P&G Tests the 'New Economy'

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SAN FRANCISCO -- Consumer packaged goods giant Procter & Gamble, a symbol of the "old economy," revealed at @d:tech World here last week that it has a few "new economy" tricks up its sleeve.

"We are in transition to becoming what we call a dot-combined economy," said Mark Schar, vice president of global iVentures at Procter & Gamble Co., Cincinnati, in a keynote address at the conference.

An example of P&G's commitment to change was a recent 12-week campaign it ran for Physique, a hair care product that is one the newest additions to its 300 brands. The introductory campaign drove consumers to Physique.com where they could learn more about the new product, get free samples and search for a location near them that sells the product.

It was an "integrated, introductory marketing program with the goal of sending all of their users through the Web sites. So everything they did had the Physique URL," Schar said.

Offline, the campaign concentrated on location-specific media buys, he said. In addition to having 60,000 in-store displays around the world, the company made one large buy -- a billboard in New York's Times Square on New Year's Eve.

Only 15 percent of its budget was spent on traditional television advertising. In the past, P&G used TV for as much as 95 percent of its marketing support. Online, a refer-a-friend program netted more than 1 million users. All of these efforts brought 5 million unique visitors to the site. Some 600,000 of which have become "Club Physique" members, spending an average of 11 minutes on the site.

It seems stockholders expect P&G to move faster. March 7, P&G announced it missed its profit goal. This announcement caused the stock price to drop to 61 that day from 87.43 the day before. It closed at 65 on May 11. "I'd call that punishment," said Schar, adding that stockholders are angry with P&G for being what they consider one of the guardians of the old economy.

One of the obstacles preventing P&G from fully embracing Internet marketing is the lack of privacy standards. "We are struggling with how we migrate our $3.5 billion worth of advertising into other mediums when standards don't exist," he said.

In the meantime, the company has had other online success stories, including Pampers.com. The site has compiled a database of 3 million households. It sends out two informational e-mails a month.

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