Good news for radio’s short-term forecast: the medium’s largest advertiser, Procter & Gamble Co., is ramping up its advertising spend. Marking a $445 million increase in its first fiscal quarter, P&G Chief Financial Officer Andre Schulten noted in a media briefing that this uptick in ad expenditure was akin to the $453 million hike in the previous fiscal quarter, reports Ad Age.
Schulten was cautious about forecasting an ongoing surge in ad spending for the full fiscal year, citing prior year cutbacks and increasing commodity costs. Nonetheless, he affirmed P&G’s commitment to maintaining robust ad investments, emphasizing a focus on return on investment (ROI) and increasingly efficient targeting strategies.
The latest increase represents a 2.6% point surge in marketing spending relative to sales. The consumer goods giant, known for brands like Tide, Pampers, and Gillette, reported a 6% rise in sales to $21.9 billion for the quarter. When adjusted for factors like currency fluctuations, acquisitions, and divestitures, the organic sales growth was 7%. Net earnings for the company showed a 15% increase, amounting to $4.6 billion, and earnings per share jumped by 17%.
In response to shrinking TV audiences, identified as early as 2017, P&G significantly increased its investment in radio advertising, following recommendations from media analyst John Fix.
The “radio experiment,” as Fix calls it, takes advantage of radio offering the lowest CPM across media platforms while retaining effectiveness. P&G’s initial $70 million investment in radio advertising in 2018 led to substantial growth in brand reach, with Olay Body Wash experiencing a surge from 43% to 71% in reach. As the national average for radio ad spending drops, P&G has emerged as radio’s top advertiser.
According to a study by Vivvix, P&G increased its radio advertising budget by 43% in 2022, even while slashing its overall advertising expenditure by more than 10%. While P&G’s competitors remain cautious about radio advertising, the company has successfully leveraged the medium, inspiring pharmaceutical companies to increase their radio advertising to supplement their TV campaigns.
