Procter & Gamble axes commission

Procter & Gamble, the world’s biggest advertiser, is dropping the commission system.

Procter & Gamble, the world’s biggest advertiser, is dropping the

commission system.

The giant household products manufacturer, a long-time advocate of

commission, will ditch it next year and base its rewards to agencies on

how effective their advertising has been in boosting brand sales.

In doing so,P&G is believed to have delivered a knock-out blow to

commission payments and, industry sources say, it will not be long

before other multinational advertisers such as Mars follow suit.

Robert Wehling, P&G’s global marketing officer, described the change as

’big and broad-scale’. But he added: ’This is a system that’s in our

best interests and the best interests of our agencies as we move


P&G is currently testing the new remuneration system on a few selected

brands within its major roster agencies - D’Arcy, Grey and Saatchi &


P&G chiefs want to ensure that there are adequate fail-safe devices to

ensure that no roster network suffers a sudden drop in income.

The strategy is the latest stage in the company’s attempt to get more

creative advertising in order to make up ground lost to its arch-rival,


Last year, P&G, traditionally one of the world’s most conservative

advertisers, relaxed its uncompromising conflict policy in an effort to

widen its choice of agencies. Switching to payment by results is seen as

a way of encouraging agencies to recommend more radical creative

solutions, particularly those involving the use of new media.

Above all, P&G, which spends more than $5.7 billion a year supporting

300 brands across the world, wants to banish agency complacency.

’There’s a belief that under the old system agencies could coin a lot of

money by not actually doing very much,’ a senior executive at a P&G

agency said. ’But if you are a decent agency, the new system could be

very beneficial.’

Some observers believe P&G’s action could spark a flurry of acquisitions

as roster agencies look to plug any gaps in their communication offering

in order to satisfy their powerful client.