Stengel Q&A: P&G - New and Improved

ADWEK 25TH ANNIVERSARYHow Jim Stengel is remaking the world's biggest advertiser.Jim Stengel points to a six-pack of Jones soda on his office windowsill. The Seattle company's bottles grab attention with labels that feature ever-changing black-and-white photos sent in by fans. The Procter & Gamble global marketing officer admires the tiny independent brand. "That's a really great way to connect with consumers," he says. Meet the new face of marketing for billion-dollar brands: Stengel, a 20-year P&G veteran who grew up within the company's TV-centric culture, has risen to the very top of the marketing world only to shift his sights to finding grassroots solutions. At P&G, the days of relying on mass-media messages aimed at broad groups of consumers are over. Stengel, who assumed his current role in August 2001, is seeking out consumers when and where they're most receptive to a brand message. He's not backing off from the 30-second spot entirely, though. Instead, he's trumpeting the call for better creative, this year leading an agency entourage on P&G's first trip to the Cannes ad festival. The amiable 48-year-old Stengel, in shirtsleeves, recently sat down to chat with Adweek among the glass, bright colors and amoeba-shaped chairs of the newly redesigned senior-management floor at P&G's Cincinnati headquarters.What did you think of Cannes?I loved it. We got a lot out of it—in fact, we brought it back here. We bring everybody—agencies and P&G people—together, and we go through a mini-Cannes in the morning, where they get to vote [on P&G and non-P&G work]. Then they get a workshop in the afternoon, where they work on watchability and decision making, which are a few of the issues we want to improve. We had a session a few weeks ago, and we're holding one in November. It's really powerful.How well do you think your agencies are responding to your request for more creativity?Extremely well. The work we're seeing from all of our agencies is a big step up from where we were even a year ago. The advertising we're doing today is better however you measure it: by market share, by qualitative work, by the buzz it creates in the community—which several of our campaigns now do—or even in the standardized research. Most of our [market] shares are growing, and that's driven by that improvement.Where we still have room to grow is in breakthrough thinking on communications planning. That's partially our responsibility and partially our agencies'. I would love to see the same drive toward creativity and breakthrough thinking in communications planning that we've seen in the creative agencies on traditional media. If I see one big challenge ahead, it is in how to change the industry to be more focused on that. The objective is to be relevant as part of the consumer's life in a deeper, more accepted way than brands are today. The models we have are largely TV-based. TV is powerful. It has its role—it is changing. We must change with it, but it's not the only thing.How would you like to see communications planning change?What I say to our people and to our agencies is: "First go deep in your understanding of your consumer. What's their life like? Be part of their lives. Market to them in a way they find relevant and acceptable. Think about when and where they are receptive to our brand message, to our brand, and then do your creative work."It's incredible to me that we don't follow that sequence in all of our work. Too much work is still based on, "What is the idea? What is the TV? Now what do I do?" We need further breakthrough. Some of the greatest marketing we're seeing is for brands like Olay, Pampers, Cover Girl and Prilosec—brands which are taking a really holistic view of the consumer, are really understanding the consumer. They're part of consumers' lives in a helpful way. Their marketing reflects that, whether it's Pampers.com, which is really a service element to the new mother; Prilosec, which helps give information to the consumer through the pharmacist and through the HMO; and even Charmin, where we totally redid the restroom experience by making it available [in restrooms] at county fairs. It's a very nontraditional way to be part of their lives in a helpful way. The Charmin story is marketing at its best: Pick a category which some people may think is low-interest, commodity-like, price-oriented, and yet our Charmin group has totally built the brand into an icon and given an equity to toilet paper by thinking very nontraditionally, by going through the process that I just talked about. So that's where I would look for the next burst of creativity, innovation and game-changing kind of work.What impact is new technology—things like the Internet and interactive TV—having on your marketing approach?The consumer is the boss, and she's really changing a lot. She's changing in how she spends her day, how she consumes entertainment, how she consumes information. It's an increasingly mobile lifestyle. Our philosophy is, we must go with her and be relevant in that context.So what are we doing? We really need to institutionalize the thinking I just talked about: Who's right for your brand? When and