Procter & Gamble (P&G) has plans to form a standalone agency for its fabric care business in North America, in a bid to further cut costs and create more efficiency in its marketing efforts.
According to the Wall Street Journal (WSJ), P&G's new standalone agency will comprise talent from Saatchi & Saatchi, Grey, Hearts & Science and Marina Maher Communications. The new agency, which is expected to launch in July this year and is yet to be named, and will be headed by Saatchi & Saatchi New York CEO Andrea Diquez. She will continue with her duties in Saatchi & Saatchi. Employees will work together in P&G's New York and Cincinnati offices.
In a statement to Marketing, P&G Asia Pacific's spokesperson said it is too early to share details of plans in other markets, including Asia Pacific, as the company is just starting this pilot in North America.
"We work closely with diverse agencies in Asia Pacific and our constant aim is to strengthen and evolve these agency relationships to deliver the best brand building capability," the spokesperson added.
P&G's chief brand officer Marc Pritchard said the industry needs to continue to set higher standards on creativity and the ability to engage consumers in new ways. He added that it is now crucial for companies to be able to reach a mass audience via "greater one-to-one precision", as well as increase creative engagement with consumers. As such, new agency models are required to meet this need.
Earlier this year, P&G announced plans to decrease the number of agencies it is working with by another 50% this year, in a bid to save US$400 million. It will also automate more media planning, buying and distribution, bringing more of it in-house.
To date P&G has already reduced its agency roster from 6,000 to 2,500, saving US$750 million in agency and production costs, and improved cash flow by over US$400 million additional through new payment terms. Last year, it 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.
P&G is not the only company to have carried out such a move to cut costs. Last month, Johnson & Johnson also executed a similar move by creating two integrated, standalone agencies within Omnicom and WPP. This was in a bid to push its agencies to evolve and adapt to the more complicated demands of digital advertising, WSJ reported.
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