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The Biggest Voice In Advertising Finds Its Purpose

The Biggest Voice In Advertising Finds Its Purpose

John Battelle: Up next, we’ve had an amazing
conversation. We’ve talked about the role of very large
corporations. We’ve said that they’re awesome and they’re
doing incredible things. We’ve said they’re the devil and they’re destroying
our society. I’m here to tell you that as someone who’s
worked literally tens of thousands of start-ups and hundreds of very large companies, I’ve
really enjoyed the work that I’ve done. I will absolutely put it out there that I
am a partner with Proctor & Gamble. They are earnest, they are honest, and they
own their mistakes. The man that has been my partner in that work
over almost a decade is coming to have a conversation with me right now. His name is Marc Pritchard and he runs the
largest advertising budget in the world. We can talk a little bit about that, as well. Please join me in welcoming the Chief Brand
Officer of P&G, Marc Pritchard. [applause] Marc Pritchard: John. JB: Thank you, your seat. Marc, I don’t know you. I know you were listening backstage for most
of the day. [laughs] I don’t know, I was wondering if
you were a bit…I was happy you came out. MP: What’s your point? [laughter] JB: Procter & Gamble started 180 years ago. You are one of, if not the most, tenured CMOs
in business. What is it now? 13 years? 11 years? MP: No. 10 years. The half-life is about 18 months. JB: Right. Most CMOs are out in two years. You’ve been there five times longer than that,
so you’re doing something right. I want to start with how your job has changed. We got a lot of issues to get into. I know you don’t talk about the number. I know that it has a B in it. How do you spend that money 10 years ago and
do your job then, compared to now? MP: The job has changed completely. The best question may be, “How hasn’t it changed?” We spent maybe two percent of our $10 billion
budget on some form of digital, which was mostly search. The majority of my time was spent on the other
coast, talking with Madison Avenue. JB: In New York? MP: In New York. Now, we spend, on average, about a third of
our money on digital. That average is even misleading, because in
some countries, it’s 30 percent. Some countries, it’s 50 percent. Places like China, it’s 70 percent. China flip overnight. JB: In China, it’s 70 percent? MP: 70 percent. JB: More than double what you spend on average? MP: Yes, it’s 70 percent of our spending is
in digital in some form. 25 percent of our business is in e-commerce
over in China. We have a four-and-a-half billion dollar e-commerce
business. It was zero back then. It’s completely changed. Moore’s laws doubled computing power every
18 months. My job has changed every 18 months, literally. I remember 2008, Stan Houston, who’s in the
audience here, and I came out and visited Facebook. I don’t even remember where there office was. If it was a tiny little office… JB: University Avenue. MP: Yeah, University. Mark was on the end of the conference table. Cheryl wasn’t there. Carolyn wasn’t there. Mark didn’t say a word. They had a hundred million users. Two years later they had 250 million. I called Cheryl and I said, “You guys are
starting to get really interesting now.” Now look at them. JB: They’re really interesting now. MP: They’re very interesting in a lot of different
ways. I know you’ve had a lot of discussions about
that during this time frame. I would say what also happened to a large
extent with Google, YouTube, Facebook, Twitter. We essentially, along with many others, created
the entire digital media ecosystem. It didn’t exist 10 years ago. JB: Part of that 10-year journey and those
calls to people like Cheryl, to Twitter or Google, was you’re asking them to help you
do what you need to do in your business within theirs. Essentially helping them invent their business
model, if I can be as bold to say that. MP: Absolutely, because when we first worked
with them they were platforms for communication with people. They had no advertising business. We essentially worked with Facebook to figure
out how to put media, how to do reach and frequency, with Facebook. YouTube came along, and we thought this could
be interesting. Not sure where it’s going to go, ended up
monetizing it. I think created. What’s interesting about that is that they
didn’t build these platforms for advertising. Some of the challenges that they’ve had recently,
I think, have been because they were built for another purpose. Whereas other media companies, the TV and
the radio, they started off and they built advertising in. [crosstalk] JB: I want to get into some of those questions. Before we do, I want to pull back from the
last day and a half. There’s been in the air, certainly here, and
I think that’s by intent. In the press and in the conversation culturally
about business, there’s been this Larry Fink moment, the Blackrock CEO, who said, “Companies
have to have a social purpose.” That call only came out last month. This is not a new idea. Everyone at CSR, everyone does ESG reporting,
yada, yada, ya, but this feels different. Has it been different at your level, at the
board level, the C-suite level? In the last year or so have you felt a shift,
sorry to use that word, but have you felt a significant difference in how, what the
role of your company where you touch, what is it, a billion customers a day? MP: No, five billion. JB: Oh, I got it off by five. MP: We touch…Because we make everyday products
like shampoo and toothpaste and toilet paper and paper towels and that kind of stuff, so
they’re daily use products. The shift though, interestingly enough, 10
years ago we went down a purpose path. When I first started my job we had purpose-inspired,
benefit-driven brands. What was interesting about that though is
that it was too disconnected from our business. Over the course of the last few years what
we’ve done is we’ve gone back in at it, we’ve always done it, but at a very low-key level,
