The move by Proctor & Gamble (P&G) to cut its marketing budget by 75% in the last year while producing improved sales metrics presents “an ideological shift” for the industry and its use of data, according to data firm Cambridge Analytica’s head of sales, Tom Jackson.
Speaking at SXSW last week, where he presented around three key beliefs – that money does not equal power, small data is greater than large data and that marketers should mix art and science – Jackson spoke of the budget cuts by the FMCG giant.
“It’s not just about scale and spray, you have to make relevant connections from the people you are trying to talk to, but senior management may not be ready to jump the gun without a proven history of success,” he said.
To further illustrate his point, he spoke of the $5 challenge – where groups are given $5 with the challenge of competing to find who can make the most profit – adding that creativity and profit can be born out of budget limitations.
Recounting such an exercise at P&G, he relayed how sales that were flat actually increased, thus encouraging the world's largest-spending advertiser to slash its agency costs – initially by 50% and then up to 75% – in a process that saved somewhere in the region of $1bn from its marketing budget.
"When the world’s largest advertiser takes this course of action, it is time to take note. It is signaling an ideological shift as a whole, and the conversation is changing," Jackson added, detailing how the FMCG giant is moving from a price-based to performance-based metrics when assessing its media budget.
"It’s telling in P&G’s case because their results speak for themselves, after that ad pull-back they were actually able to reach 10% more people by being smarter about who they actually targeted," said Jackson. "It’s for this reason that I say that’s not about how much money you have, and P&G has a lot, but it’s about how you use it to maximize your results."
Jackson continued to recommend that customer performance and ROI were the most important metrics for marketers to care about, although he did acknowledge how many marketers must exhaust their media budgets, despite such evidence.
“Unfortunately the reality is that even when CMOs are presented with this notion, even if it is the right thing to do, to cut back on the ads that they are sending out into the world, they know they have to keep spending that budget in order to keep it," he said, adding that "the easiest thing to do is to keep doing what you have always been doing."
Jackson went on to highlight areas of potential efficiencies where marketers should focus their efforts when it comes to achieving efficiencies in media budget management were "saturation," i.e., better frequency capping, as well as monitoring fraudulent activity.
He further detailed how P&G focused on "target audience density" as a means of improving both reach and conversion rates, citing a Phil Harvey study which claimed that by increasing the targeting of audience density by 10%, a company would generally see a sales lift of 7%.
“It’s not money that is power; it’s the knowledge that you bring to the campaign. You don’t need to reach all those people, you should actually be focusing on the people you should actually be converting and not waste your money elsewhere. With that in mind, you buy in, and you say; ‘I think I need to be more intelligent about how I spend. In God we trust, all others bring data.’”
Jackson would go on to talk about when “big data could be dumb” and evangelized the creation of personalized experiences, and in the value of data within the creative sector he also declared: “Invest in content and creativity because data without creativity is just a bunch of numbers."
At the time of writing, Cambridge Analytica was embroiled in controversy with allegations over its conduct and its use of use of Facebook user’s data.