P&G Scales Back Targeting For Reach: And Now The Rest Of The Story

The Wall Street Journal recently reported on changes that P&G is making to its Facebook advertising strategy.

The highlight that many in radio have grabbed onto is that the world's largest advertiser is scaling back on targeted ads in exchange for more reach.

Radio regularly promotes itself as the largest reach medium in America, so you can imagine the high fives in the hallways and people proclaiming, "Reach is back, baby."

However, in the immortal words of Paul Harvey: "And now the rest of the story."

While Marc Pritchard, P&G's Chief Marketing Officer makes the point, "We targeted too much, and we went too narrow," he continues, "and now we're looking at: What is the best way to get the most reach but also the right precision?"

According to Peter Daboll, chief executive of Ace Metrix, which tests ads for effectiveness and works with Facebook, "The bigger your brand, the more you need broad reach and less targeted media." However the article continues, "Targeting is paramount for advertisers trying to get users to download a game app or a small business trying to appeal to local customers."

Most radio advertisers aren't billion-dollar brands. They are small local businesses that thrive when ad platforms deliver their message to enough of the right target customers ... that's the power of local radio.

Takeaway #1: P&G wants the "right precision"

Despite radio actively promoting itself as the largest reach medium, that's not our best strength. Unless a client is buying ads in the same quarter-hour across every rated station in a market (along with appropriate frequency), you don't have true reach.

Instead, local advertisers have great results buying a handful of stations with a combined share of just 15-20% of the market, which means that 80-85% of the radio listeners will never hear the ad. Radio offers the "right precision" and best of all, the target audience the advertiser is reaching is employed with money to spend.

Meanwhile, how's our continued focus on reach doing in terms of driving revenue growth?

Last year, while radio was down slightly year over year, Facebook's ad revenue was up 49% and hit $17 billion. In 2016, Q1/Q2 revenue for FB surpassed $11.7 billion, well on the way to $20-$25 billion for the year.

Takeaway #2: Despite disappointing ROI, P&G isn't cutting back on Facebook, they are investing in it.

How many times have radio sellers been told by a prospective local advertiser, "I tried radio and it didn't work." In reality, the campaign was likely underfunded with a bad schedule, not to mention copy that was written by the customer.

Following a campaign, the first question to a client shouldn't be, "Do you want to run the same schedule again?" Instead, the question should involve understanding if the investment surpassed the agreed upon business objectives.

In addition, we know artists love hearing their song on the radio, how about your advertisers? Surprise and delight them with an MP3 file featuring the last few seconds of a great song, a DJ interacting with a winner, followed by the client's ad in the first position of the break. Making the investment aspirational and something they want to talk about, not a race to the bottom for the lowest rates.

"Business owners want today the same thing they have always wanted when it comes to marketing and advertising, they want it to work. They want to see sales increase or leads increase, they want a return on their investment. Salespeople who are focused on helping business to achieve that ROI will become more and more valuable," according to Matt Sunshine, Managing Partner at The Center for Sales Strategy.

On the programming side, despite the universal recognition of ratings volatility, programmers are not often given the freedom to develop and optimize station marketing. The funding gets pulled and allocated elsewhere, even after it works. Worst of all, programming jobs are lost as the search for the mythical magical bullet continues in earnest.

In the WSJ article, "A Facebook spokeswoman said its partnership with P&G "grows every year" and the two companies learn from one another. "That has always been the spirit of how we work together and challenge one another," she said.

External collaboration and consistency are keys for both sellers and programmers.

Insight #3: Winning brands invest in themselves

The article discusses the merits of reaching one million people compared to 5,000 people with a more targeted ad. This conversation is built upon a premise of consistent advertising budgets and execution ... it's what winning brands do.

While radio knows its best customers consistently run schedules, as an industry we aren't practicing what we preach. With budget season about to begin in earnest, how many groups will make funding station marketing a priority in 2017?

Radio's lack of consistent investment in marketing is taking place at the exact time when mobile usage of other audio platforms is exploding and there is more competition for both audiences and advertisers.

Not to mention the elephant in the room -- driverless cars. Ford has just announced Error! Hyperlink reference not valid. by 2021. Uber has already accelerated the timeline by rolling out driverless vehicles this month in Pittsburgh.

Going back to the earliest days of Marconi, radio has continued to face emerging threats and new competition. Today is no different. Tomorrow, the pace will likely quicken.

As an industry, we already have our running shoes on. Now's the time to lace them up a little tighter.