P&G and WPP: How the shit hit the fan in digital marketing
In the wake of P&G’s plans to axe $200 million in online spending and WPP’s devastating share price knock, Bob Hoffman argues the marketing industry only has itself to blame for its current crisis.
It’s getting ugly out there.
In just a few hours this week WPP, the world’s largest agency holding company, lost about 15 percent of its value. Trading in the stock was suspended. It later regained some value.
I’m guessing you haven’t been in the game for the past 10 years – and your affection for Ritson furthers this point.
Sure, smalltime agencies take clients for a ride, same with creative, and anyone else operating on old models.
This article reminds me of the episode of The Simpsons where Abe Simpson is in the paper (you remember those, right? They made your businesses a lot of money back in the day – you know, when people actually read them) shaking his fist at the sky under the headline ‘Old Man Yells at Cloud’.
P+ G is one example of a business taking digital in-house – among many many examples of businesses investing more and more into digital every month. Because it works. Sorry. Welcome to the future.
…your name is Pure Garbage?
So, Pure Garbage has the answers.
Only ‘smalltime’ players would risk their livelihoods ripping off their clients, of course.
Not the big guys.
We should have known all along.
Darn those rusty old models.
And digital works, right?
And your ads will never, ever appear adjacent to offensive content, right?
Perhaps Amazon, Google, TripAdvisor et al spend way too much on TV?
These modern masters of audience tracking and ROI measurement are just throwing their money at an unproven medium.
Somebody should rescue them.
Sigh – Another one. And if only they were a minority, but I am afraid, they are the norm.
This new era of “Digital Marketing” is the biggest scam ever in Marketing History. And the problem is that they are winning at convincing clients to use their conman tactics which produce jackshit results.
But we live in an era of post truth where so called “Digital Marketers” shouts everywhere with no evidence that TV, Prints and Radio and any other “traditional” media are dead, despite the overwhelming Body of research that demonstrate just the opposite.
I am sad to see that we had it right before the dot com bubble with the IMC concept. But most Marketers nowadays wouldn’t have a clue what that means, nor do they understand the 4P’s of Marketing, segmenting, targeting and positioning just to name a few concept back from the old days.
No, not anymore. We now have growth hackers (don’t even know WTF that means) who not only are proud not to have any qualification in Marketing, but spend most of their time in their AR/ VR head set, and getting to understand how AI and Blockchain can revolutionise the face of Marketing in targeting the Millenials, which apparently is a worthwhile target for all their clients.
Marketing has completely lost his way. A comparison to the scientific world would be if the flat earthers won the scientific battle and are now in charge of NASA but always find excuse to why they can’t get their rocket into orbit.
Sinek, Vaynerchuck and consor have completely destroyed this industry. More and more, businesses out there, after being burned a few time by “Digital Agencies” think that Marketers are scammers. And I must admit that I don’t disagree with them. What a sad world we are living in…
“According to Adweek, cutting $200 million out of online “helped P&G eliminate 20 percent of its ineffective marketing and increase reach by 10 percent.” How? They “…reinvested into areas with ‘media reach’ including television, audio and ecommerce.”
Of course they did, they moved money from completely measurable channels into channels that rely on extrapolated survey data. Very robust thinking…
The fact that their sales didn’t suddenly drop 20% should tell you something…
Yes, that everyone needs to buy toilet paper, soap and deodorant and there’s only so a limited number of brands, from a limited number of suppliers on the shelves.
If that’s the case they don’t need advertising at all.
@bill
Bill can you explain what you mean by digital channels being completely measurable? Feels just a little disingenuous after the last few years of Facebook bs and programmatic fraud
If digital is that future I think we all need to stick to ‘ I know 50% of my advertising works…. ‘ for the near future at least
Digital channels are extremely measurable.
It’s just that what they measure turns out to be either pretty useless to marketing or just plain wrong.
Newsflash, they’re not. Defrauding all the tracking to boost impressions is super easy, so any “extreme measuring” you’re doing is overinflated by an order of magnitude or two. By how much, you’ll never know.
Digital is completely measurable(1 or 0)…more than any platform…but what you DO with the measurements, and data, and how you utilize the information in an efficient and meaningful way, is the question that is now being answered. So much data in 2017 was collected(more than all years previous combined)that even the largest companies are overwhelmed, and are doing their best to keep up with this collection and analysis, and there are always new factors, platforms being introduced….its hard to do this well, and to know what to look at, look for…
It is also said that P&G were devil worshipers, google that my non-agency friends.
I Googled it: https://www.snopes.com/fact-check/trademark-of-the-devil/
Sorry Bill. Measurable? In what way? Clicks = no correlation with sales for fmcg. Views = gamed by optimisation and tactical buying. Viewability also irrelevant once it becomes optimised based on an MRC standard that is ridiculous and not even adopted through the buying chain
Ritson, Hoffman et al are on the money with this.