where is she open to your message? What we're now doing is following that process in how we market all of our brands. That's resulting in a kind of reframing of the marketing model. We're challenging a lot of the paradigms of the past. P&G may have been cited or faulted, whatever you want to say, for having a marketing formula 20, 30 years ago, maybe even 10 years ago. I would say we don't have a model anymore—we have an approach, we have principles, we have a philosophy that begins with the consumer. So you're seeing much more variability in how we go to market. People often ask me, "What are you going to spend next year on TV?" I say, "I don't know." That mix will change based on where the consumer is going and where the brands are going.Are we testing what's happening with leading-edge households? Of course. We know what they're doing, what they're watching, how they're watching, what they're skipping. We're projecting what that will do to us in the industry and how we market in that environment. But I'm not at all worried about it. In fact, it's hugely optimistic and promising. It actually gives you more opportunity to be customized, to be relevant. I think the days of addressable television and video and advertising on command are coming soon.We're already doing things to position us well for that environment. Our partnership with Viacom, which is about three years old, is part of that. We certainly make a large commitment in terms of our support to them. But then we work with them on flexibility and creativity about what we can do with everything they offer that is not just simply about buying TV spots.What are some examples of how P&G is using branded content?We are the major sponsor for a tour of black college campuses that's conducted by BET, a part of Viacom. We're out there in a strong way with our brands at some very large African-American institutions. It's kind of an entertainment/information tour of colleges. What's great for us is, obviously, it's an important consumer group, a growing consumer group. We're reaching them with our brands at a time when their habits are changing. That's just one program we have with BET—and that's just one property in Viacom.P&G is the company that created soap operas. Are you looking into branded- entertainment opportunities?We still produce some soap operas and People's Choice [Awards], and we're very heavy on the sponsorship of those. We have relationships with Creative Artists Agency and [entertainment development firm] Grey Alliance, so we actually have a lot of stuff we're looking at and thinking about. We'll do it if it's right for the brands. The Cat in the Hat program is a good example of leveraging entertainment in the right way to build our brands and also to have a good partnership. [New TV ads show a Dr. Seuss cleaning machine using animated versions of home-care brands such as Swiffer and Dawn; the upcoming movie does not include P&G product placement.]What are you learning from your involvement with Tremor, the teen-focused research company that's exploring word- of-mouth advocacy? It's been a great learning lab for us—both for our brands and other brands. It's now scalable, it's national, and we're really happy with what we're seeing. It is a separate company, if you will, run by P&G leaders. They actually now have more non-P&G brands than they do P&G brands in their portfolio, because not all of our brands are targeted at teens, obviously. The idea of taking word-of-mouth advocacy and scaling it up is really a big idea. As far as extending it to other consumer groups, I think we'd consider it if the concept is dead right, because word-of-mouth is the most powerful marketing. It would be approached differently if we did it among seniors or among new moms. Teens are such an interconnected group.Let's talk about your past two and a half years in your new job. What's been your toughest challenge?The issue we were talking about earlier—how to shift the industry, the agencies, our people into thinking about the marketing model in a different way. It seems like such a simple, fundamental thing, but it's not. You need to get different people to the table earlier in an idea process. You need to think about how you pull disparate agencies together. By the way, it's not just about getting people together from the creative and media world, but from the world of design as well. Then, early on in that process, there's the need to think deeply about your consumer, how you would approach her. The answer may be TV; it may not be. It may be TV and three other things. It may be something else. The Whitestrips model that we have here has been phenomenally successful. It's a $250-million-in-sales business and growing. We started the whitening business, which is now a billion-dollar industry that wasn't in existence five years ago. That started with a really different marketing model: Who's the consumer? Let's experiment on the Internet. Let's lure whoever's drawn to it, then let's build our national plan based on that. It developed into a very creative marketing plan. Was the ad agency important on that? Yes, but public relations was also important, as were the researchers who