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World's biggest advertiser on challenges of ad placement on Facebook and other digital media

Nicole Sinclair
Markets Correspondent

Procter & Gamble (PG), which has some of the world’s largest consumer brands — including Tide, Pampers, Always and Charmin — also happens to be the world’s largest advertiser. When it comes to the company’s mega-brands, having control over ad placement is key, says chairman and CEO David Taylor.

This has become increasingly important in the digital arena, where sites like Facebook (FB) are a powerful way for big brands to reach consumers.

“One of the areas that we want all of digital content providers to work on is to make sure that we have a few things met. One, we want to make sure any ads we place are next to the right content. And we want to make sure any ads we place are served to people, not to bots,” Taylor told Yahoo Finance.

Media supply chain

P&G cut $100 million in media placement spending last year because it did not have the assurances it wanted, according to a spokesperson at the company.  The company still hit its 2% sales growth target last year, validating the decision to cut back, the company added.

“When we did an audit, we did find that there were some ads that were beside inappropriate content, and we said that’s not okay, and therefore we vote with our money,” Taylor said. “I do believe it’s important that money only goes to ads that really build our brands. These are the world’s best brands in each of the categories. It’s very important the content that our brands are associated with are appropriate.”

Taylor added that the company is working closely with Facebook and other digital outlets to ensure P&G brands reach consumers effectively.

Advertising and promotion is a hot-button topic in the staples sector, given that brand equities built by these companies drives earnings and keeps competitors—like the growing Dollar Shave Club—at bay.

Earlier this month, P&G Chief Brand Officer Marc Pritchard said at a conference that the company is looking more closely at placement.

“There’s no question ads should never be on an ISIS recruiting video,” he said. “But really, how many cat videos should we advertise on? And if you’re watching cat videos, do you really want to see a toothpaste ad? So the conversation is shifting from brand safety to raising the bar on quality content for quality placement.”

And this focus is extending to effectiveness.

“The reality is that in 2017 the bloom came off the rose for digital media. We have substantial waste in a fraudulent media supply chain. As little as 25% of the money spent in digital media actually made it to consumers. But digital is now a $200 billion industry. We have to stop giving digital media a pass and insist it grow up,” Pritchard said at the conference.

Taylor told Yahoo Finance that P&G is closely working with digital companies, including Facebook and YouTube, which he says are doing their part to increase safety and effectiveness.

“We really believe that to have common standards, to make sure that it goes to humans, and to make sure that it’s served beside the right content is important,” Taylor said. “And what I can say with great confidence is that all the companies we work with are working hard to make sure that happens.”

NFL

The latest NFL controversy between teams and President Trump has raised new questions about brand control.

At the moment, only a few sponsors have come out  with a statement. Taylor explained that P&G, an official NFL sponsor, has not discussed a response publicly. When asked if he had any comments on the controversy, Taylor said no.

“We want to make sure our brands are next to the right content, and we work very hard to be available when consumers are looking for information about brands,” Taylor said. “We push all the companies we work with to make sure the content is appropriate and they treat their viewers respectfully.”

Controversies put brands — including P&G’s many labels — in a difficult spot.

“There will be some that say you shouldn’t advertise on anything that’s controversial. We think it’s important for consumers to choose what content they want to view. If it’s very inappropriate content, we don’t want our ads associated with it, but we also believe consumers need to make the choice,” Taylor said. “We associate with places where our consumers congregate, and we want to be available there for consumers to learn about these categories. We have a message that’s important, but we talk about the brand benefit and the equity of the brand and we want to make sure that enough consumers get enough chance to view that content.”

The Amazon effect

Taylor said that the company’s focus is on how to best promote its brands amid the changing retail landscape and the growth of e-commerce giant Amazon (AMZN).

“If you go on e-commerce, people talk about the endless shelf, how many pages do you typically go on if you go to Amazon.com or if you go to Walmart.com or Target.com or any omniplayer, how many pages typically? Page 1 or page 2,” Taylor said. “When you’re on page 1, what brand do you think is typically there? The leading brand. What you want to have is the brand that consumers trust that better meets consumer needs than any others.”

Yahoo Finance markets correspondent Nicole Sinclair sits down with P&G chairman and CEO David Taylor

Taylor said he sees retailers also preferring leading brands even amid the shift to private label.

“I’ve heard for many years that there was a big threat to P&G brands because of growth, whether it was private label or retailer brands, discounters or even the e-commerce change, and what I’ve found through all of those is that if your brand is preferred by consumers, then retailers tend to support you,” Taylor said.

Nicole Sinclair is markets correspondent at Yahoo Finance

For more from the P&G CEO, see:
Procter & Gamble CEO: Why activist investor Nelson Peltz is wrong for our board

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