Procter & Gamble, the largest ad spender in the world, is cutting down on its targeted Facebook ads, according to The Wall Street Journal.
The reason: The company decided the ads weren’t effective.
Facebook stock fell immediately following the news but is trading at about even for the day.
“We targeted too much and we went too narrow,” Marc Pritchard, P&G’s chief marketing officer, told The Journal. “And now we’re looking at: What is the best way to get the most reach but also the right precision?”
One example cited by The Journal explains P&G’s position well. Two years ago the company tried targeting Facebook ads for its Febreze air freshener at “pet owners and households with large families.” Sales for Febreze “stagnated” during the campaign but went up when P&G opened it up to everyone over 18 years old.
This doesn’t mean P&G will cut back on Facebook spending generally, however, and it will still use targeted ads at points. But the implications about the effectiveness of targeted ads for big brands might trouble Facebook, which snagged $17.08 billion in ad revenue last year.
Facebook’s ability to precisely target ads based on its large swaths of user data has been its main differentiator for almost a decade.
Facebook provided the following comment to Business Insider:
“Our partnership with P&G grows every year in service of effective and efficient advertising. We learn from each other and iterate. That has always been the spirit of how we work together and challenge one another. The cornerstone of our ad strategy is a mix of mass reach and personalised targeting that lends well to mobile consumption and is a strong complement to TV. Our clients tell us this strategy works because we can deliver relevant marketing to the right audiences, with unprecedented scale. It enables partners like P&G to drive the business metrics they care about.
“We see targeting success across the CPG category — for example, campaigns reaching audiences like ‘households with dishwashers’ or ‘non-chocolate candy buyers’ that drive awareness and sales. We believe that when brands are focused on the right metrics — ROI versus proxies like cost, we can most effectively help businesses grow.”
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