P&G halves agencies in efficiency drive

P&G has cut the number of PR and ad agencies it works with by roughly 50%, 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%".

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."

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% year on year. Net sales stayed flat at $16.52bn.

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