Kraus Sensitive to Creativity

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During her first tour of duty in purchasing below-the-line marketing services at Procter & Gamble Co. in 1991, Kim Kraus saw a "huge opportunity" in putting procurement to work above the line with ad agencies.

"There's so much inefficiency in the process that we create and the agencies create," said Ms. Kraus. It took 12 years for P&G to give Ms. Kraus her wish, but last October she took a newly created post focusing on agencies at the heart of P&G's $4 billion annual advertising outlay.

"Tradition is hard to change," said Ms. Kraus, 38, director of corporate marketing-strategic relationship optimization. Resistance to a procurement role in agency relations has subsided at P&G in part, she believes, because she reports to Global Marketing Officer Jim Stengel.

P&G's purchasing effort has changed, too, increasingly emphasizing services, such as a recent 10-year, $3 billion information-technology-outsourcing deal with Hewlett-Packard Co. Purchasing today is "about managing long-term relationships," she said, "not bidding out the business every year."

Ms. Kraus, a marketing major who spent most of her 16 P&G years in procurement, prefers to call what she's doing "strategic sourcing." She is not, she said, out to nickel and dime creativity. Highlighted in her office is a line from an Advertising Age editorial that says: "We are dealing in advertising here. Not toothpaste ingredients."

After five months learning about agency relations from inside P&G, she asked Mr. Stengel if she could spend time at an agency. She spent last May as an intern at Publicis Groupe's Saatchi & Saatchi and Kaplan Thaler Group in New York, working in several roles, including creative. "In the first 10 minutes I determined I shouldn't quit my day job," she said.

Ms. Kraus' efforts to understand nuances of the ad business have drawn her praise from procurement and advertising finance peers at other companies and respect from P&G agencies. Tim Love, Saatchi exec VP-international and Publicis' P&G relationship manager, said the internship is just one sign Ms. Kraus is not the type of procurement person to which he's accustomed. "Her role is really to facilitate early detection and resolution of issues in compensation, staffing and resources," Mr. Love said. "She's been a sounding board where you ordinarily wouldn't know where to turn."

Among Ms. Kraus' first projects: how to structure P&G and agency relationships to make integrated marketing work better. "I'm kicking off a project taking above the line and below the line, and erasing the line," she said. "Integration is the holy grail. Everybody knows that. It's how do we execute it?"

Ms. Kraus acknowledged that pricing creativity may always be a conundrum. "At the end of the day," she said, "it's what are you willing to spend."

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