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P&G SELECTS BURNETT AS PRINT AOR: $250 MIL ASSIGNMENT COULD BE THE BLUEPRINT FOR TV PLANNING TEST

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Procter & Gamble Co. named Leo Burnett USA, Chicago, agency of record for its $250 million print buying and planning business.

Saatchi & Saatchi Advertising, New York, previously handled buying, while most planning had been split among P&G's nine brand agencies.

Executives at P&G agencies saw far-reaching significance in the decision, which concluded a six-week review among roster agencies.

With the print decision made, P&G is now expected to study consolidation of TV planning, according to both a P&G insider and an agency executive. The marketer is the nation's largest buyer of TV time, spending more than $900 million in the first nine months of 1996, according to Competitive Media Reporting.

P&G's media department would probably test TV planning consolidation first, just as it tested print planning consolidation for nearly two years before launching the AOR review.

TeleVest would likely stand to gain from such a test; the MacManus Group unit handles network TV buying for P&G.

A P&G spokeswoman said TV "is a whole separate issue" from print.

COMMISSIONS REDUCED?

P&G agency executives also fear that the consolidation of planning foreshadows the end of agency commissions as high as 15% at P&G.

In March 1995, P&G initiated the print planning test with Saatchi, which already handled all print buying. For certain magazine titles, the agency was authorized to substitute other similar titles in a brand's media plan if it could lower rates by doing so.

EXPANDING THE TEST

Last October, P&G's director of media and programming, Daryl Simm, sent a letter to all agencies saying P&G wanted to expand the test to a broader range of titles. The decision to start a review followed.

Effective July 1, Burnett will have broad responsibility for all P&G brands' print planning and scheduling. That could be bad news for magazines, with price becoming the main focus.

"Everyone has been on pins and needles waiting for a decision .*.*. It's going to be tougher for all the magazines that will now be undergoing the same kind of scrutiny women's service magazines have for the past year and a half," said Patricia Haegele, publisher of Good Housekeeping.

Said Jack Kliger, exec VP at Conde Nast Publications: "We have been working closely with P&G over the years, and I think they understand the value of our books. If the question is will we be breaking our rate card, we'll continue to offer the same rate to companies doing the same volume of business."

COMPENSATION CONCERNS

Agencies also fear the impact on their compensation. Though P&G consolidated media buying at several agencies years ago, brand shops still get paid with commissions based on the media billings of their brands. With planning now being consolidated, agencies wonder how long that can last.

P&G declined to comment on compensation, other than to say it anticipates no changes from the print consolidation. One agency executive said commissions now range from 13% to 15% with the higher rate going to agencies that have media AOR assignments.

Agency executives said media consolidation in the U.S. emulates a pattern overseas, where P&G has been pleased with similar moves in a number of markets. In the U.S., P&G likes the efficiency it has gotten from TeleVest, the industry's TV buying leader.

With P&G included, Burnett will now have responsibility for more than $500 million in consumer magazine billings, making it the largest U.S. print buyer by far.

The loss is a big blow to Saatchi, especially since Robert Wehling, P&G's senior VP-advertising, market research and government relations, had been very complimentary about the agency's work only two months ago.

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