Procter & Gamble Co. offered some rays of optimism with results for its fiscal third quarter announced Friday. Its organic sales rose 6 percent in line with analyst expectations on the company’s biggest hike in marketing spending for any quarter this fiscal year, which ends June 30.
P&G hiked marketing spending as a share of sales in the quarter by 1.9 percentage points, or more than $320 million. But it also continued reductions in overhead and marketing costs—including agency and production fees—to the tune of 0.7 percentage points, or around $120 million.
That still means P&G’s highest net increase in marketing spending (less overhead and fee cuts) so far this fiscal year, up around $240 million compared to the year-ago quarter (also factoring in sales growth). In comparison, for the prior quarter ended Dec. 31, P&G had about a $100 million increase in marketing spending net of overhead, agency and production fee cuts.
There’s no sign P&G plans to pull back spending in the current quarter either. The company is sticking to full-year guidance on organic sales and earnings growth, and Co-Chairman Chief Financial Officer Jon Moeller said on a conference call with investors that he sees no reason to curtail ad spending.
P&G is now reviewing product-launch plans in each category to determine if changes are needed “either of necessity or design to maximize the impact,” Moeller said. “In terms of how products are brought to market, I don’t see the need for significant changes. For example, there’s more media consumption