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P & G Still TVs best friend?

Procter & Gamble, the Cincinnati-based package-goods giant, has been one of TV's biggest sponsors over the years. In 1999, it was the second-largest TV advertiser, behind General Motors.

But in the past three years, P & G's TV spending has slipped about 16%, or roughly $200 million, to approximately $1.1 billion, according to estimates compiled by Competitive Media Reporting, the New York City ad tracker. In the same period, the company's spending in the national spot market has dropped 50%. Meanwhile, the company's print spending is up.

In the following interview with Broadcasting & Cable Deputy Editor Steve McClellan, P & G's Global Marketing Officer Robert Wehling discusses the reasoning behind the spending trends. The good news is, Wehling says, TV will continue to play a big part in P & G's advertising plans. But just how big remains unclear. The P & G marketing chief also talks about the impact of the Internet and interactive TV on the company's marketing strategy, its advertising content guidelines, programming joint ventures and efforts to bring more family-friendly programming to the small screen.

Does TV advertising work?

Television advertising works if the product is great. That is, if it's superior and differentiated from its competition, and it's meeting a consumer need, and if the advertising copy is persuasive and presents the product to the consumer in a way so that, when the consumer buys it and tries it, it meets or exceeds their expectations.

But how do you really know it's the advertising that drives sales?

I know it from almost 40 years of experience. I've been through a lot of trial-and-error learning in this company. But I've seen enough examples, that I've personally been involved with and that I've witnessed where the right advertising-all of a sudden-produces a dramatic result.

Give me an example.

I'll give you a recent example. We've been running for years this advertising on Folgers coffee: "The best part of waking up is Folgers in your cup." Recently, the agency came up with two new TV spots in that advertising. One was with a singing group, and one was an Irish dancing class. Those two commercials, from the day they went on the air, lit up our 800-line. We got comments on the Internet, and we got letters. People were calling up and saying things like, 'I love them better than the programs that they're in.' Within three months or so after-when those two commercials went on television-our share was up by five points. That's a dramatic increase in a tough category. Nothing else was different except those television commercials.

What's your biggest criticism of broadcast TV?

I think, in some cases, producers go for ratings on the basis of shock value and titillation and pandering to the lower, baser instincts of people. I don't have much sympathy for that. I understand what they are trying to do, and I keep trying to tell them ratings are not as much a function of shocking people or giving them gratuitous sex and violence. Most shows that have great ratings over a sustained period of time have them because they have great writing, great, compelling writing. When you have great writing, it doesn't need all of that edgy stuff.

Sounds like you probably don't do much advertising on The Jerry Springer Show.

No, we don't. We have very clear content guidelines, which most companies do. Ours are relatively simple. I think they are common sense. We like to keep our brands out of controversy. We just feel that a really controversial show is not a good environment for a brand message, because, by its very nature, it divides the audience into for and against.

Some people look at the soap operas you sponsor and see hypocrisy, or at least a double standard, in your advertising policy. How do you respond?

We started soap operas back in the early 1930s. And if you look at it over that long period of time, what the soap operas are more than anything else is simply holding a mirror up to society-saying look at yourself. This is what life is like at this time. Throughout their history, soap operas have portrayed the problems and issues that people are dealing with. We've portrayed the behavior that is commonplace in the society.

P & G's TV ad spending has declined over the past few years, particularly in the national spot category, where spending is down roughly 50% in the past three years.

I can't confirm the exact numbers, and I honestly don't follow them that closely. But I read the same overall estimates you do, and I respect them for what they are: trending.

TV executives wonder whether there is any correlation between P & G's recent earnings woes and the shift in strategy that they see away from TV to other media. How do you respond to that?

First of all, let me assure you that the "earnings woes" are simply one quarter changing markedly in the context of a fiscal year where profits are still going to be up significantly in a very difficult, competitive environment around the world. Our business is actually quite healthy.

Why the declines in TV spending recently?

It is true that, over the last few years, I'd say, more of our brands have rediscovered print, and print spending is up. Again, not because the company said do it. But because they found some targeted vehicles that really narrowly went to their prime prospects.

Why is P & G's print spending up in recent years?

Part of that, I think, is due to the print medium becoming more vital and more targeted. It's reaching hard to reach segments of the audience. Magazines like Teen People and Cosmo Girl are, I think, doing a terrific job of reaching young teen women, and that's a very important audience for several of our key brands. I would be shocked if our brands weren't taking advantage of that.

So targeting is very important and efficient.

Absolutely. That is the overwhelming reason why you're seeing more print on some of our brands. For some of our brands, the targeted print vehicles are made to order for them.

So what does this strategy say to broadcasters?

We have well over 200 brands, some of which are very narrowly targeted, some of which have very broad target audiences. Again, a Tide or a Crest, you want for brands like that the broadest-reach vehicles that you can find. And today that would generally be network and television and some of the top cable channels.

