to be with consumers, marketing, PR, and advertising through various social media platforms like WeChat, Facebook, QQ, Weibo, etc., leveraging the power of the internet for dissemination. You might wonder: Hasn't P&G already advertised on Facebook and reduced it because of poor results? (If they truly realized consumers are on Facebook, they should operate their own user base and make friends with them, not just run ads, especially since they cut back due to performance. If they realized, they should have done it like managing shelves in key accounts.)
Consumers no longer watch TV; they might be on their phones watching shows on Youku or iQiyi, browsing information on Toutiao or UC, shopping on JD.com or Taobao, or watching game streams and beauty show hosts on live platforms like Inke or Douyu.
Consumers' lifestyles have been changed by smartphones. Their time is occupied by these platforms. They are immersed in them, yet P&G cannot see this, or even if it does, it is too large to change.
**P&G's Problem Three: Not Making Changes to Build Relationships, Occupy User Time, and Increase Stickiness**
If you don't change, you will be replaced. Coca-Cola, a brand that also thrived in the industrial era, has sensed the change and made adjustments. In October 2016, Coca-Cola established a North American Social Center, a real-time newsroom. The newsroom has 55 staff members, including marketers selected from Coca-Cola North America and executives from agencies like Possible, Havas, and Moxie. These marketers focus on listening and analysis, content strategy, innovation and publishing, community management, marketing, law, and media buying.
Why did Coca-Cola do this?
First, because having agencies manage different brand accounts is costly and yields mediocre results. Second, in an era of saturated carbonated beverage markets, Coca-Cola's marketing themes can no longer help boost performance.
Establishing a newsroom allows for integrating social media channels and attempting to build emotional connections with consumers. Mark Manning, deputy head of client services at Huge, commented: "I'm not predicting the demise of some traditional social media, nor am I recommending brands chase every shiny project aimlessly, but I suggest brand channels can be integrated and operated in a timely manner to prevent failing to find the right channels to connect with the new generation of consumers."
Coca-Cola's approach, at least objectively, discovered where consumers are, integrated social media into its own hands, and set up a dedicated team for operation. This is something P&G cannot match in marketing.
Moreover, Coca-Cola also focuses on creating topics with its bottle design, such as "designing a Coke that requires two bottles' caps to face each other to open" or, from an environmental perspective, designing bottles that consumers can reuse. These all spark social media sharing.
So, who else does well in brand communication on social media? Starbucks is one. Whether it's product packaging, coffee culture, or store decoration, Starbucks always has a point that triggers consumers to share. Schultz redefined Starbucks' selling point: selling experience, not coffee beans.
Starbucks even opened a 1,394-square-meter eco-coffee experience store in Seattle, bringing the process from coffee beans to a finished cup of coffee into the experience store. It also offers coffee-making courses for consumers.
Of course, there are many other examples. Whether it's Coca-Cola or Starbucks, **the commonality is that they try every means to get close to users, build relationships, and increase stickiness. Marketing revolves around consumer experience and needs, triggering spontaneous sharing.**
Domestic brands like Wei Chuan's spelling bottles and Jiang Xiaobai's bottle copy are similar. They use the product itself to capture consumer needs and trigger automatic sharing. They interact on social media, repeatedly going viral to achieve brand promotion.
Of course, the most famous case is Xiaomi. On Xiaomi's forum, hundreds of millions of users spontaneously organize online or offline activities, and through Xiaomi's official organization and operation, brand communication is achieved. The details are in the book *Participation Sense*.
To summarize P&G's problems: **Advertising effectiveness has greatly diminished, they haven't realized where consumers are, and they haven't integrated their social media channels to be with consumers and build relationships through marketing activities.**
P&G executives will surely ask: Does this matter? Think about it: a brand that can't even win consumers' time—can it expect consumers to learn about and buy its products?
So, the wise move for P&G is to cut spending on advertising and channels, build a marketing team, integrate social media channels, find its users, plan activities around products, understand consumer needs, satisfy them, occupy their time, and make them stay longer with its products. Otherwise, those invisible enemies are eroding P&G's sales in channels and media that P&G cannot cover.
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