Procter & Gamble halves agencies in efficiency drive

Procter & Gamble (P&G) has cut the number of PR and ad agencies it works with by roughly 50 per cent, as it looks to boost the efficiency of its marketing spend.

P&G chief brand officer Marc Pritchard
P&G chief brand officer Marc Pritchard

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

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 per cent".

A spokeswoman told Ad Age 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."

PRWeek UK asked P&G to clarify its current PR agency roster but did not receive a response at the time of publication.

The company uses Citizen as its global consumer PR agency, while Porter Novelli is also employed in a number of global markets.

P&G CFO Jon Moeller announced last year that the company was looking to save $500m (£400.5m) in costs around its agency relationships. The firm decided a few years ago to divide its agency support across three large holding companies: Omnicom, Publicis, and WPP.

P&G has divested around 100 brands over the last two years to refocus on its best performing brands, leaving it with around 70 to 80 brands. Cost-cutting resulted in a better than expected first quarter, with $2.7bn in net earnings, up 4 per cent year on year. Net sales stayed flat at $16.52bn.

This story originally appeared in Campaign UK. Additional reporting by PRWeek UK deputy editor John Harrington

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