During Procter & Gamble’s fourth-quarter earnings call yesterday, the packaged-goods giant reported that it cut approximately $100 million to $140 million in digital advertising spend last quarter because of brand safety concerns and ineffective ads.
While finance chief Jon Moeller did not explicitly call out YouTube’s brand safety issues that started earlier this year, he did say fake traffic driven by bots and objectionable content led to the company pulling back on its advertising spending.
“Digital ad spending was lower versus a high base period and due to current period choices to temporarily restrict spending in digital forums where our ads were not being placed according to our standards and specifications,” the company said in its earnings release.
According to Kantar Media, P&G spent $2.4 billion on U.S. advertising last year, making it the country’s biggest advertiser.
In addition to digital media, P&G also cited cuts to agency and production spend, leading to a quarter-over-quarter profit margin boost of nearly 1 percent. The brand’s U.S. revenue increased 2 percent on 4 percent unit growth.
The cuts fall in line with chief brand officer Marc Pritchard’s call in January for P&G’s agencies to clean up transparency and demand that all platforms provide third-party measurement this year, threatening to pull spend for partners who do not get on board with standards.
“We’re setting a higher standard of excellence on advertising quality with a focus on brand performance claims that communicate the brand’s benefit superiority to create awareness and trial,” said CEO David Taylor during the earnings call. “We’re improving the quality of consumer insights, agency creative talent and production.”
Competitor Unilever has also cut down on its marketing to improve margins, recently reporting higher than expected fiscals for the first half of the year, while Johnson & Johnson recently reported a 4.3 percent dip in its second-quarter profits (so it will be intriguing to see if the brand cuts digital ad spending).