P&G's Pritchard Calls for Digital to Grow Up, Clean Up
Photo: Marc Pritchard speaks at the IAB Annual Leadership Meeting. Credit: IAB
Procter & Gamble Co., the nation's and world's biggest advertiser, is laying down the law for digital media players and agencies in a five-point program that will take effect this year as outlined by Chief Brand Officer Marc Pritchard on Sunday evening at the Interactive Advertising Bureau's Annual Leadership Meeting in Hollywood, Fla.
"The days of giving digital a pass are over," Mr. Pritchard said, urging the rest of the ad industry to follow P&G"s lead. "It's time to grow up. It's time for action."
The heavily influential marketer's program includes a thorough review of all media-agency contracts after the company found a surprise in its dealings with at least one agency, plus requirements that everyone use industry-standard viewability metrics, fraud protection and third-party verification.
And to enforce all of those steps, Mr. Pritchard said the company has vowed to no longer pay for any digital media, ad tech companies, agencies or other suppliers for services that don't comply with its new rules.
"We've given them plenty of notice," he said, according to transcript of his prepared remarks that was provided by P&G. "More than a full year for many." P&G doesn't "want to waste time and money on a crappy media supply chain," he said. And he urged others in the industry to follow suit. "Don't accept the excuses," he said. "Don't wait for someone else to move. …There is tremendous power in the collective force of our industry."
Contract confusion
Problems in what he called the "media supply chain" may help explain why the U.S. has anemic economic growth despite $200 billion in annual ad spending, including $72 billion on digital, Mr. Pritchard said. The IAB is 21 years old now, he noted, and digital collectively gets more money than TV.
Mr. Pritchard has been relatively sanguine publicly about his own media agencies' transparency practices, despite a wild industry debate since former Mediacom CEO Jon Mandel nearly two years ago leveled blistering accusations of undisclosed incentives to media rebates. But on Sunday he acknowledged that P&G encountered some unexpected findings as it dug into the matter.
"Not long ago, we discovered one of our agencies was using media money as float," Mr. Pritchard said, according to the transcript. "We were incensed -- they're supposed to be an agent. How could they use this money as 'principal?'" A spokeswoman declined to provide details on the agency or media involved.
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New rules
"So we are now poring over every agency contract for full transparency by the end of 2017 to include terms requiring funds to be used for media payment only, all rebates to be disclosed and returned, and all transactions subject to audit," he said, according to the transcript of his prepared remarks. "We've had some surprises. It's taking time to complete, and we're often using outside counsel." At the same time, P&G is re-examining its media-agency fee structure "to make sure we're paying appropriately for services rendered," he said. "When we asked why the agency used the money for float, they said, 'Your fee doesn't cover our expenses.' Another humbling moment. 'Oh, I didn't realize that.' Having unprofitable agencies is not good business, and can lead to practices we don't want, so we're taking a closer look at matching fees to services."
Mr. Pritchard also said P&G is fully endorsing the often controversial Media Rating Council viewability standards for digital media -- which defines display ad impressions as "viewable" if at least 50% of pixels are on-screen for at least one second and video as viewable if at least 50% of the player is on-screen for at least two seconds.
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