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P&G budget cut prompts Publicis to restructure production units, APAC unaffected

Publicis Communications has reorganised its production units at three of its creative agencies in New York. According to Adweek sources, the move was a result of Procter & Gamble (P&G) cutting production work on advertising campaigns. This also saw people cuts which include executives, a head of production and at least one executive producer, said the article.

Marketing understands that the move does not affect Asia Pacific markets. The report added that a new cross-agency lead, Jenny Read, director of integrated production since 2017, has been named to oversee the teams at Saatchi & Saatchi New York, Publicis New York and PG One, the group’s P&G unit.

In a statement to Adweek, a Publicis Communications spokesperson said that the agency is being mindful about its actions in New York. This includes restructuring resources to better serve clients and better deploy talent. The move comes as the agency looks to better position itself for the future and unlock better solutions.

In March, P&G’s Marc Pritchard said the company had slashed its digital ad spend by US$200 million last year. The amount was invested into other areas with “media reach” such as e-commerce, audio and even television, helping to increase reach by 10%. The FMCG giant has also been advocating for more transparency in the digital space, calling out past marketing strategies for being wasteful. As a result, it said it was reducing the number of agencies it was working with, and implementing new agency models, in a bid to save US$400 million.

This includes efforts such as reducing non-viewable ads, which enabled P&G to eliminate waste and reduce losses. In 2017, the brand also revealed plans to reduce marketing spend by US$2 billion in the next five years. This was part of a broader US$10 billion cost reduction plan it launched one year ago, according to several media reports.

According to its annual report, P&G advertising expenditure was at US$7.1 billion in 2017, down from US$7.2 billion in 2016. The brand is not alone in making strides in reducing production marketing costs. In February this year, competitor Unilever allocated about US$300 million of its productions savings in 2017 to media and in-store marketing. This comes after it saved approximately US$700 million from production costs in 2017, by producing fewer ads and relegating more work in-house. According to AdAge, this move mainly affected work done, or overseen, by agencies.

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