NewCo Shift Forum 2018
The Biggest Voice In Advertising Finds Its Purpose
The Chief Brand Officer of P&G on Facebook, Google, and bringing true diversity to marketing.
It isn’t easy being the CMO of any massive business — tenure is short, the demand for growth from Wall Street is relentless, and your budget is often the first to be cut. But that budget is also expected to drive that growth — an often contradictory challenge. Marc Pritchard, the Chief Brand Office of P&G, has been a CMO for more than ten years — so he must be doing something right. At the Shift Forum earlier this year, Pritchard explained his strategy for managing through significant disruption. When he started in his current role, Facebook was a tiny player, Twitter was a toy, and YouTube had no ad model.
What a difference a decade can make. In the transcript and video below, hear Pritchard on the Facebook/Google duopoly, the role of marketing as a change agent in society, and how he navigated a bruising proxy fight with a renown Wall Street raider.
John Battelle: Procter & Gamble started 180 years ago. And you are one of the most tenured CMOs in business. What is it now? 11 years?
Marc Pritchard: 10 years. The half-life for a CMO is about 18 months.
Right. Most CMOs are out in two years. You’ve been there five times longer than that, so you’re doing something right. I want to start with how your job has changed. You have the largest budget in advertising. How did you spend that money 10 years ago, compared to now?
The job has changed completely. The best question may be, “How hasn’t it changed?” [Ten years ago] We spent maybe two percent of our $10 billion budget on some form of digital, which was mostly search. The majority of my time was spent on the other coast, talking with Madison Avenue.
In New York?
In New York. Now, we spend, on average, about a third of our money on digital. That average is even misleading, because in some countries, it’s 30 percent. Some countries, it’s 50 percent. Places like China, it’s 70 percent. China flipped overnight.
In China, it’s 70 percent?
More than double spent digitally, compared to your average?
Yes, it’s 70 percent of our spending is in digital in some form. 25 percent of our business is in e-commerce over in China. We have a four-and-a-half billion dollar e-commerce business. It was zero back then. It’s completely changed. Moore’s laws doubled computing power every 18 months. My job has changed every 18 months, literally.
I remember 2008, [P&G director of innovation] Stan Joosten, who’s in the audience here, and I came out and visited Facebook. I don’t even remember where there office was. It was a tiny little office…
Yeah, University. Mark was on the end of the conference table. [COO] Sheryl Sandberg wasn’t there. [VP Marketing] Carolyn Everson wasn’t there. Mark didn’t say a word. They had a hundred million users. Two years later they had 250 million. I called Sheryl and I said, “You guys are starting to get really interesting now.” And now look at them.
They’re really interesting now.
They’re very interesting in a lot of different ways. I know you’ve had a lot of discussions about that during this time frame. I would say what also happened to a large extent with Google, YouTube, Facebook, Twitter. Along with many others, we created the entire digital media ecosystem in the past ten years.
Part of that 10-year journey and those calls to people like Sheryl, to Twitter or Google, was you’re asking them to help you do what you need to do in your business, within theirs. Essentially helping them invent their business model, if I can be as bold to say that.
Absolutely, because when we first worked with them they were platforms for communication with people. They had no advertising business. We essentially worked with Facebook to figure out how to place media, how to do reach and frequency, within Facebook.
YouTube came along, and we thought this could be interesting. Not sure where it’s going to go, [but we] ended up monetizing it. What’s interesting about that is that [the founders of Facebook and YouTube] didn’t build these platforms for advertising. Some of the challenges that they’ve had recently, I think, have been because they were built for another purpose. Whereas other media companies, the TV and the radio, they started off and they built advertising in.
I want to pull back from the last day and a half. In the press and in the conversation culturally about business, there’s been this Larry Fink moment. The Blackrock CEO called for companies have to have a social purpose. That call only came out last month. But this is not a new idea. Everyone is already doing CSR, ESG reporting, yada, yada. But this feels different. Has it been different at your level, at the board level, the C-suite level? In the last year or so have you felt a shift, sorry to use that word, but have you felt a significant difference in how you think about engaging with — what is it, a billion customers a day?
