Companies notorious for relying on expensive advertising campaigns are starting to realize the improved return on investment offered through digital media. Procter & Gamble, the largest marketer in the world, spends an average of $10 billion annually on its marketing efforts – and the large advertising budget has hurt the company profits resulting in a layoff of 1,600 staff. P&G increased advertising spending by 24 percent for two years leading up to October 2011 – while sales only rose 6 percent during that time period.
What Procter & Gamble Has Learned About Digital Marketing
Analysts are taking issue with the rising advertising costs of the company. The CEO of Procter & Gamble, Robert McDonald, has told Wall Street analysts that he would be moderating the advertising budget after discovering digital marketing channels like Facebook and Google are more efficient than their traditional media advertising. He was quoted in a BusinessInsider article as saying, “As we’ve said historically, the 9% to 11% range [for advertising as a percentage of sales] has been what we have spent. Actually, I believe that over time, we will see the increase in the cost of advertising moderate. There are just so many different media available today and we’re quickly moving more and more of our businesses into digital. And in that space, there are lots of different avenues available.”
Benefits of Digital Marketing
Before the 1990’s, most companies relied on television and radio for advertising. During the mid-1990’s, however, the way people communicate and share information was changed by the internet. It opened the doors for more targeted marketing efforts for business owners, helping businesses market their products and services directly to the people who are most likely to need them instead of just to anyone who happened to be watching tv or listening to the radio when the commercial aired. Websites and social media made it inexpensive to advertise in the digital world, offering a higher return on investment for this type of marketing activity.
The United States Census Bureau research shows that more than half of all United States residents are online; and more than 75% of all U.S adults have access to the internet. A staggering 89% of internet users are going to make a search online before they buy a product, even when they intend to buy that product from a local business. Pew Internet conducted a survey that found 92% of adults online use search engines to find information, and nearly 60% of them do it daily. Of the daily searches, 46% are for information about products and services.