helped us figure out who was drawn to the brand.What impact do you think new technologies like TiVo will have on the future of TV advertising?If we're doing the kind of thinking I've been talking about, we'll be better prepared for TiVo. If we're making advertising that is more watchable, people will stop to look at it, and it will still work in that environment. A lot of the strategies we are following are preparing us well for that future. But at the same time, it's going to be an industry changer. The music industry is going through a lot of change right now because of technology. TV is looking at similar kinds of changes. The power is going to the consumer.The consumer will choose when and where she watches. Being on TV on a Thursday night is going to be less important. It won't matter, actually. It's going to change the model, and we're doing all we can to stay close to the consumer and be with her as she changes. As we learn about that, we'll figure out the right way to build our brands in that environment. But TiVo is a provocative change, and is the industry thinking about that deeply enough? I don't know.What are some of the other big changes impacting the P&G consumer's behavior and the way you reach her?The focus on value has always been important here, but it's more important than ever now. We just have to be relentless about offering her the right value, which can be $2 or $40. It's not just price, it's value, it's innovation, and it's experience. We sell products ranging from detergents for a few cents up to cosmetics for $150. We run the entire range of price points and categories. A second trend is to help make a consumer's life a bit simpler, easier. The speed at which information travels, the choices she has in spending her time, all the environmental factors of single-parent households—all these things factor into it. So we're putting a lot of attention on this idea of making the shopping experience easier, simpler, more delightful, and making our brand experiences simpler, easier, more delightful. It's not just this culture, it's others as well. It gets down to very mundane things. We even think about when you walk in and look at the Crest aisle, the oral-care aisle. How simple is it for her to figure out what's right for her? We don't think it's simple enough. We're giving a lot of thought to working with our retailers on how quickly can she find what's right for her? How simple is the architecture of the brand on the shelf?Is P&G putting new emphasis on retail environment and package design?[President and CEO] A.G. Lafley has brought a lot of that focus since he's been in the job [since 2000]. We were certainly working with retailers collaboratively before, but it's taken on a new level of focus. That's the first moment of truth—when the shopper chooses. There's still tremendous potential out there. Think about your own habits. How often have you walked up and down an aisle looking for things? We still aren't making it easy enough. It comes down to your package and how to read it. What's the nomenclature and the design? I think it's a big area of opportunity.You've put a lot of focus on involving P&G procurement people in your agency relations. What's been the result? Do your brand managers get involved in those discussions?I think we're the only company where purchasing reports to marketing, which I think says it all. Kim Kraus, director of corporate marketing-strategic relationship optimization, is part of my team, which includes advertising specialists and those from finance. We meet to discuss all of the issues we might have with agencies, whether it be new assignments, compensation issues, a brand that is in trouble, whatever. We meet collaboratively on that. Kim brings a set of skills which are wonderful: She knows how to manage relationships, how to benchmark. She's good on compensation. This is her training, this is her background, this is her experience, and so I leverage that. I think you will hear very favorable reactions from our agencies to what she's doing. They see her as help. Good partnerships have issues on both sides. It's often said a client gets the creative and talent they deserve. We have been on a mission to attract the best talent in the best agencies to P&G. We weren't always there. But I do think we're getting there.What are some non-P&G campaigns you particularly admire?I like what Budweiser does. If you look at their longevity in building a brand, in being creative in building that brand, being holistic in their communication, it's different from others in the category. The way they think about the first moment of truth and the second moment of truth—advertising—is different. They manage the brand really well. eBay has done a super job in the way they've managed their equity, managed their relationship with their consumers. They've evolved with them and been very responsive to them. What the Lexus brand has done has been pretty remarkable over the last 10 to 12 years. They've come from nowhere to achieve market leadership against such competitors as Mercedes and BMW. They've had a pretty consistent equity, approach, look and feel, and design. They've done a lot right in