With A Single Speech, P&G’s Pritchard Signals New Rules For Digital Advertising – Forbes

In a wildly influential speech to the 4A’s annual meeting in 1994, then P&G CEO Ed Artzt gave a speech entitled “The Future of Advertising.” Artzt warned of a future in which consumers would shun advertising unless Madison Avenue gave them reason to pay attention. It was a startling declaration coming from the world’s biggest advertiser, which invested almost 90% of its budget in TV advertising.

Many observers believe this speech helped push agencies into the digital space.

This year, digital advertising will surpass TV for the first time to become the primary channel for marketers, accounting for a $72 billion outlay. It is against that rite of passage that another P&G’er, Chief Brand Officer Marc Pritchard, gave what is arguably the biggest marketing speech in a generation at the ANA Media Masters conference in Orlando on Thursday. Pritchard signaled that the days of chasing shiny objects in the name of becoming first mover are over and it’s time to hold digital advertising accountable.

Marc Pritchard, chief brand officer of Procter & Gamble Co. Photographer: Michael Nagle/Bloomberg

Pritchard’s speech is wake-up call for marketers and agencies in the Digital Age. What’s behind Pritchard’s speech is the anemic 2% growth among U.S. consumer companies, despite the fact that marketers spend $200 billion on advertising in the U.S. alone, and $1 trillion in total marketing spending. Most of this underperformance can be traced to the low quality of digital media supply chain. Instead of engaging and persuasion, advertising bombards consumers with thousands of often irrelevant ads a day, subjecting them to endless ad load times, pop-ups, overpopulating screens and feeds which then result in ad blockers growing 40% annually.

To improve its ROI P&G has taken four steps to clean up the media supply chain during 2017.

  • Validate ad viewability standards: Unlike a more general approach by some ad agencies, P&G is adopting a specific, and measurable, standard – which is that the ad must be at least 50% in view for at least one second and two for video. It’s judged as an opportunity to see an ad – to make it onto the device screen where the human eye can see it.
  • Prevent ad fraud: Ad fraud has reached 20% of the digital media supply chain, costing marketers more than $10 Billion. P&G insists that any entity touching digital media must become certified to help ensure that it is free from fraud. This means using only buys from sites that have been fully vetted, eliminating much of the long tail, especially on video inventory.
  • Transparent agency contracts: The controversy on undisclosed rebates and media funds used as “principal” to make money on “float” is now well-known. Therefore, P&G, is poring over every agency contract for full transparency – to include terms requiring funds to be used for media payment only, all rebates to be disclosed up to the holding company level and returned, and all transactions subject to audit.
  • Third party measurement verification: P&G, the world’s biggest advertiser, makes decisions involving billions of dollars as to where to invest their media money. These are big bets that require objective, validated measurement. And, regardless of how much one trusts and respects the publishers, an objective, impartial audit is needed.

In an interview after the speech Marc told me: “These standards will lead to increased trust between clients and agencies and drive better relationships. Cleaning up the ecosystem from complexity and making it more transparent has one simple objective – better work and better ROI.” He added, “This is essential. Penetration of ad blockers has increased, and now stands at 18% in the U.S. Better ads and improved user experience are crucial.”

“And”, he pointed out, “If we get some of the unnecessary complexity out of the ecosystem, we can generate tremendous amount of funds and invest them in advertising.”

Right now, only 40% of all advertising dollars are reaching the consumer, the rest lost to intermediaries and waste. “the goal is to raise it to 70%, and there is no reason why we can’t. It’s great for advertiser, agencies and publishers, a classic win-win-win. It would add another $18 billion to the ecosystem.”

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