Procter & Gamble restructures its media buying business to cut costs

By Simon Pitman

- Last updated on GMT

Procter & Gamble restructures its media buying business to cut costs

Related tags Advertising

P&G is one of the world’s biggest advertisers, so when the company announces major changes to its media buying strategy, heads turn.

The company has announced its decision to let two ad agencies handle its media buying strategy for North America – Omnicom Media Group and Carat agency, which are both New York based.

The move is part of the company’s ambition to cut costs as the business is set to emerge in a leaner form following the sale of 43 brands to Coty for $12.5bn – a deal that is expected to be finalized in the latter half of next year.

Omnicom gets the largest slice of business

Omnicom’s larger slice of the media management cake will account for the vast majority of P&G’s and US media-buying and planning spend as it entails most of its business in the consumer category.

Omnicom says it has successfully pitched for a media spend valued at approximately $2.7bn. In 2014 P&G spent approximately $4.6bn on advertising in the US, but with cost cutting measures in place and a leaner business model about to emerge, that figure is likely to be significantly less in 2016.

The company began reviewing its media buying strategy earlier this year, and the CFO has previously stated that he wants to reduce media buying and advertising related expenses by $500m, having already made significant cut backs in this area last year.

Some win, some lose

The Carat agency, which is a part of the Dentsu Aegis network, will support the rest of the P&G business categories, which is expected to represent a significantly smaller share of the media buying business in North America.

In an official statement a P&G spokesman said that the new media agency appointments represented a renewed focused on the quality of its media buying and advertising, as well as a consolidation of the operations that would mean greater efficiency.

The appointment of the two agencies is to the detriment of the France-based Publicis group, which has held the bulk of the US media buying business since 1997.

Fall in sales means less money to spend

In the last financial year the evidence has been clear that P&G spending was down, with selling and general expenses falling from $24.7bn to $23.5bn, on the back of sales sliding from $80.5bn to $76.3bn and profits down from $11.6bn to $7.1bn.

A big part of the lower spending has been the reduced campaigns for ads and promotion, with global advertising spend down to $8.3bn in the fiscal year, compared to $9bn in the previous year.

Historically this is a five year low and goes a long way to reflect just how much the company’s place on the global consumer market has been impacted in recent years, although out-going CEO A.G. Lafley has consistently underlined his commitment to advertising in the course of the last year.

Related news

Show more

Related products

show more

Exosomes: Passing Trend or Transformative Reality?

Exosomes: Passing Trend or Transformative Reality?

Content provided by Naolys | 26-Mar-2024 | White Paper

Exosomes, microscopic vesicles naturally present in abundance within Plant Cells, have garnered significant attention within the scientific and cosmetic...

How Nutricosmetics Can Enhance Skin Beauty

How Nutricosmetics Can Enhance Skin Beauty

Content provided by Activ'Inside | 11-Dec-2023 | White Paper

In the ever-evolving realm of nutricosmetics, where inner wellness meets outer beauty, few natural ingredients have captured the spotlight quite like grapes.

Ultimate Antimicrobial Solution for BPC

Ultimate Antimicrobial Solution for BPC

Content provided by Acme-Hardesty Company | 11-Oct-2023 | White Paper

Sharomix™ EG10, a versatile broad-spectrum antimicrobial liquid blend for preserving personal care products, ensures safety at usage levels ranging from...

Acme-Hardesty Expands Product Line into Canada

Acme-Hardesty Expands Product Line into Canada

Content provided by Acme-Hardesty Company | 07-Jul-2023 | Product Brochure

Acme-Hardesty’s latest expansion into Canada includes Resplanta®, Botaneco®, and BYK from our partners Sharon Personal Care and Eckart Effect Pigments...

Related suppliers