Procter & Gamble (P&G) has said that nearly 30% of its $7bn global media spend is now planned in-house.
P&G has made no secret of its in-housing ambitions, saying in 2018 that it would begin to manage some portion of media, production and creative itself. Just one year later, at the start of 2019, it orchestrated a massive overhaul of its media agency structure in North America to fuel this plan.
Its in-house agency took a larger share of the media business, specifically on its oral care business, following a media review which pitted the team against its long-standing agencies Carat and Omnicom’s Hearts and Sciences.
At the Morgan Stanley Global Consumer and Retail conference this week, P&G’s chief brand officer Marc Pritchard lauded the results.
“Reinventing advertising means reinventing agency partnerships moving from brand people who outsource too much of their work to brand entrepreneurs with their hands on the keyboard,” he said. “P&G people are doing more media planning in-house with nearly 30% of our media spending already planned in-house.”
It’s not just media that its internal teams have taken more control of. P&G has also brought more creative and production in-house. The case-study in the effectiveness of this move comes in the form of Secret, its deodorant brand.
In June, it opted to end its agency of record relationship with Wieden+Kennedy and began creating and producing ads itself. Pritchard claims it can now produce an ad “for as little as a tenth of the costs and in one month versus five.”
For a recent ad, it opted to shoot it at the company's headquarters in Cincinnati with the associate brand director acting as producer and its brand manager as creative director.
“It’s winning in market,” he claimed. “Secret sales have consistently grown mid-single digits since in-sourcing this work. Our agency reinvention has not only saved $1bn over the last five years it's also leading to more creativity, agility, and entrepreneurship, and helping to transform our organization and culture.”
But even after making these savings, Pritchard said it believes more cuts can be made in advertising supply costs; a familiar and ominous message to its roster of 3,000 agencies.
It will ramp up its so-called “fix and flow” model and continue to co-locate its own people along with individuals from media, creative and production agencies into one unit across more brands. It has already attempted it with its Oral Care division where it’s brought all of its agencies into one team called ‘Woven’.
“This takes time, touches and distance out but first it takes costs out,” he said.
“We're seeing a lot more innovation and creativity and quite frankly I've seen the bar rise in terms of creativity and responsiveness and working together. So, I think it's actually starting to have a positive effect on the creative agency in the industry.”
Pritchard said he is eyeing up the production sector for the coming year. “The in-house production on Secret gives us an opportunity to be able to bring some of that production in-house and also take cost out because that production supply chain in the industry is kind of an expensive one.
“We also see there's opportunities in other nonworking spending, in terms of display costs and other types of marketing materials which we're really just getting started on in a big way.”