P&G says cut digital ad spend by $200 million in 2017

FILE PHOTO: The logo of Dow Jones Industrial Average stock market index listed company Procter & Gamble (PG) is seen on a tube of toothpaste in Los Angeles, California, United States, April 25, 2016. REUTERS/Lucy Nicholson

(Reuters) - Procter & Gamble Co PG.N said on Thursday it cut digital advertising spend by $200 million last year based on viewership data provided by tech and media companies that showed its ads were not reaching its target audience effectively.

P&G, the world’s biggest advertiser, has been at the forefront of a campaign to pressure digital media companies to be transparent with their viewership metrics by telling them how many people see their ads and how ad agencies spend advertising dollars.

These efforts have led tech companies such as Facebook FB.O and Alphabet Inc's GOOGL.O YouTube to rework algorithms to check content quality, empower marketers with more control on their ads and protect them from being associated with unrelated or inappropriate content.

“Transparency shined a spotlight on reality and we learned valuable lessons which are driving profound change,” Marc Pritchard, P&G’s chief brand officer said at the Association of National Advertisers’ media conference in Orlando, Florida on Thursday.

“With transparent viewability data, we learned that the average view time for an ad on a mobile newsfeed is 1.7 seconds – little more than a glance – pushing us to innovate.”

Pritchard said fresh data on ad consumption encouraged P&G to reduce digital spending to several big media companies by 20 percent to 50 percent last year.

The consumer goods conglomerate said it cut digital spending by more $100 million between April and June of 2017 and continued with the cuts at the same rate for the rest of the year.

P&G, however, has not cut overall media spending. Funds have been reinvested to increase media reach, including in areas such as TV, audio and ecommerce media, a company spokeswoman told Reuters.

P&G’s advertising costs, which includes spends on worldwide television, print, radio, internet and in-store advertising, were $7.1 billion in 2017, down from $7.2 billion in 2016. Its digital spending amounts to a third of the total spend.

Reporting by Siddharth Cavale in Bengaluru; Editing by Arun Koyyur