P&G, the world's biggest ad spender, is cutting back on targeted Facebook ads because they aren't effective
The reason: the company decided the ads weren't effective.
Facebook stock fell immediately following the news, but is still trading at around even for the day.
"We targeted too much and we went too narrow," Marc Pritchard, P&G's CMO, told the Journal. "And now we're looking at: What is the best way to get the most reach but also the right precision?"
One example from P&G explains its position well. Two years ago Febreze tried targeting Facebook ads to "pet owners and households with large families." Sales for Febreze "stagnated" during the campaign, but went up when P&G opened it up to all adults (over 18).
This doesn't mean P&G will cut back on Facebook spending generally, however, and it will still use targeted ads at points. But the implications about the effectiveness of targeted ads should trouble Facebook.
Facebook snagged $17.08 billion in ad revenue last year.