Facebook Flops After World's Largest Advertiser Questions Ad Effectiveness

Facebook tumbled in midday trading after WSJ reported Procter & Gamble - the biggest advertising spender in the world - will move away from advertising on Facebook that targets specific consumers after deciding the practice has limited effectiveness.

Facebook has spent years developing its ability to zero in on consumers based on demographics, shopping habits and life milestones. P&G, the maker of Tide and Pampers, initially jumped at the opportunity to market directly to subsets of shoppers, from expectant mothers to first-time homeowners.

 

Marc Pritchard, P&G’s chief marketing officer, said the company has realized it took the strategy too far.

 

“We targeted too much and we went too narrow,” he said in an interview, “and now we’re looking at: What is the best way to get the most reach but also the right precision?”

 

...

 

Cincinnati-based P&G spent approximately $8.3 billion on advertising globally in the year that ended June 2015, down 8% from the previous year, according to company filings. P&G said it increased ad spending by 1% in its most recent fiscal year and plans to increase it around 5% for the year that started July 1.

 

P&G’s push to find broader reach with its advertising is also evident in the company’s recent increases in television spending. Toward the end of last year P&G began moving more money back into television, according to people familiar with the matter. During the first quarter of 2016, the company’s ad spending jumped 11% to $429 million from the year earlier, Kantar Media said.

The first two tumbles weighed stocks down but once the machines got hold of the headline and crashed Facebook, the broad indices shrugged...

 

For now it seems the machines are buying it back.