A consumer goods giant selling widely-used products such as detergent, razors, soap and toothpaste is less interested in buying ads that specifically target one niche demographic group or another than in reaching as many people as possible. That's ultimately good news for Facebook(FB) - Get Report and Alphabet (GOOGL) - Get Report, and potentially a problem for Twitter (TWTR) - Get Report and other sites and platforms with less scale.
A Tuesday Wall Street Journal article about Procter & Gamble's (PG) - Get Report Facebook ad plans raised some eyebrows by stating that P&G, which spent $7.2 billion (11% of its revenue) in the fiscal year ending in June on ads, will pare back its use of Facebook ad-buying tools that allow marketers to specifically target groups of users based on information such as age, gender, location, profession and the products and brands a user is known to like.
However, P&G isn't reducing its total Facebook ad spend -- Facebook says its partnership with the conglomerate "grows every year" -- and will instead revamp its strategy for how it will promote its products on the world's biggest social network. P&G marketing chief Marc Pritchard: "We targeted too much, and we went too narrow, and now we're looking at: What is the best way to get the most reach but also the right precision?"
He adds P&G will still use targeting when it makes sense, such as showing diaper ads to expectant mothers, and that it's smaller websites that lack the reach of Facebook, Google Search or Google-owned YouTube -- all three claim over a billion monthly active users (MAUs) -- that will see less spending.
That could be a negative for Twitter (TWTR) - Get Report, which claimed 313 million MAUs as of June and has partly blamed its slumping ad sales growth on weak brand ad demand and "increased competition for social marketing budgets." Twitter's ad revenue rose only 18% annually in the second quarter to $535 million, and the company has guided for total revenue to rise just 4% to 7% in the third quarter. Facebook's ad revenue rose 63% in Q2 to $6.24 billion.
The upshot of the WSJ column, arguably is that online brand advertising is starting to look a lot like TV brand advertising: For some brands, nothing matters more the ability of a platform to get a ton of people covering many demographics to learn about, remember and hopefully talk about a brand's products.
An estimated 111.9 million Americans watched Super Bowl 50 this year, and advertisers such as Coca-Cola, Pepsi, Honda, Amazon, Colgate and PayPal paid about $5 million per 30 seconds of airtime. These advertisers weren't looking to just show ads to, say, men aged 35-49 earning more than $75,000 per year. They wanted to show them to every demographic, or close to it.
The same applies for big brands looking to reach the 1.71 billion MAUs Facebook claimed as of June (not counting Instagram or WhatsApp users not using core Facebook), or even just the 226 million MAUs Facebook had in the U.S. and Canada. And as mentioned by COO Sheryl Sandberg during Facebook's second-quarter earnings call, immersive Facebook ad formats such as news feed video ads, Instagram photo and video ads, and Canvas ads lend themselves well to brand advertising.
This doesn't change the fact that there are many marketers for whom the advanced targeting tools Facebook has developed, such as Custom Audiences, Lookalike Audiences or Detailed Targeting could be quite useful. A mobile action game developer, a Congressman up for re-election or a local yoga studio owner will probably want to use those tools to carefully select which users see an ad. Just today, Facebook rolled out tools that allow video publishers (advertisers included) to break out the percentage of minutes viewed by age, gender and location-based demographic groups, and how engaged those groups are at different parts of a video.
Those tools may be overkill for many of P&G's brands, for whom a more simple and blunt marketing strategy can be more effective. Fortunately for Facebook, the size of its user base can make it a good partner for those kinds of ad-buyers as well.