PUBGY Publicis Groupe SA (QX)

By Alexandra Bruell 

In recent years, brands have experimented with new agency models, from creating a dedicated, integrated agency within a holding company to building an in-house agency from scratch.

Now, Procter & Gamble, the world's largest advertiser, is taking the agency remodel even further in a bid to cut costs and create more efficiency in its marketing efforts. The packaged-goods giant wants to build one dedicated creative agency made up of teams from its different ad holding company partners.

P&G's fabric care business in North America is creating a standalone agency consisting of talent from Publicis Groupe's Saatchi & Saatchi, WPP's Grey and Omnicom's Marina Maher Communications and Hearts & Science. The employees are expected work together under the same roof, in dedicated offices in New York and Cincinnati, where P&G is headquartered.

Saatchi & Saatchi New York CEO Andrea Diquez will lead the new group, which has yet to be named, as CEO, while retaining her broader Saatchi duties. The shop is expected to be up and running by July.

"We need to continue to raise the bar on creativity and the ability to reach consumers in a new way," said Marc Pritchard, chief brand officer at P&G. "The way things are moving, it's [about] much more mass reach but with greater one-to-one precision and far more creative engagement with consumers. It's a new model. That requires new agency models."

Mr. Pritchard has been vocal about the need for change and simplicity at agencies, especially as packaged-goods companies navigate an increasingly complex digital ad business and face new competition from e-commerce giants like Amazon.com Inc.

P&G recently announced that it reduced the number of agencies it works with from 6,000 globally to 2,500. Now, the company is changing the way it works with some of its existing agencies as part of a new plan to further reduce costs by $400 million by 2021 and make better use of creative and media resources. Cost reductions might come from back-end savings through consolidation, as well as production and fee cuts.

The new agency model is expected to reduce the number of people working on P&G's marketing efforts, strip away excess resources and ultimately save the company money. The plan is to eliminate what Mr. Pritchard calls the "buddy system," where there's nearly one agency staffer for every P&G brand person, and to hand-pluck and combine fewer staffers to increase speed, integration and efficiency.

Currently, around 50% of P&G's appointed agency staffers are creative, while the remainder are account managers, planners, production talent and media buyers, among others. Mr. Pritchard wants to increase the percentage of creative roles on P&G accounts, while reducing the others, he said.

P&G's Super Bowl campaign, "It's a Tide Ad," was created by a joint team of creatives from different agencies on a tight deadline, a successful process that inspired the organization of the new model, he said.

"What we found, when you have a Super Bowl or Olympics deadline, you have high degrees of speed and focus and make things happen," Mr. Pritchard said. "What we want to really do is institutionalize that approach."

Mr. Pritchard said that the companies are still working out compensation and other logistics.

A number of brands in recent years have created dedicated agencies that pull talent from various agencies within a holding company. For example, Johnson & Johnson recently created two integrated, standalone shops within WPP and Omnicom with the intent of cutting costs and increasing collaboration among the agency disciplines. It's less typical, however, for a marketer to ask employees from different holding companies to work together under one roof.

P&G also plans to bring more digital media planning and buying in-house, said Mr. Pritchard. The company will train existing employees and hire digital media talent to work with the brand teams. The move will reduce the amount of business handled by Omnicom's Hearts & Science and Dentsu Aegis's Carat, he said.

"Our folks can do that more effectively," he said. "What it'll also allow them to do is optimize digital media, with social media and search and those kinds of things to get the best reach and cost per reach."

(END) Dow Jones Newswires

April 09, 2018 08:44 ET (12:44 GMT)

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