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P & G Shifts Advertising Strategy

P&G Procter & Gamble
CBS
Procter & Gamble Inc., a major television advertiser for decades, is now focusing more on reaching specific consumer groups through direct mail, the Internet and other marketing alternatives.

"Television will remain a significant part of our advertising budget, but we are researching a variety of ways to reach consumers where they live, work and play," P&G spokeswoman Gretchen Briscoe said Thursday. "It's not so much the dollar amounts involved, but the way we are approaching the market."

Briscoe pointed to P&G's new Physique hair-care line as an example of the new approach.

The company introduced the line earlier this year by promoting specifically to the product's target audience—women in their late teens to early 30s.

The brand's logo of a male and female silhouette was put on coasters and glasses in bars near college campuses, and P&G mailed out 500,000 samples. It also created a Web site that offered a free bottle of the shampoo to consumers who e-mailed the link to 10 friends.

"Our marketing has been very successful, and Physique is already one of top 10 hair-care brands on the market," said Briscoe.

She admits the approach might not work with all of the company's products—which include Tide laundry detergent and Crest toothpaste—but says each brand makes its own marketing decisions.

Gary Stibel, founder of the Westport, Conn.-based New England Consulting Group, said P&G's "micro-marketing" approach of focusing on subgroups within the market is the wave of the future.

"P&G always has been at the forefront of marketing, and is arguably the most sophisticated marketer on the planet," he said. "They have understood that you can't walk away from broadcast, but relying on it solely means that you miss a huge audience."

P&G also is changing the way its advertising agencies are compensated. Beginning this month, P&G is paying its agencies based on the sales growth performance of the brands they promote.

Traditionally, agencies received a 15 percent commission for every advertising dollar spent. That meant agencies relied primarily on TV, where ads were more expensive.

The Cincinnati-based company, which has $38 billion in annual worldwide sales, also has vowed not to cut its total advertising spending and to control operating costs in the wake of a disappointing series of earnings reports and the resignation of top
executive Durk Jager.

The company has had problems recently with its TV advertising. P&G has ceased running ads on two racy MTV programs after a meeting with conservative Christian leader James Dobson, founder of the Focus on the Family ministry in Colorado Spring.

The company stood by an earlier decision to pull advertising from the upcoming television talk show "Dr. Laura," hosted by conservative radio commentator Dr. Laura Schlessinger, because of protests by homosexuls.