P&G roster agencies face commission cutback

By JOHN TYLEE, campaignlive.co.uk, Friday, 30 October 1998 12:00AM

Procter & Gamble’s roster agencies across the globe are bracing themselves for a cut in commission levels as part of a massive belt-tightening programme.

Procter & Gamble’s roster agencies across the globe are bracing

themselves for a cut in commission levels as part of a massive

belt-tightening programme.



The world’s biggest advertiser is looking at a wide range of options for

changing the way in which its agencies are rewarded - including

abandoning the commission system altogether.



’P&G is clearly signalling a more aggressive time,’ an industry source

said.



The company, which has traditionally adhered to the full 15 per cent

commission rate for agencies, is said to be looking to reduce it by

between 1 and 1.5 per cent after 2000. ’It only needs a drop of a couple

of points to make a big difference to our income,’ a P&G agency manager

said.



The company’s problems became public this week with news of a

confidential memo from Wolfgang Berndt, P&G’s head of European

operations, which appealed to agencies for help in cutting advertising

and marketing costs by at least 5 per cent.



Berndt said: ’Unless we fix our fundamental growth issue, we have no way

to hit our forecasts. We must operate in a crisis mode.’



P&G’s global agency roster includes DMB&B, Saatchi & Saatchi, Grey, Leo

Burnett and Euro RSCG.



The company said it would not comment on speculation or private

memos.



But a senior executive insisted: ’There is no general freeze on capital

investment and new marketing initiatives.’



Nevertheless, P&G bosses are understood to be concerned that the company

has not been courageous enough in its initiatives and has allowed its

bitter rival, Uni-lever, to push ahead. ’It’s driving them crazy,’ a

senior agency executive said.


P&G last month signalled its changing stance when it announced that John

Pepper will stand down as chief executive at the beginning of next year

to be replaced by his deputy, Durk Jager.



Editor’s comment, p29.



This article was first published on campaignlive.co.uk

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