Sounds like a WPP bash
Well done Bill and Garbage.
First a bit of offensive ageist stereotyping (play the man not the ball) then an warranted bit of tv bashing. Par for the course.
Do yourselves a favour. On Wednesday have a look at Ebiquity’s new report on media channels in the UK. Will help get you up to Bobs speed.
Is this one completely independant or has it been commissioned by a TV body (like the Payback studies here)?
Mark – if agencies charge clients a fixed fee, like we do for almost all our clients.. is the whole article you wrote just puff / irrelevant? I think your points apply to the small time agencies still playing the commissions game. This is 2018, tell me any large advertiser who hasnt reviewed their agency rem models by now?? We’ve been through the whole transparency-led reviews for 3 years now, there are no clients left (or any size/importance) who havent done anything
Hey Mark,
I wonder if you have any opinions on how a business could ever have ‘smashed sales forecasts’ without any TV?
http://www.adnews.com.au/news/.....oured-cans
Presumably Bob is just talking about digital display advertising for CPG brand building and not digital holistically? We get sales data broken by channel for most of our clients and, surprise surprise, digital channels are eating traditional sales channels alive. What’s more, we can track those sales directly back to comms in other digital channels. When was the last time you stepped into a travel agent to book a flight? Or a branch to take out a car insurance policy? Having handled P&G for many years I, like Bob, respect and listen to what they have to say…mostly about what’s good for their business and, in that respect, I’m sure much of the above is valid. But Bob, you’d be better being more specific and less generalizing despite that being less click-bait friendly.
Just because P&G restrategizes doesn’t indict the entire digital marketing world, as this author seems to want to do for some untold reason. They’re still spending in that area, and there are other digital marketing methods that may be effective that are within that realm. They’re just pulling back some in Facebook, Google and YouTube according to this article. P&G’s overall marketing budget is enormous. What works for P&G, or doesn’t, doesn’t make the law for all businesses and industries.
A fair bit of ‘fake-news’ here. Many digital media channels pay no commission, let alone three times the old-media. Digital is intense to plan and manage, so higher fees might apply for creative and agency management, but to suggest that agencies ‘push’ clients into digital to gain commissions is rubbish.
Having worked in WPP agencies, I can tell you that the commission and fee structure is based on a 3x multiplier of actual salaries (indeed like many other industries, ie. bill out at extortionist rates as needed). Not a lot of that money goes to the people actually doing the work required to implement campaigns and do the digital advertising. The majority of the cash goes to the directors and partners doing the fluff work taking in extraordinary salaries to spit the bs to company execs. And, of course, to Sir Martin so that he can buy more toys. God forbid he can’t upgrade to 2018 versions…
As somebody lucky (old?) enough to have worked across both traditional and digital, I know ‘squalid practices, half-truths, and unreliable metrics’ is not exclusively a digital problem, it’s an industry problem that cuts across all channels both old and new.
Until this is acknowledged this ‘debate’ is just piss and wind.
Interesting read, but I’m not sure that one change by one firm (however large) or one drop to one holding company (again, however larger) signals some kinda of apocalypse. I’m sure that you are right that structural weakness in the ecosystem has been revealed, but it can adapt, not simply die.
Hair on fire! Digital is dead! So, there are dishonest agency types out there taking advantage of clients. Shocked, shocked I am, my innocence shattered. All this illustrates is the obvious, that digital media and strategy, like everything else in the world, can be mismanaged, and apparently has been with wild abandon in this case. And damn, 3x multiplier commission, heck, wish I had thought of charging this much… Seriously, there’s a world of boutique to midsize agencies out there that do not screw over their clients and generate results in digital. Amazing. And I ought to know. I co-own one.
This seems like a misplaced condolence piece around “Digital Marketing”. Firstly, no other form of marketing provides as much opportunity to measure and know about your investments as Digital marketing does. The fact that P&G could decide for itself that its investments in the realm of Digital Advertisements ain’t quite faring well enough is a tribute to the “decision powering” abilities of Digital Marketing. In other forms you would be left wondering and wandering in the dark hoping that results would start getting seen sooner than later.
Are agencies “commission hungry”? Not any more! Not with so many agencies fighting for the same Digital pie and not with many advertisers forcing the agencies out of a hackneyed “commission model”.
Digital is here to stay. Some organizations might invest heavily into it, some like P&G might invest, then evaluate which is absolutely normal.
But to stretch this scenario beyond its stretchable limits and to start singing condolence tunes around Digital Marketing is drawing inferences out of a wrong sample.