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Marketing Procter & Gamble (P&G)

P&G to spend $1.5bn on agencies next year, down from last but there’s still a $200m 'room for improvement'

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By Jennifer Faull, Deputy Editor

April 26, 2016 | 3 min read

Procter & Gamble (P&G) has cut its agency-related costs down from $2bn to a projected $1.5bn spend for the next year but there's still room for improvement.

It shows the world's largest advertiser is on track to shave off at least $500m in agency fees by next year. And yet in its third quarter results earlier today (26 April) it revealed there is “still more room to improve” as it eyes $200m in additional savings this year.

“After two strong years of savings, we'll enter next year still spending $1.5 billion in agency-related marketing costs, still more room to improve,” said chief financial officer Jon Moeller.

Last year it reduced the 6,000 agencies it works with by nearly 40 per cent and cut agency and production spending by about $370m. This saw its sought-after media account in the US move to Omnicom while its so-called ‘Dish’ business – which spans some 32-coutnies and includes brands like Fairy – was consolidated with Publicis Worldwide.

“We're aiming for an additional $200m of agency-related savings this year, reinvesting those savings in advertising and sampling of consumer-preferred products,” added Moeller.

Further efficiencies will be driven through digital and investing more in creating engaging content over paid media.

This digitisation, it said, also spreads far beyond the marketing department. It’s also employing smart automation and digitisation to improve manufacturing productivity, raw material and finished product logistics.

“As we fully operationalize the new focused 10-category company, there will undoubtedly be additional opportunities to increase organization efficiency, agility, and speed of decision-making. Digitisation will continue to enable smart productivity choices,” continued Moeller.

Elsewhere, the Pantene-maker once again promised that it will be “more present” in direct-to-consumption e-commerce channels.

“And we need to bring innovation equally across the portfolio and marketing equally across the portfolio, which we're committed to do,” it said.

Overall, P&G reported organic growth of 1 per cent for the quarter.

Marketing Procter & Gamble (P&G)

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