BrandArena: P&G cuts agencies by almost 50% to optimise marketing spend

Wednesday, 23 November 2016

P&G cuts agencies by almost 50% to optimise marketing spend

The world’s biggest advertiser P&G has cut the number of PR and ad agencies on its roster by about 50 percent, in an effort to enhance the efficiency of its marketing spend.

Yet the FMCG giant still spends around $500m (£400m) a year on marketing and advertising – its third highest cost after staff and product.

This is a consequence of the series of changes that have been announced following the appointment of a new Chief Executive, David Taylor, who replaced predecessor AG Lafley in November.

In January 2016, P&G reported that its agency cost-cutting drive has allowed it to reduce spending by $370m, and helped it to invest more in marketing support.

According to Ad Age, Chief Brand Officer, Marc Pritchard said P&G would look to “open sourcing in creativity” to create ads to cut costs. It will also use digital technology for production and pool production within agencies.
Speaking during an investor day, Pritchard highlighted the SK-II luxury brand, whose open sourcing of ads means costs are down “about 50%”.

A spokeswoman for the brand said recently that while P&G agency Leo Burnett created SK-II’s “Change destiny” campaign, briefs for other projects had been handed out to other agencies inside Publicis.

Pritchard added: “We reassigned several brands to higher-quality partners, and we cut the workload to produce far fewer but much better advertising and marketing campaigns.”

Late last year, P&G transferred the bulk of its North American media-buying and planning business into Omnicom Media Group, following its first review of the account in nearly 20 years.

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