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January 31, 2012

Procter and Gamble To Fire 1600 ,Over Facebook Ads





Procter and Gamble  has done one thing amazingly well since the 2008 financial crisis: grow sales. But that growth has come at a price. The company spends nearly $10 billion on advertising -- that's billion and its ad budget is increasingly hurting the company's ability to return earnings per share to investors. P&G's ad budget has grown a lot faster than its sales have grown, according to P&G's annual report through June 2011:

The world's largest marketer, whose $10 billion annual ad budget has hurt the company's margins.P&G  has decided to  lay off 1,600 staffers, including marketers, as part of a cost-cutting exercise.Its CEO CEO Robert whose $10 billion annual ad budget has hurt the company's margins  has decided to cut flab  and would have to "moderate" his ad budget because Facebook and Google can be "more efficient" than the traditional media that usually eats the lion's share of P&G's ad budget.

This is coming from the man who increased P&G's adspend by a staggering 24 percent over the two years through October 2011, even though sales rose only 6 percent in the same period. Many expertis feel that P&G's Old Spice campaign is a textbook example of what the entire company should be doing. The problem is that the entire company isn't doing it.

Procter and Gamble  Sales vs Advertising Spends Numbers

2011 Sales: $82.6 billion
Ads: $9.3 billion
Ads as a portion of sales: 11.3%


2010 Sales: $78.9 billion
Ads: $8.6 billion
Ads as a portion of sales: 10.9%


2009 Sales: $76,694
Ads: $7.5billion
Ads as a portion of sales: 9.8%