P&G EASES CONFLICT POLICY, PAVING WAY FOR MORE CHANGE: CONSOLIDATION CONTINUES AS EURO RSCG FALLS FROM ROSTER

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Even as Procter & Gamble Co. signaled confidence in its large global agencies last week, its newly relaxed conflict policy sets the stage for more changes in the marketing giant's roster.

P&G, the nation's largest package-goods advertiser, last week terminated Euro RSCG Worldwide and further consolidated accounts globally with the favored four of Saatchi & Saatchi, D'Arcy Masius Benton & Bowles, Grey Advertising and Leo Burnett Co.

In the shift, New York-based Euro RSCG lost an estimated $90 million in billings with the departure of the Head & Shoulders, Mr. Clean, Old Spice, Metamucil and Clearasil brands.

Euro RSCG Tatham, Chicago, the unit most affected, said its P&G work represented 13% of its total billings.

"In the last couple of years, especially the last 18 months, it became clear [P&G was] going to focus on the four agencies they are most important to," said Euro RSCG Worldwide Chairman-CEO Bob Schmetterer. "For each [of the other agencies], it's a huge piece of business. For Euro RSCG, it's a small piece of business."

LOOSENING OF CONFLICTS

P&G said its revamped conflict policy went into effect Jan. 1, but executives close to the company said details are still being ironed out.

One of the biggest changes is the loosening of category conflicts within agency holding companies. P&G said it will now consider an agency by its brand name not its holding company, as it had in the past in what was one of the industry's strictest policies.

For example, a sibling shop of an agency with a P&G shampoo account could now pitch another marketer's haircare business.

Of the four big P&G agencies, however, only DMB&B is under a holding company; its parent is MacManus Group.

The wider implication of the new holding company rule is the effect on mergers; P&G agencies could now be purchased by other holding companies without losing their P&G accounts.

Another part of the policy is said to be that P&G agencies also now will be allowed to handle other products competing in the same category, as long as they are in different parts of the world.

P&G is expected to continue to be strict with chief competitors Kimberly-Clark Corp. and Uni-lever. Marketers formerly on that same "archrival" list, including Colgate-Palmolive Co., Kao Corp. and Henkel Corp., have been removed, executives close to the marketer said.

NARROWING DEFINITIONS

Also as part of the new policy, P&G will narrow the definition of most of its categories. A P&G spokeswoman wouldn't elaborate on specifics; however, in the past, P&G forbade its agencies to work for rivals in fairly broad product sectors, such as paper products.

While P&G agencies could now pursue competitor assignments, the relaxing of the policy could be a double-edged sword. Agencies that P&G never considered for its business because of competing work could now be free to pursue the company's accounts.

P&G is already working with Omnicom Group interactive shops Red Sky Interactive and Think New Ideas, which one executive said could lead to assignments with general-market agencies owned by Omnicom.

Last week, there was further speculation not on which agency might get more work, but rather which other P&G agencies besides Tatham may lose work.

Some executives close to P&G indicated Jordan, McGrath, Case & Partners, New York, which is being acquired by Euro RSCG, might be next. Jordan McGrath Chairman-CEO Pat McGrath and Euro RSCG's Mr. Schmetterer both denied it, as did P&G.

Jordan McGrath "definitely will remain on the roster. They earned the right to remain an agency through their performance and they will remain one," said Denis Beausejour, P&G VP-global marketing.

The one global brand handled by Jordan McGrath is also its biggest account-Bounty paper towels. When P&G launched Bounty in Europe in 1997, Burnett's Frankfurt and London affiliates were assigned the brand.

MANY CASES RESOLVED

Last week's moves, the largest in a series of four global realignments in the past year, resolved many of the cases where different agencies handled different P&G brands in other parts of the world. But it didn't resolve all the complexities, even for the brands involved.

For instance, though Saatchi & Saatchi will handle Old Spice in most of the world, Grey will continue to handle the brand in Latin America.

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