P&G Review Could Be Far-Reaching

Apr 12, 2004  •  Post A Comment

The concept of “communications planning,” a hot topic on Madison Avenue for a while now, got even hotter last week when Procter & Gamble, the nation’s largest advertiser, initiated what is believed to be the first large-scale review of a communications planning account.
While the move was likely inevitable, the decision stunned executives at P&G’s media planning agencies and sent them scrambling in preparation, especially when the marketer let it be known that it had invited “a select number of new agencies” to pitch the account in addition to its media planning incumbents Starcom MediaVest Group and Mediacom Worldwide.
Exactly who those undisclosed shops are is driving the incumbents crazy, especially considering that they may not necessarily be competing with other media-buying juggernauts. In theory, communications planning is not about scale. It’s about smarter and more strategic thinking about what constitutes the best communications platform-what insiders call “contacts”-for delivering a marketing message to a consumer.
It is a process that can be amazingly complicated, trying to develop a multidimensional view of the marketing mix that goes well beyond traditional media and covering every conceivable form of marketing, including advertising, promotion, direct marketing, public relations and package design, not to mention a much wider range of media options, including some that aren’t necessarily considered traditional media.
“In essence,” said Steve Fajen, general manager of advertising consultant Morgan Anderson Consultants, “everything is a communication.”
But while it requires some high-powered thinking and an expert understanding of consumer media behavior, communications planning does not necessarily require the scale of a Starcom MediaVest Group or a Mediacom. In fact, the practice was first championed by relatively small communications planning boutiques such as Michaelides & Bednash in the United Kingdom.
Bigger Isn’t Always Better
More recently, dedicated shops have been formed in the United States, including Media Kitchen and TargetCast TCM, that are focused exclusively on a communications planning approach. The problem with the bigger shops, clients say, is that they may have individuals or even teams devoted to a communications planning approach, but that the vast majority of their media planners still approach the business in the conventional way that P&G said it wants to move away from.
In fact, the marketer went so far as to state that it plans to “redesign its media planning agencies into communications planning agencies.”
What that means isn’t exactly clear. P&G declined to elaborate other than to say the review would be resolved by early July, a relatively quick pace for something that might have such a profound effect on the way media is planned and bought by P&G as well as by the industry at large. The reason is that P&G isn’t just any big marketer. It is what’s known by marketing experts as an “alpha” marketer, the kind that leads the pack in marketing best practices.
The same thing happened in the mid-’90s, when P&G caught on to the emerging practice of media optimization, an approach that uses sophisticated computer systems to literally optimize the reach of media buys-usually television-to reach a certain target audience for a specific advertising budget.
U.S. agencies and marketers had been looking at optimizers-they were already being used in Europe-but they hadn’t really caught on until P&G mandated them as part of a media review it held in the late 1990s that resulted in Starcom MediaVest’s winning its business. Starcom won the account largely based on its development of a TV optimization system and on the agencies’ ability to get Nielsen to release the kind of TV ratings data that was necessary to run it. Within a year of that development, virtually every major media agency had some form of optimization service.
More recently, P&G got on the econometric modeling bandwagon, an approach that uses sophisticated regression models to reveal how various components of the marketing mix-including advertising-contribute directly to product sales. Such modeling had been pioneered by other marketers, but once P&G gets behind it, experts such as Morgan Anderson’s Mr. Fajen say, it will have a profound influence on the thinking of other marketers that ultimately will emulate P&G’s strategies. In fact, Mr. Fajen said the current communications planning review most likely was a direct result of the econometric modeling work that P&G has done over the past year, which may have revealed new insights into the effectiveness of various media and marketing platforms.
Erwin Ephron, another consultant who advises top marketers, said that the hyper-inflation of the television marketplace is forcing major marketers in general to rethink their communications mix, noting that they are even rethinking how they plan media.
Instead of using traditional “reach-based planning,” Mr. Ephron said, they are moving toward “an ROI approach” that values media based on the specific returns they contribute to a marketing plan, not just how many people they reach. The problem with this approach, he said, is that marketers may have different goals and individual marketers may have many goals for their communications plans.
Remarkably, even though marketers have been seriously rethinking their marketing mix, there has been virtually no change in the share of marketing budget allocated to advertising over the past decade. That may be changing, according to research released last week by the Promotion Marketing Association and Promo magazine.
The research, which was based on an annual survey of 5,000 brand marketers and agency executives, indicates that marketers have begun to shift spending out of advertising and into other kinds of promotional media. During 2003, the report estimated, consumer promotion picked up 2.0 percentage points and trade marketing gained 4.5 percentage points of overall marketing budgets, while consumer advertising lost 6.5 points.