One of the nation’s most traditional advertisers is breaking the rules on Madison Avenue.
Procter & Gamble, which spends millions to call attention to high-profile products like Crest, Tide and Pampers, will negotiate directly with media outlets going forward — a move that is likely to take it out of typical “upfront” discussions that involve letting media-buying agencies utilize its ad spend for leverage in these annual talks between marketers and U.S. TV companies.
Procter has been a driving force in the TV-upfront market for decades, owing to its massive annual outlay for TV ads. But the company has, along with several other large advertisers, sought to make changes in recent weeks. “We almost always end up buying too much, but we can buy ‘options’ to return some spending without penalty — and to avoid the open ‘scatter market’ where even higher prices are extremely punishing,” said Marc Pritchard, the company’s chief brand officer, speaking Wednesday at an industry conference. “Buying too much inventory is inefficient at best, and at worst, leads to excess frequency through heavy ad loads in programs — annoying consumers and wasting money. The system must change.”
Procter is one of several large marketers pushing to change one of TV’s most important economic cycles. In June, the Association of National Advertisers, an industry organization representing 1600 companies that spend more than $400 billion annually on advertising and marketing, called for seismic changes to the upfront, which has roots in historic business movements, such as car companies unveiling new models in autumn. Unilever and MasterCard have also pushed for new systems. And its dissatisfaction is emblematic of a larger schism in recent years between advertisers and the media outlets they support.
Many of the advertisers have been spurred to call for change by the effects of the coronavirus pandemic. Advertisers are not only less certain about their own business prospects in months to come, but they are also less informed about what TV networks will be able to put on the air as the contagion continues to affect live sport and scripted production. With that in mind, more advertisers are making spending decisions more quickly as events allow for the airing of content that meets their immediate. needs. In recent weeks, marketers seeking big audiences have gravitated to sports events and news specials, for example.
Making such changes could require a host of new duties and potential expenditures — unless Procter intends to rely on its media agencies for data on viewership and audience response. Most advertisers continue to rely on one of the industry’s large media-buying operations. There have been exceptions. Before it was acquired by the company now known as Anheuser-Busch InBev, large brewer Anheuser-Busch operated Busch Media Group, an in-house media agency. By 2014, however, the company moved its media duties to WPP’s MediaCom and Publicis Groupe’s Spark, citing the ability of those agencies to secure better prices and facility with new kinds of digital media.
Some TV networks might prefer to do less business with Procter & Gamble. The consumer-products giant is among a handful of longtime TV sponsors that enjoys lower or more moderate rate hikes over a multi-year period by dint of its decades buying a high volume of TV advertising. These rates are in some cases grandfathered into negotiations between TV networks and individual advertisers. In recent negotiating cycles, the networks have pressed buying agencies to give them more business from clients who pay higher rates in order to get them to accept deals struck at lower figures. The advent of direct-to-consumer start-ups like Wayfair, Warby Parker and Peloton had given the TV networks new confidence in making such requests. TV sales executives have also been known to complain that ads from conservative consumer-goods companies often don’t keep viewers as engaged during commercial breaks as movie trailers or soda spots.
Of course, in a pandemic, P&G’s dollars are probably better than some others. Consumer-products companies have thrived in recent months as consumers who are sheltering at home need toiletries, toilet paper and dishwashing liquid.
Despite its protestations, P&G has in fact held upfront discussions with TV networks – but this year, on its own terms. By holding its own talks, P&G avoids having its ad dollars used as part of a larger pool of dollars that help media buyers gain leverage in discussions, and also ensures it has more direct control over where its commercials are placed and when they run.
Advertising Age previously reported on Pritchard’s remarks.
“At P&G, we’ve taken control of when we negotiate and buy TV media. To level the playing field, we negotiate directly with as many as possible. Our agencies help us and have an important role as contributing partners, but we are in the lead,” said Pritchard. “We give and get the information needed to make decisions that create value for P&G brands and for the agencies and for the media providers. It’s not about winners and losers – it’s about a level playing field to constructively create value together.”