Jim Stengel, the outgoing global marketing chief at Procter & Gamble, is moving from a big advertiser to a small start-up, hoping to remedy some of what he thinks is wrong with the industry.
Starting Monday, the 25-year P&G veteran is opening Jim Stengel LLC, which will try to persuade companies to buy into a newfangled way of selling. It’s called “purpose-based marketing,” which Mr. Stengel says is about defining what a company does — beyond making money — and how it can make its customers’ lives better.
“Marketing is in need of a major overhaul,” and “trust in brands is at an all-time low,” says Mr. Stengel, who is funding the venture himself.
The well-known adman maintains that the idea of “purpose” isn’t just the latest cooked-up marketing-speak. He says dozens of companies and brands have used this approach. He points to P&G’s Pampers brand, which several years ago decided it had a higher purpose: helping moms develop healthy, happy babies, rather than just keeping babies’ bottoms dry.
To drill home that message, the company offered parenting advice and teed up experts on an array of parenting topics. It also did research on why babies don’t sleep, a study that eventually yielded a design change in Pampers to give them a more cloth-like feel. The new design keeps babies warmer, helping them sleep better.
The brand won market share. Mr. Stengel says there were several reasons for the gain. The repositioning helped inspire employees. It built trust and an emotional connection to the consumer. And it helped differentiate the brand.
Mr. Stengel is a believer in the concept: he says he is writing a book with the working title “Packaged Good,” which will expand on the idea.
A similar approach, he says, worked for Safeguard in Pakistan several years ago. The antibacterial soap was floundering in the country in 2003, until P&G decided that the soap would help fight diarrhea, the cause of many early childhood deaths in the region.
P&G designed a superhero character dubbed “Commander Safeguard” to use in ads and teamed up with moms, educators and doctors to tout basic hygiene — such as hand-washing — as a way to combat the scourge. The brand’s market share in Pakistan soared.
Some ad experts believe Mr. Stengel’s approach is a little too touchy-feely for these tough times, when consumers are more interested in buying cheaper brands because of the economic downturn. This approach is “not going to save your bacon in this tough world,” says Jack Trout, president of Trout & Partners, a marketing-strategy firm in Old Greenwich, Conn. Consumers are “going for the cheaper guy now.”
Indeed, P&G on Wednesday said it would shift marketing gears, promoting the value and prices of its brands. Why? Because it “works with consumers,” Chief Executive A.G. Lafley said during the company’s fiscal first-quarter earnings call with analysts.
Advertising value and purpose-based marketing “are not mutually exclusive,” argues Mr. Stengel. “I believe that you can communicate value and build emotional equity at the same time.”
Some experts think the new approach hits an emerging sweet spot with consumers that’s been building for some time. Consumers “want brands that have a purpose beyond materialism,” says J. Walker Smith, president of market-research firm Yankelovich. “The rat race of having material things isn’t proving to be as fulfilling for people, and they want more.”
Still, the recession could hamper Mr. Stengel’s ability to persuade clients to pony up money for his expertise. “I think it’s a real difficult time right now for anybody to launch a business,” says Russel Wohlwerth, a principal at Ark Advisors, a firm that helps marketers pick ad agencies.
Mr. Stengel says he already has signed a handful of clients but some marketers are off limits. Mr. Stengel isn’t able to work for any P&G rivals because he signed a three-year non-compete agreement with his former employer.
MPG Embraces Unavoidable Ads
With the global economic downturn threatening to derail growth next year, MPG, a major media-buying firm, is looking to new ad venues.
The agency, owned by Havas, is launching a new division dubbed Chrysalis that will specialize in out-of-home digital media, which includes putting pitches on digital screens in places like elevators, supermarkets, gas stations and doctor’s offices.
“It’s a business that is exploding,” says Steve Lanzano, chief operating officer at MPG North America.
Indeed, even in the troubled economic environment, the nation’s digital out-of-home media industry is expected to grow 11.2% to $2.43 billion in 2008, according to PQ Media, a market-research firm in Stamford, Conn.
While that growth rate is far slower than the 20% annual growth the sector has seen over the past few years, it is more robust than growth estimates for other forms of advertising.
TV advertising, for example, is expected to increase 6.5% while spending on print ads is expected to decline 5% this year, according to Michael Morris, a media analyst with UBS.
The digital out-of-home sector is gaining steam because advertisers are under pressure to put ads where consumers can’t avoid them. Wal-Mart Stores and Kellogg, for example, have bought time on Gas Station TV, which serves up a mix of entertainment and ads on fuel pumps equipped with special 20-inch liquid crystal screens.
“This is the last bastion where the consumer doesn’t have control — they can’t skip the ads,” says Mr. Lanzano, who says Chrysalis also will offer event marketing and sponsorship services.
Still, MPG is jumping into the space a bit late. TV networks have been very aggressive in this area for some time, particularly CBS Corp., which is in the billboard business.