Procter & Gamble, the world’s largest advertiser, has announced plans to reduce the number of agencies it is working with by another half this year.
In a bid to save $400 million, the FMCG brand’s chief financial officer, Jon Moeller, said P&G had already reduced the number of agencies it worked with from 6,000 to 2,500, and wanted to slash this by another 50%.
Last year, P&G revealed plans to reduce marketing spend by around $2 billion over the next five years. The business said it has already saved $750m in associated costs by cutting agency spend.
“We need the contribution of creative talent and are prepared to pay for that,” Moeller said in an investment call on Tuesday (23 January). “We don’t need some of the other components of the cost.”
Moeller added that the business would move to more “fixed-and-flow” arrangements “with more open sourcing of creative talent and production capability, driving greater local relevance, speed and quality at lower cost. We’ll automate more media planning, buying, and distribution, bringing more of it in house.”
P&G will also continue to “reinvent” its agency relationships, upgrading their capabilities to “deliver the best brand building creativity.”
Meanwhile, P&G reported net sales of $17.4 billion in the period ending December 2017, a 3% increase on 2016.