but we’ve been more focused on that. We’ve created, we’ve really become a citizenship
platform. We’re building into the business social responsibility. Diversity it includes in gender equality,
community impact and environmental sustainability based on the foundation of ethics and responsibility. JB: I’m curious how you actually build that
in in terms of how you do your job? MP: How I do my job…We focus on using our
voice in advertising as the world’s largest advertiser as a force for good and a force
for growth. JB: You have the largest voice in the world. MP: Right. We felt that as a result of that, as a consequence,
since people are affected by advertising every day and the images that come through advertising
every day, we have a responsibility to ensure that those images represent equality in terms
of gender, equality in terms of race, diversity and inclusion throughout every type of person. Also to focus on eradicating bias because
if we get, and this back to why it’s a force for growth, if you get equality, you end up
making the world a better place and you end up making economics a better place. Just take pay equality in and of itself, the
fact that women are paid 20 percent less. Blacks are paid 39 percent less, Hispanics
43 percent less, Asians still like 23 percent less. If you just get equal pay, it will add 28
to 30 trillion dollars to the economy. That’s a force for growth. Our advertising affects how people see others
and that’s why we focus on having [inaudible 8:13]. [crosstalk] JB: I don’t want to put you on the spot, but
we do have a link and if you guys…Since you agreed to not take a break, we can show
you a little television. MP: We’ll show you a little television advertising,
yes. Don’t’ go… JB: I just don’t like to bring up the CM of
P&G without showing [inaudible 8:27] video. MP: Just one video? OK. JB: Can we roll it? MP: Please do. JB: So I don’t know. [applause] JB: That gets me. If you’re cynical, you’re just pulling my
heartstrings. Well done. I don’t know that could have gotten made five
years ago. MP: I don’t think it maybe would have not
have had the same impact five years ago. We made a deliberate choice a year ago that
we were going to use our voice in the Olympics to address bias because of what was happening
in society. The divisiveness that was occurring, we felt
that it was time for us to step up and use our voice and it’s had a great impact. JB: I don’t know whether sales went up because
of it, but you’ve had a lot of experience in this and so far it seems like… MP: People prefer advertising like this. When they can see themselves, when they can
see a positive portrayal, then we actually have found that it’s better for business. It’s smart, a force for growth and a force
for good. JB: Again, let me play the Wall Street raider,
that’s happy talk, great. Cut all that stuff out. Let’s increase profits, cut costs, do things
my way. You just went through a bruising activist
shareholder battle which you lost by, I think, a smaller margin than Trump won. Literally, it was that close and now you’ve
got a board member who came from Trian, Nelson Peltz. Has that changed the culture of the company? Has that diminished the commitment to doing
work like this? MP: No, I think if anything what it’s done,
it’s firmed our resolve as to what our business model is about and what we need to do better. When someone comes in and wants you to do
better and puts you on the public stage for six months, you step-up your game. And all investors including all the people
on our board want to focus on environmental sustainability. It’s back to the point of what you said with
Larry Fink. That’s a statement from investors indicating
that this is important. JB: It’s thanks to that six trillion dollar
air cover there. MP: Yeah and the thing about it is what you
have to do is build in doing good to your business model. If it’s disconnected from your business model,
then it’s not sustainable. That’s I think the key point. What we have found is that why can we use
our voice in advertising to promote equality? Why do we focus on taking more, using recycled
beach plastic in order to make our Head & Shoulders bottles and our Dawn bottles. We do that because it is better for our business
as well as being better for the world. JB: So you can defend it to the… MP: Exactly and it’s sustainable. Otherwise it’s not sustainable. Otherwise to your point, it’s happy talk,
it doesn’t lead to anything and no investor’s going to like that. JB: Now let’s get to what has been termed
the duopoly. [crosstalk] MP: Aha, [inaudible 13:10] get into it. JB: I think that some people would say you
are the enabler of the duopoly with the hundreds of millions of dollars you spend across Google
and Facebook, but given that, as we’ve said before, that you often have the conversations
with these companies well before the public is aware of the changes that might be coming. In other words, you knew the business models
of these businesses well before the public did. What are you talking with them about right
now? MP: Two years ago I was out here talking to
them about transparency. Just ensuring that we got the information,
the data so we could make good business decisions and that it was no longer OK to hide behind
a walled garden. A year ago because not enough progress was
made, I publicly went out and made a statement that said this needs to change. JB: Just so you know, Marc shocked the ad
world by declaring that the digital supply chain of media was a vast wasteland and needed
to be cleaned up. MP: Yeah and I will say they stepped up. They stepped up to give us the transparency,
the data, the third party data that we needed so it was an objective assessment. They also stepped up on what’s quote called
brand safety. Which as you may recall when YouTube and Facebook
were having some ads show up in objectionable content and they got exposed. We said, “Look, we have zero tolerance for
that. We can’t have our ads or brands associate
with objectionable content like a terrorist video.” They stepped up. They did a lot of work to get control of their