No, five billion.
I was off times five!
Because we make everyday products like shampoo and toothpaste and toilet paper and paper towels and that kind of stuff, they’re daily use products.
The shift though, interestingly enough, 10 years ago we went down a purpose path. When I first started my job we had purpose-inspired, benefit-driven brands. What was interesting about that though, is that it was too disconnected from our business. Over the course of the last few years what we’ve done is we’ve gone back in at it, we’ve really become a citizenship platform. We’re building social responsibility into the business. It includes gender equality, community impact and environmental sustainability based on a foundation of ethics and responsibility.
I’m curious how you actually build that in in terms of how you do your job?
We focus on using our voice in advertising as the world’s largest advertiser as a force for good and a force for growth.
You have the largest voice in the world.
Right. We felt that as a result of that, as a consequence, since people are affected by advertising every day and the images that come through advertising every day, we have a responsibility to ensure that those images represent equality in terms of gender, equality in terms of race, diversity and inclusion throughout every type of person.
Also to focus on eradicating bias. Because if we get — and this back to why it’s a force for growth — if you get equality, you end up making the world a better place, and you end up making economics better.
Just take pay equality in and of itself, the fact that women are paid 20 percent less. Blacks are paid 39 percent less, Hispanics 43 percent less, Asians still like 23 percent less. If you just get equal pay, it will add 28 to 30 trillion dollars to the economy. That’s a force for growth. Our advertising affects how people see others …
I don’t want to put you on the spot, but we do have an example of this…we can’t bring up the CMO of P&G without showing an ad or two
Can we roll it?
That gets me, I’ll admit. If you’re cynical, you’re just pulling my heartstrings. Well done. I don’t know that could have gotten made five years ago.
I don’t think it maybe would have not have had the same impact five years ago. We made a deliberate choice a year ago that we were going to use our voice in the Olympics to address bias because of what was happening in society.
The divisiveness that was occurring, we felt that it was time for us to step up and use our voice and it’s had a great impact.
I don’t know whether sales went up because of it, but you’ve had a lot of experience in this …
People prefer advertising like this. When they can see themselves, when they can see a positive portrayal, then we actually have found that it’s better for business. It’s smart, a force for growth and a force for good.
Again, let me play the Wall Street raider: That’s happy talk, great. Cut all that stuff out. Let’s increase profits, cut costs, do things my way. You just went through a bruising activist shareholder battle which you lost by, I think, a smaller margin than Trump won. Literally, it was that close and now you’ve got a board member who came from Trian, Nelson Peltz. Has that changed the culture of the company? Has that diminished the commitment to doing work like this?
No, I think if anything what it’s done, it’s firmed our resolve as to what our business model is about and what we need to do better. When someone comes in and wants you to do better and puts you on the public stage for six months, you step-up your game.
And all investors including all the people on our board want to focus on environmental sustainability. It’s back to the point of what you said with Larry Fink. That’s a statement from investors indicating that this is important.
That’s some six trillion dollar air cover there (BlackRock’s investment holdings).
Yeah and the thing about it is what you have to do is build in doing good to your business model. If it’s disconnected from your business model, then it’s not sustainable. That’s I think the key point.
What we have found is that why can we use our voice in advertising to promote equality? Why do we focus on taking more, using recycled beach plastic in order to make our Head & Shoulders bottles and our Dawn bottles. We do that because it is better for our business as well as being better for the world.
So you can defend it to the activists…
Exactly and it’s sustainable. Otherwise it’s not sustainable. Otherwise to your point, it’s happy talk, it doesn’t lead to anything and no investor’s going to like that.
Now let’s get to what has been termed “the duopoly.” Some would say you are the enabler of the duopoly, with the hundreds of millions of dollars you spend across Google and Facebook, but given that, as we’ve said before, that you often have the conversations with these companies well before the public is aware of the changes that might be coming.
In other words, you knew the business models of these businesses well before the public did. So what are you talking with them about right now?
Two years ago I was out here talking to them about transparency. Just ensuring that we got the information, the data so we could make good business decisions and that it was no longer OK to hide behind a walled garden. A year ago because not enough progress was made, I publicly went out and made a statement that said this needs to change.
