February 15, 2018

Can We Trust P&G?

Marc Pritchard, chief brand officer for Procter & Gamble, made a big splash last year when he stood up before the annual IAB conference and lambasted the online ad industry.

Pritchard said the industry was “murky at best and fraudulent at worst” and "It's time to grow up. It's time for action... the days of giving digital a pass are over."

According to Ad Age, P&G, "vowed to no longer pay for any digital media, ad tech companies, agencies or other suppliers for services that don't comply with its new rules." 

Recently, however, Pritchard has been far more gentle -- one might even say strangely sympathetic -- in his statements about the online ad industry.

According to AdAge, Pritchard recently said he has "little reason to make good" on his threats of last year. He said...
"...I’m encouraged by the progress made over the past year to clean up the digital media supply chain, driven by the entire industry stepping up to take action."
"...progress with these big players is really strong. It's a sea change versus where we were a year ago."

This is difficult to understand at a time when everyone else in the world seems to have finally caught on to the fraud, corruption and malevolence that are rampant in the digital ad ecosystem.
- The New York Times recently ran a scathing front page story about fraud and corruption on Twitter.

- Keith Weed of Unilever is threatening to pull their advertising from digital platforms...
“Fake news, racism, sexism, terrorists spreading messages of hate, toxic content directed at children – parts of the internet we have ended up with is a million miles from where we thought it would take us.”
- The US Department of Justice has indicted 13 Russian operatives on a variety of charges related to illegally exploiting digital ad media.
- The Russian government continues to secretly exploit social media to influence US public opinion.
- Google and Facebook are still not in compliance with the Media Rating Council
- Even Mark Zuckerberg said recently, "Facebook has a lot of work to do — whether it’s protecting our community from abuse and hate, defending against the interference by nation states, or making sure that time spent on Facebook is well spent,”
So what's going on with Pritchard? I've got a hunch...

I've been told by insiders that several years ago one of the largest and most respected advertising trade associations was ready to tear into the corrupt online media industry. But Pritchard stepped in and blocked it. This was during an era in which P&G was deep into digital love.
"...digital is incredibly effective, and we're doing more,” said their CEO
“...effectiveness and the consumer impact of our advertising spending will be well ahead of the prior year... (because of) an optimized media mix with more digital, mobile, search and social presence..." said their CFO.
They had moved billions of their spending online. By blocking the trade association from taking on the online ad industry, P&G saved face.

That all quickly became farce when their sales dropped 8% in a twelve month period and they lost $6 billion in sales. Pritchard suddenly grew a pair and gave his famous IAB speech.

So why has Pritchard changed his tune again and gone all cuddly? Are the days of "giving digital a pass" back? First, let's be fair.

I'm sure P&G's agencies have stopped playing word games over what types of compensation they're entitled to. I'm also sure Google and Facebook have done a damn good job of putting a happy face on their relationship with P&G. And I wouldn't be surprised if a dollar or two has changed hands.

But here's why I'm suspicious. After going through the most expensive proxy fight in history, activist investor Nelson Peltz won a board seat at P&G a few months ago. According to The Wall Street Journal during the proxy battle...
Mr. Peltz’s Trian Fund Management LP criticized P&G’s cutback on digital spending. P&G’s improved earnings “came as a result of reducing advertising, specifically digital, a tactic we believe will damage the value of the company’s brands if continued in the long term”
Could it be that Pritchard's new coziness with digital is as much about politics as principles? I have no facts, but my smell detector is in the red zone.

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