P&G Slashes TV Upfront Spending 10%

Pharmaceutical, Telecom, Domestic Auto Buys Also Down

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NEW YORK (AdAge.com) -- Procter & Gamble Co. is making cuts to its upfront spending for the second year in a row, a move attributed in part to its merger with Gillette that closed in October. The packaged-goods giant is slashing its upfront budget by around 10% and is one of a number of marketers reportedly spending less this year in broadcast TV.
When the marketer announced the $57 billion Gillette acquisition last year, P&G Chief Financial Officer Clayton Daley cited savings on media costs as one of the key areas where P&G would squeeze profits from the deal.
When the marketer announced the $57 billion Gillette acquisition last year, P&G Chief Financial Officer Clayton Daley cited savings on media costs as one of the key areas where P&G would squeeze profits from the deal.

Media costs cut
A P&G spokeswoman couldn't immediately be reached for comment. When the marketer announced the $57 billion Gillette acquisition last year, P&G Chief Financial Officer Clayton Daley cited savings on media costs as one of the key areas where P&G would squeeze profits from the deal.

In its first media move after closing the Gillette deal last October, P&G sliced as much as $10 million off of its $100 million-plus relationship with coupon-insert distributor Valassis Communications. But P&G alone accounts for more than 15% of Valassis' coupon insert business, giving it considerably more clout than in the broader media marketplace.

Gillette spending
Still, P&G cutting upfront spending by 10% just based on savings from the Gillette side alone would be ambitious. Gillette brands retained by P&G spent less than $300 million last year on TV, according to TNS Media Intelligence, compared with $2.3 billion for P&G overall. And industry watchers at the time noted that Gillette, with its heavy emphasis on sports programming highly sought after by men, might be hard pressed to push rates down by much.

P&G also faces pressure on its media budget from rising raw materials costs, which haven't eased or stabilized as much as once expected, and slower top-line growth than the company has had in years past.

Other categories
Media agencies are also reporting softness at movie studios and in the telecom category, as AT&T's acquisition of Bell South's Cingular takes some money out of the market, according to executives. Domestic autos are also said to be off, and pharmaceuticals are reportedly down compared to last year, though one agency executive suggested pharma could be holding money out for the scatter market.

Johnson & Johnson had said it was sitting out the upfront, though its executives were present at network presentations. Among the stronger advertising categories in this year's upfront are retail, foreign autos and fast food.

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Jack Neff contributed to this report.
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