marketing.We have tremendous respect for L'Oréal. We're competing with them in many categories, but we admire and respect them a lot.You've been on the job for two years now. What's the best decision you've made? I think the best decision I made was to take the job. The hardest part for me is the endurance, stamina and energy the job demands. It's a global job. It really is an outreach job with the agencies and our people. You need to be out there in the field, working with them, staying in touch, understanding what's on their minds so I can work an agenda that is driven by what we need on the business around the world. The diversity of our business and the diversity of the cultures in which we work is challenging. But it's also stimulating; it's inspirational. I wouldn't want to be doing anything else. I love it. I'm thriving in it. I think also that a very, very smart decision was the agency consolidation we made a year ago [which put P&G brands at agencies within two holding companies: Publicis and Grey].What have been the benefits?It took courage. We changed 45 or 50 brands that represented $10 billion in sales. We moved business out of Arnold McGrath, we closed D'Arcy, and we started working with Publicis, which we had never done. People underestimate the amount of change we dealt with there, but without exception, every brand feels in a better place. We have better talent on the business. We're seeing a synergy, especially in the Publicis network, because that's the one that had most of the change. The agencies are sharing ideas and coming together when it's about P&G issues and opportunities. So we feel great about it. It gives me fewer points of leadership to work with if we have any issues. The other decision I would highlight is the organizational changes we're making. I wrote a story about them in the Harvard Business Review this month, the November edition. We've been thinking about what is the right organizational design and culture and reward systems for the future if we want to be at the top of our game in branding. We're just at the beginning, even though we're a year into it. We're thinking about the organization and how to have everyone contribute more to live up to their potential.While we're on that point, I want to mention the support I've gotten from day one from A.G. and the rest of the business leaders here. It's come from across the board, with people saying, "How can we help? How can we work together? How can we build the best brand organization in the world? How can we work with the best agencies? How can we innovate better than anyone else?"What would you do differently?If there were anything I would do differently, it would be to have more time to work on the organizational design and issues. I've brought in some human-resources help, but I wish I could have done it even faster, because there's such potential here.What are the biggest differences between you and your predecessor, Bob Wehling?He was hugely instrumental in me getting this job. Bob and I worked together to catalyze the training program, which is really hot off the charts here now. We share very similar philosophies about organization, agencies, relationships and branding. The one thing I had that Bob never had the opportunity to do was to develop international experience. I worked in Eastern Europe and learned the markets; I worked in Western Europe. That is very helpful in a job like the one I'm in now, because my reach is global, and it gives me credibility when I'm out and about, working with the people outside the United States. Looking ahead, are you planning any major shifts in spending or placing new emphasis on certain brands, geography or media? We'll continue our focus on the big brands, the big countries and the big retailers, so you'll continue to see resources flowing there. You should see innovation in those brands. Our hottest thing right now is Prilosec, which you should see everywhere. We'll continue to support our brands really well. Even in tough times we do that, because that just helps the best times, the better brands. We'll see a continued focus on value, on low-income consumers—not just in the places you would expect, like China, but also in this country. We've made some resource changes involving African-American and Hispanic consumers. With the appointment of Bernhard Glock as head of media and communication planning, you'll see more innovation there. Our spending will be what it takes to grow our brands, and we will continue to see it get more diversified based on the brand portfolio.You once worked in the photo department at Time-Life's books division. Why did you change careers and move into marketing?I started thinking that I wanted to get into more of a leadership position. So I started talking to people within the business side of Time Inc., and it interested me. I started taking a few courses at night, and I actually went back for my MBA. Working at Time Inc. was actually reasonable preparation for this career—it's a business of ideas and communication.

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Stengel Q&A: P&G - New and Improved

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