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Jun
18
Now here’s a wow factor.
P&G just shifted $2 Billion into the direct control of Brand Managers.
I’m heralding today, June 18th, 2007, the coming of age day of retail media. Thank you P&G.
What this $2 Billion dollar shift means is that the guys and gals who currently control each Brand’s measured media advertising budgets now get to control an additional media pie - at retail media.
A couple of points about why this is relevant to the Digital Signage space and generally points good things in our direction over the next little bit:
- P&G has been talking about “shifting” media dollars for some time now but hasn’t done anything about it, unlike it’s competitors. You can see my whining about it here. It now looks like they’re really starting to make moves to address the shifts in media consumption patterns and to keep up with competitors like J&J and KC
- $2 Billion is NOTHING in the retail spend arena. To give you an idea of relevance of that amount, In CANADA, if memory serves, P&G spends $450 million every year JUST ON IN-STORE DISPLAYS/MERCHANDISING. This does not include flyers, signs, promos, contests, trade incentives, trade co-op budgets, etc. So let’s assume that the total retail dollar spend in the North is $1-$1.5 Billion (it’s likely a lot more). That would make the current US version a minimum of $10-$15 Billion? (just guessing but there’s 34,000 grocery store chain locations and if each location got only $1000 a year in co-op budgets, that’s $34 million a year….my complete guess is it’s more like $500 x 72 brands x 12 months x 34,000 = 15,000,000,000)…ok…so that seems a little too big, but you get the idea. Total Ad Spending by P&G on measured media in 2005 was $4.6 Billion. This is all conjecture of course and the calculations are likely all wrong but that means that we’d be seeing a 20% switch in spending at those rates. I don’t think that’s possible, if only because shareholders would pee themselves about that type of dramatic shift. My guess is that $2 Billion would represent around a 5%-15% increase in the total current retail spend, making the current retail spend…20-25 Billion’ish?
- Also, switching that much $ into each of the Brands’ hands would be dangerous to start. The retail game is very complex to plan and buy in. The fragmentation is phenomenal. It’s not like buying TV or Magazines for each of the Brands. It takes a lot of experience for a buyer to identify when, why and how to buy a particular “What”. To date, retail has been the bastard child of the media spend. Here’s a brief example quote to support what I’m talking about:
…trade marketing is sometimes kicked around like an interdepartmental political football; other times it’s largely ignored by marketers who set brand strategy.
It would be like a merchandising or point-of-purchase display company walking in and saying they know how to buy TV advertising. This isn’t a slag on the Brand Management group at all, it’s just a reality….you introduce an entirely new horizontal spend category into an $80 Billion/year company and you’re bound to need some learning time to identify how that needs to fit into the overall marketing mix with the existing measured media.
- Lastly, my guess is that most of this budget is coming out of the TV budgets based on some releases that have come out in the last six months on P&Gs spending habits.
All told, what do I think this means? Interestingly, I think this is basically just a “test budget”. If you slowly open the coffers to a new medium, teach the people responsible for it (Brand Managers) how to use the funds properly to effectively ramp product sales, get the right returns and favourable response from consumers, retailers, etc, you can THEN open the flood gates for a new breed of ad spend
As is, shareholders wouldn’t stand for a 90 degree turn in strategy on advertising if it meant it might mean short term harm to their holdings…it’s also pretty hard to turn the Titanic on a dime
Why do I think this is likely going to be very good for Digital Signage? I would guess that, despite the fragmentation issues of our industry, we’re likely the closest cousin to what the Brand Managers are used to buying, so we have an opportunity to present P&G with a media purchase option that is an easy transition as they start to spend more.
…Just some open ended musings…
The original article from Ad Age is here
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[…] to get your take on the above. Is it over the top to assume this space could grow that fast? If P&G just re-routed $2Billion into the retail space, we’re starting to add up the […]
[…] advertising distribution channel and switching an additional $2 Billion into those efforts. (See: P&G Weighs In…The Coming of age for retail media) You can bet that this could be the start of a very big migration of spend when two of the […]