That is according to David Taylor, the FMCG company’s Chairman and CEO, who was speaking at the Consumer Analyst Group of New York Conference in Florida at the end of last week.
As reported by Advertising Age, the cuts will be in addition to the $750m savings in agency spend that P&G has made over the past three fiscal years.
And it means that overall spending on agency and production fees will reduce to $1.15bn from $2bn when P&G’s cost-cutting exercise started in mid-2015.
Since then, P&G has cut the number of agencies it works with by 60% and Taylor made clear that the company plans to cut this figure further, reducing them by 80% from the original base.
“We continue to reinvent our agency relationships, consolidating and upgrading P&G’s agency capabilities, to deliver the best brand building creativity,” he said.
His comments came a month after P&G Chief Financial Officer Jon Moeller said on a Q2 earnings call that the company had reduced the number of agencies it worked with from 6,000 to 2,500, with resulting savings of $750m.
Further detail about the company’s plans came from P&G spokeswoman Tressie Rose, who told Advertising Age: “Moving forward, we intend to take a more balanced approach between fixed retainers for a portion of the work, and project-based fees for other work.
“Open sourcing in this context means we will look both at our existing agency partner who is on retainer in addition to other agencies on our roster for the project-based assignments to determine the best quality, capability and value for each project.
“If a crowd-sourcing platform makes sense, we would consider this, but our first step will be to look at our roster agencies.”
Sourced from Advertising Age; additional content by WARC staff