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P&G overall marketing spend down 6%, US$130m of total savings made

Procter & Gamble (P&G) has seen a 6% drop in overall marketing spend, shared its CFO Jon Moeller in a recent financial earnings call. According to AdAge, continued cuts in media, agency and production costs, along with reductions in headcount, also saved the company around US$130 million last quarter.

Moeller added that total reach and frequency had “probably increased” in the quarter, while total marketing spend required to deliver that increase was down – resulting in efficiencies.

According to the FMCG giant’s financials, its beauty segment organic sales saw a 7% increase when compared to one year ago. Skin and personal care organic sales had increased in double digits due to increased marketing investments and premium innovation. Disproportionate growth of SK-II and Olay Skin Care also contributed to this rise, each delivering mid-single-digit growth.

Meanwhile, personal care products, including Safeguard, Old Spice, Olay and Secret, delivered mid-single-digit growth. As for hair care organic sales, the company saw increased low single digits due to increased pricing, innovation and improved retail executions. Overall, P&G reported first quarter fiscal year 2019 net sales of US$16.7 billion, which was in-line with the year-ago level. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased 4%. Net sales in the first quarter of fiscal year 2019 were at US$16.7 billion, in-line with the prior year.

“We generated strong consumption, organic volume and organic sales in the first quarter. This keeps us on track to deliver our top- and bottom-line targets for the fiscal year. Our focus on superiority, productivity and improving P&G’s organisation and culture is driving improved results,” David Taylor, chairman, president and CEO, said.

In a previous earnings call, P&G said it saw “more savings potential” in areas such as advertising agency fees and production costs. This was after achieving nearly US$1 billion in these areas over the last four years, Taylor said. Overall, P&G planned to return to one-stop shops “where it makes sense”, and reunite its media and creative.

In July, Publicis Communications reorganised its production units at three of its creative agencies in New York as a result of P&G cutting production work on advertising campaigns, Adweek reported. Marketing understood that the time that the move does not affect Asia Pacific markets.

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