Q&A with Jim Stengel: P&G shakeup adds scale and leverage

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Procter & Gamble co. Global Marketing Officer Jim Stengel implemented the biggest agency roster shakeup in P&G history and presided over an expanded role for purchasing in agency relations. He's aiming to pump up the troops with events such as P&G's 2002 Global Brand Building Awards, a 14-year P&G tradition brought back after a two-year hiatus. After the event, Mr. Stengel talked with Advertising Age Contributing Editor Jack Neff.

AA: What does the new agency alignment allow P&G and its agencies to do that they couldn't do before?

Mr. Stengel: With two big networks now, we are really huge partners. They are very important to us. We are very important to them. And there's no ambiguity. ... I'd expect more scale across the [agencies] in terms of helping us with our business challenges. More scale, knowledge, leverage. ... We learned from Tom Muccio [president of P&G's Wal-Mart team] who started the Wal-Mart team 15 years ago. He and Wal-Mart have an annual plan for what they hope to achieve together, above and beyond what they do by brand. And I'd hope we'd have a parallel plan with Publicis and Grey. The company needs to know more about how to launch plans in low-income markets. So what can Grey do to advance our knowledge there? They can advance our knowledge in a way that we couldn't do if we had our brands fragmented in 10 different networks.

AA: With the application of Supplier Business Development to the purchasing discipline, what do you expect that to result in?

Mr. Stengel: We've had purchasing involved for quite a while in virtually all of our marketing spending, but it's done as part of a team. It's very collaborative in terms of tackling the challenge. What we're doing is not a new issue for us, and the agencies don't report in through them. What they are is a resource for both us and our teams and our agencies.

[Results could include] things like ... how do we get approval of commercial production bids faster? It could be that mundane. It could be very strategic about what evaluation system do we put in place for our agencies that will really help us improve. And purchasing has some knowledge of that. They've worked with suppliers in many industries.

AA: How do P&G brand people fit into the equation?

Mr. Stengel: ...Every relationship we have with our agencies has transactions involved. You want less of that and more working on ideas and getting close to consumers. So purchasing is there to help us work on more of what we want to work on more. I want account people and creatives and brand people working on the brands, being outside, meeting consumers, being in stores, brainstorming, trying new ideas, going to the Internet and getting feedback on ideas. I don't want them talking about how do we pay for this, which fees are on which projects. Purchasing has knowledge there. But we're not deferring accountability for agency performance or reporting relationships to purchasing. They're a resource.

AA: Are there particular areas of shared costs that are likely to be a focus? Production costs come to mind.

Mr. Stengel: We don't have the concrete plan yet. But that is an example of one that could be. We've got a lot of ideas. We have a planning meeting in December to start locking on a few things to work on. But frankly there's so much change in the past couple of weeks that the focus now will be on moving all the accounts, making sure there are no projects slipping, and that's going to take a few months. So purchasing would just be part of the team to help this transition run smoothly. ... After that, we will agree with our agencies on a project list. And we'll agree to jointly evaluate it. This has to be a win-win or it's not sustainable. And I won't let it happen. If it's not a win-win, then we regroup.

AA: P&G, like many big advertisers, has talked about wanting its agencies to develop more, broader and better capabilities in holistic marketing or below the line areas. How would you assess your agencies' progress?

Mr. Stengel: We expect our agencies to be stewards or navigators or shepherds of the brand standing beside us. They will know the brand better than anyone. They will know what the brand needs. And they will help us determine in their areas of expertise what the best talent is and what the best plans could be. ... What we want is the best in every area, and whether that's in the network or not is irrelevant.

AA: I've heard you talk several times about wanting the best people at the best agencies on P&G's brands. Do you think when the economy changes, when there's more new business out there, that it will be harder to get that demand met? And if I'm another client in a P&G agency, particularly a competitor, should I be worried that I'm not going to get the best people now, and does that create a new conflict problem?

Mr. Stengel: We don't want P&G within the agencies to be a secluded group. We do want to tap into the best resources in the entire network. But our scale now at [Publicis and Grey], no matter what happens in the economy, [is such that] if there's another dot-com surge or whatever, we will be the place where people want to make a career....It's our responsibility to develop an environment where, beyond the financials, people want to work. You saw that with the two awards we led with [at P&G's Global Brand Building Awards].... So we want to be from a partnership standpoint, from an emotional and financial standpoint, a place where people want to work. You've got to be willing to let them take chances, take risks.

AA: You saw that last night ...

Mr. Stengel: [Laughing] You saw that last night. [Among the ads shown during the ceremony for Grey Global Group's Ericsson Fina was one for Lacoste Homme fragrance featuring male full-dorsal nudity.] And I think a lot of the work you saw, if you're a creative person, you're going to say, they're going to let me stretch-based on solid consumer insights-but they will let me stretch. And that's what we want.

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