The latest news that Proctor & Gamble is laying off 1,600 employees, assumingly in their marketing division, has had some confusing and misinformed statements. Many of the headlines are either assuming statements or a complete lack of understanding. At first I attributed this solely to CEO Bob McDonald, who made the announcement. However after further review, it appears it is a stretch of his statement, coupled with some bad decisions on his part.
The original article I read on this was from Business Insider in a post titled, “P&G To Lay Off 1,600 After Discovering It’s Free To Advertise On Facebook”.
The first shocking item here is the incorrect statement that it is free to advertise on Facebook. It is certainly not free and even if they were just referring to fan pages, you still need to hire people to manage them. After further reading I see that McDonald never stated that Facebook was free. He did however reference getting 1.8 billion free impressions with their Old Spice campaign. Notice he did not say anything about money made on those impressions. It is also unclear as to if all 1,600 are in marketing.
The writer of this article goes on to state that “P&G’s Old Spice campaign is a textbook example of what the entire company should be doing.” I guess the fact that the campaign did nothing for sales is lost on both the writer and McDonald. Any gains in sales during that campaign, can be tied directly back to a buy one, get one free coupon they ran at the same time. Take into account the normal response to those coupons and the campaign was garbage.
Did it help Old Spice’s brand recognition? Probably, but are you wearing Old Spice?
The real measure is and always will be sales. Dollars. Profits. It doesn’t matter if you get 5 billion impressions if it doesn’t increase sales.
It appears that the real reason for the cutbacks are the increases they made before. Over the last two years P&G increased ad spend by 24%. I’m sure with that increase, came new hires. Leading to a portion of the current layoffs. Add to that other cost increases and sales losses of the current economy.
Common sense says that the lay offs are not as simple as a change in media. Switching to digital media does not reduce need for staff. Even if Facebook or Google were free advertising (which they aren’t), it doesn’t affect your staff needs. Unless your staff was also responsible for cutting down trees, milling paper and creating magazines and mailers.
If you have a staff of 5,000 to handle your advertising and the company that you order paper from decides not to charge you anymore, how does that reduce staff needs? It should increase budget for staff. So this idea that they are laying people off because they found a cheaper advertising media, is ridiculous.
The Real Story
So let’s look at the real story here.
P&G’s advertising problem is not a digital vs. traditional problem. It’s a product and message problem. Funny commercials might get a lot of attention, but they do not sell product. Whenever I hear someone ranting about some hilarious commercial, I find it interesting to ask if they bought the product. The answer is “No”, just about every time.
There still needs to be a message and a reason for the consumer to make the purchase. Old Spice is trying to compete with the growing popularity of Axe. Axe is growing fast in the younger market. “Old” Spice, is a tough sell to that market. The commercials may have created the attention, but the message did not convince the market. The message and the product are the issue.
I admit, I enjoyed the commercials and thought what they did on YouTube was pretty innovative. But I did not buy Old Spice.
Branding vs. Advertising
I separate branding from advertising and think that to combine the two is a serious error. They can work together but they are not the same thing. Branding should be used to create awareness and not for every business. That awareness should lead people to a message that sells the product. True advertising. Direct Response advertising. This is what generates sales.
Has branding increased sales? Sure, it happens often. But there are usually other forces in play. Especially a new product. People love new products. While some brands stay for the long haul, many of the brands you buy today, did not exist 10 years ago.
Sadly though, most advertisers are going after awards for being funny or cute. I know of no such award for sales made. When sales are dropping, those awards are nothing more than an expensive paper weight. The public would be surprised to see what advertisements actually result in the most sales.
Market, Message and Media
There are three components to proper advertising. Your market, your message and the media you use to deliver your message to the market. All three must be right to have success. Fail on one and the whole campaign fails.
You can have the greatest message and use the greatest media, but if sent to the wrong market, it’s garbage. Get the market right and have no message that sells and you fail again Find the right market, have the perfect message and use the wrong media to reach the market and you again fail.
It doesn’t matter if it is traditional media, digital media or whatever comes next. You must get all three right. Forget making the funniest commercials of the year list. Sales are more important.
Traditional vs. Digital
The question of traditional vs. digital is only dealing with one of the three components. The media. If your market and message are wrong, the media does not matter, it will fail. P&G went digital with their Old Spice campaign and the only boost in sales came from the traditional media, where their coupons were circulating. But the conclusion they came to was that digital was better?
Look, I am a big fan of digital marketing. I think every business should be using it. But, not at the expense of “traditional” media. The error, is thinking of it as anything but another tool. Thinking it is some golden ticket that lets you overcome other flaws in your advertising.
I won’t get into all the numerous studies that show traditional media is still highly effective. But just for a quick comparison let’s look at an interesting statistic. In direct mail, a 1% response is considered decent. 3-5% is great. And anything above that is an amazing campaign.
So what are the response rates on Social Media? Here is a study that shows 1% engagement on Facebook. How interesting is that? Some companies are getting more than that with better efforts and a better understanding of how to use Social Media. But many are only averaging 1%. Same as direct mail. Yet so many incorrectly state that digital media is better.
Social Media and other digital media have many benefits over traditional media. For one, it is the future of marketing. It has far better tracking capabilities. But, you still need the right market and message. Add to that also, the right product. Digital media is not a golden ticket that will just magically increase sales. It will not reduce your need for talented people, to create sales producing ads. It is not free.
There are companies having enormous success with Social Media. However it is a long term process and just the act of using Social Media, is not what makes it successful. You must have other key ingredients in place. You must have the proper market and message. With Social Media, you must also understand how to communicate with your market. Something many do not yet understand.
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