Why has spot spending decreased so significantly?

Part of the reason is, when we had a major new brand, we used to test it in one region and then roll it out. We might go to the West Coast and then the Midwest and then the South and then the Northeast over a two-year period. Now the emphasis is on speed, and we're much more likely to go national all at once rather than in a wave. In that environment, you need more network and large cable network and less local spots.

Will TV's role in P & G's ad mix be more or less important going forward?

I don't know. It will have a major role. It depends on a lot of factors, on how it develops, and I think it's also going to vary significantly by brand within a company like Procter & Gamble. Some of our brands will do a lot of their business on the Internet. Others will do very little. Some of them will rely heavily on targeted print and PR. Others much less so. Some of them will be almost solely television. I think it's going to be all over the lot. But clearly it's going to become more complicated.

Network ad salespeople say P & G and other package goods advertisers are more sensitive to price hikes in a world where online and other so-called "new economy" companies are spending money like water. Given the price hikes in recent years and the fact that there's no end in sight to the seller's market, is prime time worth the price of admission?

That's tough question to generalize about. Every media decision depends upon what other choices are available to you at that point in time. If, in a given year, the cost of prime time goes up 25% because of the dotcom demand, and a strong cable channel that is reaching the same general demographics only goes up 5%, you say to yourself, I could sprinkle commercials across that cable channel and cumulatively reach similar numbers-and I'll still have some left over to put into print and radio or whatever.

So it's an open question as to what role network TV will have in the mix going forward?

Sure, and it will vary significantly by brand. I'm convinced that we will have brands who will have a significant presence in network television as far into the future as I can see. And I think we have brands who are in network television today that may not be there five years from now. I think right now-today-network television is still the premiere broad-reach medium available to us. But is there a point in time out there when the combination of clutter and price increases will make it a less attractive option than other vehicles, even for those of us who are in love with broad-reach TV? Yes.

I've heard that at least one major cable network owner claims to have put a cap on your spending because it can sell the time at better rates to others. Is this a situation you confront a lot?

No. Remember, there're lots of cable channels out there. There're lots of different ways we can reach the consumer. And I would urge all the media to think long-term. Procter & Gamble is committed to advertising and a steady stream of product upgrades and new products over a long period of time.

Will the earnings shortfall and the drop in P & G's stock price impact your ad budget at all?

My comment there is, again, every brand's plans are unique. If you look at all of our brands over any long period of time, no matter what's happened to the stock price, you don't see a fundamental relationship between the media support on a given brand and P & G stock price-up or down.

Should we expect dramatic changes in the advertising process-how it's bought, sold, distributed? How viewers interact with it?

Well, we've undergone a rapid change over the last several years. The climate has changed dramatically in terms of what's available, how many channels, how do you buy it. We used to have each of our agencies buy from three networks, if you go back long enough. Now we have one agency of record for each medium, buying on behalf of all of our brands across dozens and dozens and dozens of network and cable channels and spot and everything else.

How is the Internet changing the ad business?

It's a wholly different climate because of the Internet and the ability to interact with your consumer and have a dialogue as opposed to a monologue. Change will be even more dramatic over the next several years with the things that are developing now: the convergence, widescreen television, screens within screens, and the ability to use a remote control and go from Frasier to and back.

Will the 30-second TV spot become obsolete at some point?

Well, I'm not sure it'll become obsolete. I think it's going to become less and less the standard means of communication every year. And that's because of the new opportunities we have today for a dialogue with the consumer as opposed to a one-way monologue. A commercial is essentially us digesting what the consumer has told us and feeding it back in a way that we think reflects what we heard.

But it's still a monologue.

Right. I think there are going to be more opportunities for consumer choice and dialogue. And I think even on a Tide commercial, in the future, the consumer will get to decide whether the Tide commercial they see, if they choose to see it, will be liquid, powder, with bleach, without bleach, some new version. And there'll be that opportunity to move commercials to households based on their needs and what they're receptive to.

Is today's monologue-centric way perhaps the biggest shortcoming of TV advertising? And will the interactivity address that problem?

To some degree, but, again, I think we're going to go through a long period of time in which there is a lot of variation. Interactivity of course, requires a consumer who wants an active relationship. I don't believe everybody wants that all the time. I know I don't. There are many times when I find it very relaxing to passively watch television and just enjoy it. And I don't want to act. I don't want to make decisions. But I think there's got to be opportunities over the next several years for both.

How concerned are you about personal video recorders? Essentially, they let viewers zap commercials more easily than ever.

That's true, and obviously we are following TiVo, Replay and PVR technology closely to see how it develops and learn how we can co-exist with it. But I'm convinced that we will always be able to reach our consumers with persuasive advertising messages, one way or another. It's just going to get harder.

What brands are best suited for Internet marketing strategies?

