- In an earnings call this week, Procter & Gamble revealed it reduced its agency relationships by 40% last year, and saved around $370 million in agency- and production-related costs, with an anticipated additional $200 million in savings this year.
- According to P&G Chief Financial Officer Jon Moeller those savings will go toward advertising and other marketing programs.
- Moeller said media budgets are up 1% as a share of U.S. sales this fiscal year, a figure somewhere around $135 million, and expected to increase as much as 15% as a share of sales.
While P&G is realizing agency savings after joining a number of large brands in reviewing those relationships last year, its media spending is rising.
About the agency cost savings, Moeller said in the earnings call, "These are non-working savings that enable us to invest in advertising and in trial of consumer-preferred products. We’re strengthening our working marketing programs -- greater reach, higher frequency, greater effectiveness, at less overall marketing costs."
In December P&G announced Omnicom would oversee its $2 billion media spend. At the time the company released in a statement, "We will see cost savings by simplifying our agency structure and negotiating new rates for the services our brands need today, and continue to reinvest to drive brand growth."