World’s Biggest Advertiser Rethinks Facebook Strategy

SMITH BRAIN TRUST — Facebook might know more about you than Big Brother, which makes it easy for the social media giant to steer advertisers toward likely customers. But Procter & Gamble, the world’s biggest advertising spender, isn’t sure the targeted approach works for all of its household and personal care products. The owner of Crest, Gillette, Downy and other popular brands announced plans this week to move away from narrowly focused ads on Facebook and other sites.

Smaller companies pay attention when P&G speaks. Smith professor Wendy W. Moe, director of the school’s Master of Science in Marketing Analytics program, says any firm looking at its online strategy needs to consider three factors in the age of big data.

Now v. later

First, companies need to remember that ads serve multiple purposes. Coupons, promotional codes and other calls to action drive immediate purchases. But companies also need long-term branding. “The problem with online advertising is that they’re over-focused on the call to action, while not paying enough attention to the long-term brand building,” Moe says.

That’s partially a function of how metrics are monitored and how advertising rates are determined online. “They’re mostly pay-per-click as opposed to looking at whether the consumer ultimately comes back and  buys something,” says Moe, author of “Social Media Intelligence” (Cambridge University Press, 2014).

Product category

Second, companies need to consider what they sell. “If online advertising is focused on the immediate click, that doesn’t make sense for a lot of product categories,” Moe says. “Something like toothpaste, for example. You’re not going to click on an ad for toothpaste and say, ‘Send me a tube.’”

Moe says the pay-per-click metric makes more sense for bulkier or more expensive items. For P&G that might mean investing more heavily in online ads for Luvs or Pampers diapers than something like Dawn dish soap.

Zoom level

Third, companies need to consider how much they zoom in on demographic data. Many online advertising algorithms target customers who already have shown interest in a product — or they narrowly slice the data to deliver maximum efficiency. “That builds your customer base deep,” Moe says. “But it doesn’t bring in new people.”

P&G already has learned that zooming out to reach a broader audience can work better for some types of products. Two years ago, the company tried targeting ads for Febreze air freshener to pet owners and parents with large families. “The brand found that sales stagnated during the effort, but they rose when the campaign on Facebook and elsewhere was expanded last March to include anyone over 18,” the Wall Street Journal reports.

Moe says targeted online advertising still has value for the right products in the right places, but Facebook and other social media sites must continue to listen to firms like P&G. “Many of these targeting algorithms track metrics based on clicks, but firms care about ultimate sales metrics,” she says. “I was out at Facebook a couple of weeks ago, and it sounds like they’re moving in that direction — toward tracking long-term customer value metrics.”