Procter & Gamble’s (P&G) chief financial officer claims the company is using AI tools to “execute [its] advertising plans at the best possible value” and achieve its goal of delivering “superior communication”.
Addressing an audience of financial analysts at the Consumer Analyst Group of New York (CAGNY) conference today (20 February), finance chief Andre Schulten described “superior brand communication” as a crucial vector of the company’s strategy, explaining P&G is optimising spend in this area.
In particular, the FMCG giant is utilising AI to generate advertising ideas, test ads and automate media buying. P&G’s AI capabilities are increasing the speed and decreasing the cost at which it can test advertising, Schulten claimed.
“Our AI studios use decades of P&G brand ad research data correlated to in-market sales results for fast cycle, iterative pre-market ad testing based on consumer reactions,” he said. “Ads can now be tested and optimised in just a few days versus weeks, at one tenth of the cost versus prior.”
Another tool highlighted by Schulten was the company’s “Great Idea Generator”, which he claimed was “transforming the idea creation process by enabling concept development in minutes versus weeks”.
The tool takes P&G concept data, consumer insights and comments, and external trends analysis, and creates advertising concepts. Schulten claimed the tool is increasing the number of concepts created “tenfold” and improving quality in the ideation process.
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“The AI leverages an array of data sources well beyond what’s available in the current processes,” he said.
P&G is also utilising automated media buying to drive media effectiveness and “increase media reach with greater precision”.
“This proprietary database enables brands to use target audience algorithms to reach the widest range of consumers where they are the most receptive to messages, serving ads at the right frequency each week or year around,” Schulten said.
Speaking to investors last month during its 2024 fiscal year results, Schulten explained P&G would invest in advertising at a “slower” pace than it had done in previous years. He said the company had built out a “playbook” in terms of driving frequency and reach.
“We’re focusing mostly now on optimising within that playbook and improving content quality,” he said during the earnings call.
The AI tools to automate media buying, ad testing and idea generation are clearly aimed at “optimising” that playbook.
‘Reinventing’ the agency model
While advertising effectiveness remains a stated focus for P&G, so too does efficiency. Schulten reported the business has a “runway” of up $500m (£395m) to $700m (£554m) in annual savings and efficiencies within is advertising.
This could be achieved through agency reduction, in-housing media and in-housing ad production, he stated.
“We are reinventing the agency model again,” Schulten asserted.
Back in 2018, P&G started talking about its efforts to shake up its agency model. This time around, the company has further reduced the number of agencies it works with and “enabled broad-based agency partnership flexibility”.
What this means is the model is shifting from one key agency “to a most valuable partner model that selects and hires star creative talent, regardless of agency”, enabling brands to source the best creative work from anywhere, Schulten said.
He also spoke about in-housing both media operations and ad production. On the latter, P&G’s brands are speeding up ad production as well as saving money, the CFO claimed.
“North America personal care is leading the way, reducing from dozens of agencies to only one, improving quality and reducing cost per ad, as well as reducing ad development and execution time by 50%,” said Schulten.
