Dive Brief:
- After cutting the number of agency relationships and spending, P&G expects to see $200 million in savings.
- The consumer products company cut the number of agencies it works with by around 40%, and slashed spending on agency and production by $300 million over the last fiscal year.
- According to its CFO, the savings were described as “non-working savings” that will go toward investing in working media and sampling dollars.
Dive Insight:
Looks like reviewageddon is paying off for brands – at least for consumer products behemoth P&G. In the last fiscal year it cut agency relationships by around 40% and related spending by $300 million, certainly no coincidence the moves coincided with a year that saw major brands put agency relationships under review essentially across the board. According to P&G, the moves will provide savings of $200 million this year.
P&G Chief Financial Officer Jon Moeller said in an earnings call, “We are strengthening marketing – greater reach, higher frequency, greater effectiveness, at less overall cost.” And added, “We’re going to continue to fund increases in spending that matters with reduction in spending that doesn’t.”
P&G’s fiscal year ended June 30 and reported advertising expenses of $8.29 billion for 2015, down from $9 billion the previous year, but the company also said it plans to increase its working marketing dollars on an absolute and percentage of sales basis. P&G is in the process of divesting 100 brands to focus on 65 core brands.