Just so you know, Marc shocked the ad world by declaring that the digital supply chain of media was a vast wasteland and needed to be cleaned up.
Yeah and I will say, they’ve stepped up. They stepped up to give us the transparency, the data, the third party data that we needed so it was an objective assessment. They also stepped up on brand safety — as you may recall YouTube and Facebook were having some ads show up in objectionable content. We said, “Look, we have zero tolerance for that. We can’t have our ads or brands associate with objectionable content like a terrorist video.”
They stepped up. They did a lot of work to get control of their platforms. We did tests with them to figure out how we can get to a safe place to advertise. I feel like we’re 90 percent of the way where we need to be.
They get hammered a lot, but I will say they have done a lot of good work over the last year.
Is it possible we haven’t seen all of that good work? You seem a bit more optimistic than everyone else who’s been on this stage.
I know that. I know and maybe it’s a bit of a contrarian view, but that’s because I’ve worked with them very closely over the course of the past year.
I now have transparent data that will help us make better decisions. I now know that there are places that we can safely put our advertising.
I also know, and I just spent yesterday talking to them about it, all the things that they’re trying to do to make sure that their platform will be on the right side of history when it comes to being good for the world.
I’m pleased to hear that. I’m interested in the details.
But these things take time. They take time. It still remains to be seen. There’s still going to be work that’s coming. I’m sure it’ll still be a much better story to be against what they’re doing, but in this case I want them to do better and I think they’re working on it.
Now that doesn’t mean that we didn’t vote with our dollars …
Indeed you did. Perhaps you should get credit for what Keith Weed, your counterpart at Unilever, just announced. Unilever is also a massive advertiser and a significant competitor. Two weeks ago Weed threatened to pull money from social media platforms if they were not contributing positive social value. A year ago you actually pulled all of your money off of YouTube.
I’ve pointed out that when you pull $100 million from YouTube, there are a million people happy to give YouTube $100 who will take your place. The long tale of advertiser for this platforms is such that you don’t have the power that you used to have over, say network television.
So how do you use your soft power?
What I think people respond to, the business world responds to, the media responds to, everybody responds to is doing the right thing. When we called them out and said they need to be transparent.
They need to make sure to take objectionable content off, they need to make sure that they let us advertise in safe places and there are consequences if they don’t do that, then I think people step up appropriately.
I think that’s whatever you want to call it, but…One, it’s common sense and second, it’s just the right thing to do.
At the end of the day though, John, you’re absolutely correct. There are millions of advertisers on there. What this has caused us to do is to recognize that there’s only so much they can do or we’ll do. Therefore, we need to take control of our own destiny. We’re the ones that need to decide.
What I said to those companies then is that, for example, on YouTube [many] want to express freedom of speech. There may be some things on there that we don’t think are right. That doesn’t mean I’ll advertise on it. That’s my choice.
That’s what I think a lot more companies need to do is they need to take control of what they’re doing, recognize that they’ll have some impact on those companies. Largely, I think what’s going to make the bigger difference is going to be their own consumers, their own customers. It’s going to be the other advertisers rising up and saying, “We think this is not acceptable.”
I want to shift a little bit to a question I’ve asked Kevin Johnson from Starbucks and others, which is how you handle change inside the company. That was one of Trian’s criticisms — that you’re not a handling innovation quickly enough.
In full disclosure, I’ve worked with you to do events focused on this. The only difference in the event is that it happens in Cincinnati, in your hometown. It’s called Signal. You’ve moved now a whole innovation process and a platform at P&G called Signal. Next, we’ve got three great speakers, rapid fire talks highlighting innovation, who are going to be examples of that kind of thinking that you bring into the company.
Some of the people coming up next are partners of ours. For example, Jana Eggers of NaraLogics. We applied her AI engine to what’s called Olay Skin Advisor. I have to tell you our company has gone through a lot of changes in the last couple of years. The next few years will be some of the most significant transformation that our company has ever seen. And we will see a complete disruption of mass marketing as we know it in the next 18 months.
Three more P&G Signal talks will be published shortly: