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P&G looks to slash marketing spend by US$2 billion

Procter & Gamble (P&G) has revealed that it wants to reduce its marketing spend by US$2 billion in the next five years. This is part of a broader US$10 billion cost reduction plan it launched one year ago, according to several media reports.

In a company’s earnings call on Wednesday published by Yahoo Finance, P&G chief financial officer Jon Moeller (pictured) explained that the half or more of the US$2 billion savings opportunities in marketing spending will likely come from media rates or eliminating supply-chain waste.

Meanwhile, the company is targeting up to half a billion in saving from reducing agency fees and ad-production costs. It will also see about half a billion in sales from direct-to-consumer programs, in-store materials, as well as improved efficiencies in trial and sampling programs.

When it comes to agency fees, P&G added it is looking to squeeze US$1billion or more out of the system. This follows a stand P&G chief brand officer Marc Pritchard took in February this year, which saw the  company reviewing all of its agency contracts this year in a bid to drive a cleaner media supply chain and transparent digital measurement.

The company is hoping to save US$12 billion to US$13 billion in overall savings according to Yahoo Finance. This will come from categories such as packaging, production, material and transportation costs. These savings will be redirected into marketing.

The news is hot on the heels of P&G’s third quarter financial results announcement on Wednesday, which reported net sales of US$15.6 billion for the fiscal year 2017, a decrease of 1% versus the prior year. Organic sales increased one percent, rising in four of five business segments.

Meanwhile in Asia, Procter & Gamble (P&G) has launched its first digital innovation centre in Singapore. This new centre, which is the first outside of the US, is called E-Center and was created in partnership with the Singapore Economic Development Board (EDB).

The new centre will see an investment of over US$100 million over the next five years. P&G also said in a statement that the launch reaffirms its commitment to Singapore, and aims to strengthen Singapore’s standing as a leading digital and e-commerce hub in the world.

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