Unveiling P&G's Formula: Unleashing Marketing Investments with 100% ROI Focus

P&G, the consumer goods giant, remains committed to being “100% ROI driven” when it comes to determining its marketing budgets. The company's Chief Financial Officer has stated that P&G will continue to make investment decisions based on need and performance, rather than setting predetermined budgets. Regardless of economic improvements in the countries it operates in, P&G will invest based on the effectiveness of its spend.

During today's investors' call (28 July), Andre Schulten, the chief financial officer of the company, was questioned about the possibility of increasing investments in areas such as marketing in the next financial year, assuming that commodity price pressures decrease.

"We prioritize return on investment and it's not solely dependent on whether we receive more or less commodity assistance. Our focus is on staying within the guidance range and determining if an investment aligns with our strategy and can generate sustainable value," he stated.

The company will maintain its focus on achieving a “100% return on investment (ROI)” in both short-term and long-term investments, he stated. P&G has made significant strides in improving the effectiveness and efficiency of its media spending, resulting in a greater ROI for every additional dollar invested, he asserted.

We aim to optimize our reach across all touchpoints, including the emerging retail media channel. Retail media, just like any other channel, must prove its value in our marketing mix model through relative returns, according to Schulten.

The company acknowledges that retail media must prove its worth and earn its place within the channels. However, CEO Jon Moeller remains optimistic and believes that a significant proportion of brand decisions are made in a retail environment, hence highlighting the tremendous potential it holds.

The business released its full-year results for the 52-week period ending on June 30. It achieved a 2% increase in net sales compared to the previous year, reaching $20.55 billion (£15.98 billion). Profits also experienced significant growth, rising by 14% to $9.9 billion (£7.7 billion). Although overall volumes decreased by 3% throughout the year, there was a slight improvement in the last three months, with a volume decline of only 1%.

The company's CEO, Moeller, expressed satisfaction with the strong performance in the final months of the fiscal year 2023. The company also commended its growth, which was driven by long-term strategies rather than short-term promotions.

"It is challenging to increase categories, volume, and value solely through promotion," Schulten remarked, emphasizing the company's preference for employing innovation and effective communication to drive growth. "Our approach to promotion is strategic," he added.

The company had made a commitment to increase its marketing investment in the current fiscal year. Nevertheless, during the call, it emphasized to investors that the impact of this increase would not be immediate, highlighting their focus on evaluating the effectiveness of their spending over extended periods.