US CPG giants squeeze media, agencies

04 May 2009

CINCINATTI: US packaged goods giants Procter & Gamble and Colgate-Palmolive are both claiming to have struck better media deals in the recession. P&G chief financial officer Jon Moeller said the company had secured 5% more impacts while spending $440m (€338m, £297m) less in the last quarter, while Colgate cut spend by $74m.
P&G has just posted an 8% decline in first quarter sales to $18bn although it said organic sales increased by 1%. The company blamed the fall on needing to increase prices to offset falling currency values.

P&G chairman/ceo AG Lafley expects more savings to come, particularly in the forthcoming US ‘upfront' negotiations when advertisers commit their TV airtime for the year.

“The media world has been good news for buyers,” he said, “and not just in the US…in the near term it could be even more of a buyer's market.”

Colgate chief executive Ian Cook echoed Lafley saying, “We are taking advantage (of rate softness) on the media side and we think there is more to come over the balance of the year.”

Cook did say however that he expected ad spending to rise over the course of the year. 

Agencies are also feeling the squeeze, with WPP chief executive Sir Martin Sorrell warning of pressure on margins and saying that anyone denying that agencies were being pressured into cutting prices was being “economical with the actualite.”

Data sourced from AdAge; additional content by WARC staff.