P&G tests roster reduction

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Procter & Gamble Co., looking to winnow its massive roster of more than 200 marketing services shops globally, is conducting a test that could result in more business landing at its major agency holding companies, Publicis Groupe and Grey Global Group.

Though P&G last year consolidated almost all creative, media planning and buying duties globally with Publicis and Grey, it has continued its longtime practice of going outside those holding companies for much or most of its promotion, public relations, direct marketing and retail marketing work.

Now it is preparing a test of funneling more marketing-services assignments to one of the two, according to executives familiar with the situation. Details, including which parts of the business and which holding company will be involved, could not be determined. P&G spends more than an estimated $600 million on below-the-line marketing in the U.S.

"We are always looking for ways to gain efficiencies in the way we work with our agencies," said a P&G spokeswoman. Grey Worldwide and Publicis' Saatchi & Saatchi referred inquiries to P&G.

The effort is being handled by the purchasing group of P&G's North American Market Development Organization but has ramifications globally and for other parts of P&G's business, the executives said.

The test is an outgrowth of P&G's Supplier Business Development launched last year to work jointly with suppliers to cut costs and spur mutual growth, but it isn't directly connected with a purchasing program begun last year focused on P&G's creative and media agencies.

P&G's marketing-services roster proliferated in recent years, particularly after the company in 2000 split its marketing efforts between market development organizations, which focus on retail and regional multi-brand promotions, and global business units, which have primary responsibility for marketing individual brands.

P&G executives assigned to the MDOs no longer had responsibility for individual brand marketing but did have authority to choose agencies to execute regional programs and did so with zeal, said one executive close to the company. He believes the P&G purchasing effort is focused not so much on cost-cutting or financial streamlining as on quality and ensuring all parts of the marketing mix jibe with brand advertising and equity.

`sane level'

"Will they get the 200 down to some sane level? Absolutely," said one executive close to P&G. "Will Grey and Publicis pick up some of it? Yes. But they won't pick up all of it. [Saatchi CEO] Kevin Roberts would like it all, but that's not going to happen."

The two holding companies lack the breadth of capabilities needed to handle all P&G's marketing-services business in such areas as beauty care public relations, executives close to the company said. Some of P&G's deepest marketing-services relationships are with independents or shops at other holding companies, some of which also could benefit from the consolidation.

For example, P&G licenses a proprietary targeting methodology to Omnicom Group's Targetbase, Dallas, which uses it for P&G and markets it to other clients. Independent Northlich, Cincinnati, handles P&G's Brandsaver, a corporate-branding promotion executed through newspaper coupons, a Web site and in-store displays.

P&G undertook a similar effort in 2001 to pare its roster of 40 interactive shops in the U.S. down to nine.

Last week, meanwhile, the company announced realignment of its African-American advertising assignments as it expands their work to more brands, naming two independent shops to handle all the work, but aligning them with P&G's major agency holding companies. Burrell, Chicago, long P&G's primary African-American agency, will work on Publicis-handled brands, while Carol H. Williams Advertising, Oakland, works on several Grey brands.

contributing: bradley johnson

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