The cuts keep coming: P&G plans to cut advertising costs by $400m by implementing new agency models and reducing the number of agencies it works with by 50%.
Last month, P&G chief financial officer Jon Moeller told investors that a review of its agency roster was underway.
Speaking at the Consumer Analyst Group of New York Conference, P&G chairman and chief executive David Taylor confirmed that the consumer goods giant has already reduced the number of agencies it works with from 6,000 to 2,500 since it began its cost-saving spree in 2015. According to Taylor, the company has saved $750m in agency and production costs since then.
Taylor said the “next phase” will involve slashing the number of agencies it works with by another 50%.
“We continue to reinvent our agency relationships, consolidating and upgrading P&G’s agency capabilities to deliver the best brand-building creativity,” he said.
The maker of household brands including Tide and Always also plans to further change how it works with agencies. During the presentation, Taylor said that P&G will continue to work on a fixed retainer basis with agencies for creative that it’s “certain of,” like major campaigns, but will rely on “open sourcing” for the rest. He said this strategy drives greater local relevance, speed, quality and lower costs for P&G’s brands.
In total, he said P&G anticipates a total of $2bn in savings across marketing productivity efforts through fiscal year 2021.