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.
[video playing]
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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