platforms. We did tests with them to figure out how we
can get to a safe place to advertise. I feel like we’re 90 percent of the way where
we need to be. They get hammered a lot, but I will say they
have done a lot of good work over the last year. JB: Is it possible we haven’t seen all of
that good work? You seem a bit more optimistic than everyone
else who’s been on this stage. MP: I know that. I know and maybe it’s a bit of a contrarian
view, but that’s because I’ve worked with them very closely over the course of the past
year. I now have transparent data that will help
us make better decisions. I now know that there are places that we can
safely put our advertising. I also know, and I just spent yesterday talking
to them about it, all the things that they’re trying to do to make sure that their platform
will be on the right side of history when it comes to being good for the world. JB: I’m pleased to hear that. MP: But these things take time. JB: I’m interested in the details. MP: They take time. It still remains to be seen. There’s still going to be work that’s coming. I’m sure it’ll still be a much better story
to be against what they’re doing, but in this case I want them to do better and I think
they’re working on it. Now that doesn’t mean that we didn’t vote
with our dollars and… JB: This is the thing I think…Perhaps you
should get credit for Keith Weed, your counterpart at Unilever. Also a massive advertiser and a significant
competitor in the ring of commerce. Keith Weed two weeks ago did — I think it
was mentioned in another panel — threaten to pull money from social media platforms
if they were not contributing positive social value. You a year ago actually pulled all of your
money off of YouTube. That was well covered in the industry press,
but it wasn’t…There’s a story in the “Journal,” a story here, a story there, but this is a
big move. I’ve pointed out that when you pull $100 million
from YouTube, there are a million people happy to give YouTube $100. The long tale of advertiser for this platforms
is such that you don’t have the power that you used to have over, say network television. How do you use your soft power? MP: What I think people respond to, the business
world responds to, the media responds to, everybody responds to is doing the right thing. When we called out and said they need to be
transparent. They need to make sure to take objectionable
content off, they need to make sure that they let us advertise in safe places and there
are consequences if they don’t do that, then I think people step up appropriately. I think that’s whatever you want to call it,
but what it is is it’s…One, it’s common sense and second, it’s just the right thing
to do. They have made those moves and I think there’s
still more to be done. At the end of the day though, John, you’re
absolutely correct. There are millions of advertisers on there. What this has caused us to do is to recognize
that there’s only so much they can do or we’ll do. Therefore, we need to take control of our
own destiny. We’re the ones that need to decide. What I said to those companies then is that,
for example, on YouTube you may have content and you may want to express freedom of speech. There may be some things on there that we
don’t think are right. That doesn’t mean I’ll advertise on it. That’s my choice. That’s what I think a lot more companies need
to do is they need to take control of what they’re doing, do what they’re doing, and
recognize that they’ll have some impact on those companies. Largely, I think what’s going to make the
bigger difference is going to be their own consumers, their own customers. It’s going to be the others rising up and
saying, “We think this is not acceptable.” JB: I want to shift a little bit to a question
I’ve asked Kevin Johnson from Starbucks and others, which is how you handle change inside
the company. That was one of Trian’s criticisms is you’re
not a handling innovation to change quick enough. In full disclosure, I’ve worked with you to
do events like this. The only difference in the event is that it
happens in Cincinnati, in your hometown. It’s called Signal. You’ve moved now a whole innovation process
and a platform at P&G called Signal. Much of the work that you do is aligned with
what Eric Ries was talking about yesterday in “The Lean Startup” and the startup way. Tell me a little bit about that as we transition
into a few examples of that. Because we’ve got three amazing speakers right
after this rapid fire much like Ignite who are going to be examples of that kind of thinking
that you bring into the company. MP: One of the things we do every year is
what you described as Signal. Which, by the way, everybody’s welcome. JB: I’m going to come. MP: There’s probably some speakers that we’d
like to recruit as well because what this does is it inspires people inside of our company
with what’s happening in the data, digital, and technology world. What that does is inspire people so then they
can then go out and do it. In fact, many of the people here are going
to come up and talk about it in a minute. For example, [inaudible 19:59] who’s our neurologics
partner came and spoke to us. We applied that startup to her AI engine to
what’s called Olay Skin Advisor. Which you will hear about, so I won’t go ahead
and scoop that. That’s how we do it. We expose people to the ideas. Then we bring people like Eric Ries, other
folks in to implement things like Lean Innovation. It’s transforming our company. I have to tell you our company has gone through
a lot of changes in the last couple of years. The next few years will be some of the most
significant transformation that our company has ever seen. We will see a complete disruption of mass
marketing as we know it in the next 18 months as a result of some of the things that we’re
doing. JB: I look forward to reporting on them and
to hearing more. I think that’s our cue to move forward. Marc, thank you so much for coming and being
part of the forum. MP: Thank you. As always, thank you. [applause]

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