One example is Cover Girl. When a girl first starts using cosmetics, you'd like to have a robust Web site that she can go to that guides her every step of the way on how to deal with everything from skin cleansing to moisturizing. Another good example would be the feminine- protection category, to be able to go into an Always site and really learn all these different forms of products out there-tampons, pads and all that. Think of that vs. what I'll call previous times, when a lot of the selection in the store by women was trial and error.

How about interactive television? Have you gotten involved in tests with some of the cable MSOs on trying to create that dialogue with consumers?

Some of our brands are engaged as we speak.

What have you learned?

I think the basic thing we've learned is that it's not a panacea for all of our brands. There are brands that just have nothing to say, that really aren't compelling and newsworthy and worth the investment of time for that dialogue to occur. So what we have learned is it's not a one-size-fits-all. We've learned that you can't just take television copy or print copy and throw it on the Internet or broadband and expect to see people stand up and applaud.

How fruitful have your programming joint ventures with Paramount and Sony been?

I think they've been productive. First of all, keep in mind we've been in programming since 1932, continuously, with soap operas, with the early days of nighttime television. We've produced movies and miniseries, on a continuous basis over a long, long period of time. We just had a very successful movie, a couple of weeks ago, with Lou Gossett, called The Color of Love. So you need to put the Paramount and Columbia joint ventures in the context of this long and sustained programming tradition.

How have they done?

They have performed well for us. I don't think we hit a home run, because the environment changed so dramatically in so many ways since the point in time when we entered into the deals back in the mid '90s. The television landscape is different. The ownership structure of our partners is different.

What has been the biggest success to come from those ventures?

Sabrina has been a huge success for both of us [P & G and Paramount parent Viacom]. And two shows that have the same potential for becoming that kind of success are Becker and King of Queens. I think we've got a lot to be pleased with the relationships. But I'm not sure, if we all knew then what we know now, Paramount, Columbia or we would make the same deal.

How come?

It's a whole different environment today. But I think we did the right thing at the time.

Series are structured a little differently, right? You don't fully sponsor those?

No. We have the rights to commercials-at least a commercial-in most of the shows. But the reason for getting into those shows was that it was suggested to us that the opportunity for commercial television was going to be less in the future. We felt that, no matter how things changed, no matter how technology impacted the business, if you had some degree of ownership in programming, you'd be in a much better position to have some control of your destiny. And we still think that's true.

How much editorial control do you get?

None. We didn't want any. The only element of our deal with Paramount and Columbia that got into content at all was, in each case, we had a provision to opt out if we didn't feel it was within our content guidelines.

Have you opted out of some shows?

We have opted out of some. And some have done extremely well commercially. If we didn't have content guidelines, we would have done very, very well financially.

Such as?

Dawson's Creek. We had a real issue with Dawson's Creek because of the student-teacher sex issue. But that's been a huge commercial success.

Some questions about family-friendly programming. First, do you advocate stricter family-viewing regulatory guidelines?

No. In fact, a lot of people are taking issue with programming in one way or another. We've had a lot of groups complaining about what's on television that have asked us to join with them. Our thing is really not about regulation, and it's not about throwing stones at what's out there.

What is your thing?

What we're all about is doing what we can to create more choices for families or multigenerational households in the early-evening viewing hours. And we want to do it in a positive way, working with networks and studios, not against them. I believe that creativity is the answer. If we can help stimulate that creativity and reward it, over a period of time, we will be able to have a positive influence on that time period.

Have you seen any convincing evidence of a correlation between TV violence and violence in society?

No. I don't think you can blame violence in society primarily on or only on television violence. I think, when you have violence in a society, you have a lot of fundamental problems that deal with everything from parenting to education to opportunities as perceived by all segments of your population.

Is TV a factor?

Yes, it can be a factor. But it's one of many, many factors. I think it's irresponsible to single it out.

Your were a major force in starting the Family Friendly Programming Forum last year. Is it starting to pay off yet?

We funded eight scripts at The WB this season, and they asked for pilot presentations on four of them. Two are in pilot production now and are still under consideration for midseason next year or fall a year from now: Finally Home, with Melissa Gilbert, and The Gilmore Girls, a multigenerational drama.

This year, the Forum's script-funding project was exclusive to The WB. Will you expand it to other networks?

Two other networks have expressed a high level of interest. It just depends upon how many advertisers we get that really want to do it. We have 40 advertisers in the coalition now. Last year, we only had 12 that were fully involved with the script-development fund.

Once some of these shows get on the air, what is the Forum's involvement?

Once they get on the air, the only involvement we have, at least with The WB, is a first-look opportunity for advertising time.

Will you direct more advertising into these shows than into shows not initially funded by the Forum?

No. Keep in mind, again, P & G doesn't direct its brand advertising. I do what the brands want. But we have enough brands that want this kind of programming that will always be there when it's available.