Question

1-For what reasons is P&G choosing to move away from Facebook's targeted ads?

2-Describe the type of calculations you would recommend that P&G and other advertisers to use to evaluate whether to use targeted ads or ads that reach a broad audience.

3-What criteria would you recommend that advertisers consider in determining whether to run targeted ads or ads with a broad reach?

Answer 1

The answer to Q. 1) P&G’s Reasons for moving away from Facebook’s targeted ads:

Advertising cost for targeting ads at a precise group of customers has resulted in higher CPMs (Cost Per thousand impressions). To advertise 1.7 billion Facebook users, P&G spent $6.2 Billion in the last quarter of 2016. After spending the huge amount for target advertising P&G had an 8% sales drop for the financial year 2015-16. This demonstrations lower return on investments for advertising and marketing. As higher CPM decreases the company’s rank in Media Mix Modeling results. Media Mix Modeling is a method to attribute the sales and other outcomes to different media investment. The bottom line is even after spending a huge amount in advertising, P&G did not see any favorable results on sales, so it chose to move away from Facebook’s targeted ads.

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The answer to 2) Types of calculations for evaluation:

When it comes to advertising the product to the audience, it depends upon the response of the customer. According to an Associate Director of social media, one can never guess how the customer will respond in appoint of time. To evaluate the efficiency of advertising, P&G and other advertisers should use the tools like ROI, MMM methods. Moreover, it highly depends on the sector your products are. For example, an automobile manufacturer would have a different approach than FMCG producers. For P&G, it is important that its products are visible more often to the customers, whether in the supermarket or in media. Basically, more customers should be targeted at fewer costs will benefit.

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The answer to 3) Recommendations to determine the reach of ads:

As per my view, the following criteria would worth considering while determining whether to run targeted ads or ads with a broad reach.

1. Customers the company serve: The group of customers, the age of the customers and income group of the customers must be considered. For example, BMW should run a targeted ad, as the potential customer will not be in a broad audience. P&G should target a broad audience as it has a wide range of products for a little one to the older one.

2. Use of the product: How frequently the product is used and will be reused, should also be considered. For P&G and other FMCG, product companies need returning customers within a shorter period of time, whereas BMW owners will purchase the products after a comparatively long time.

3. Audience Profession: As FMCG products are bought mostly for personal care, hygiene, cleansing, and other family needs. These products mostly bought as the need occurs and one dedicated family member, who stays at home. These family members comparatively less active on social media, and make decisions on the basis of price and quantity. So targeting a broad audience serves the purpose.

Hope this will help.