P&G, Reckitt take control of production

07 July 2009

CINCINNATI: Consumer goods giants Procter & Gamble and Reckitt Benckiser are both said to be drawing up lists of "approved" production houses for use by their creative agencies, as part of a broader effort to control costs.

According to AdWeek, Procter & Gamble is assessing its pre-production, production and post-production options, as it attempts to reduce overall expenditure levels.

Last year, the world's biggest advertiser spent $8.6 billion (€6.2bn; £5.3bn) on marketing worldwide, and it is now looking to reduce its production company roster from around 125 firms to just 30.

In exchange for providing the FMCG giant with reduced rates, the remaining "preferred vendors" will be the only options its creative agencies will be able to pick between.

While these shops, which include Saatchi & Saatchi, Grey and BBDO in the US, were said to have recommended certain production houses, they are not set to have a say in any final decisions.

A P&G representative confirmed the maker of Tide and Always wants to "reduce" the number of production companies it uses.

However, they also added that this strategy was "about getting the best quality and the most efficiency."

Reckitt's global adspend reached around $1.3bn in 2008, and the UK-based company is reported to have hired MurphyCobb & Associates, a marketing procurement consultancy, to assess its production arrangements.

Both advertisers will expect their creative agencies to continue to manage the production companies they work with, however.

Matt Miller, president/ceo of the Association of Independent Commercial Producers, argued that simply "looking at the cost of items" as a means of making decisions is not sufficient.

"The ingenuity of production isn't the cost of the lumber, the nails and the lights. It's about how you approach it and what you do with it," he said.

Data sourced from AdWeek; additional content by WARC staff