Profile: Sir Charlie Mayfield

John Lewis Partnership Chairman

P&G outlines marketing savings

P&G is to further trim its marketing services supplier roster and cut non-essential promotional activity as part of its efforts to save more than $1bn in marketing costs.

PG

Marketing is P&G’s third largest outlay. It spent $13.7bn on advertising and non-advertising marketing last year although it claims to have already made efficiencies this year believes there are “significant opportunities” for further savings.

Speaking at the firm’s annual meeting for analysts this week, chief brand building officer Marc Pritchard said there are more opportunities for P&G to make savings through non-advertising costs than advertising costs.

P&G has reduced the number of marketing services suppliers globally to 13,000 down from 20,000 five years ago, but Pritchard says this is still “too many” and hopes to further cut the number.

Unnecessary promotions such as those that offer things like free soft toys with multiple purchases will also be trimmed back. Pritchard says: “We don’t need those kind of of activities they are non-equity building and we can get rid of them, they don’t add value.”

Pritchard says: “making savings in non-advertising marketing costs is not rocket science - it’s simply hard work and requires more consolidation, simplification and discipline than we have been putting against this spend.”

The company has already started to change its approach to advertising by adopting fewer bigger creative ideas that can be used around the globe rather than different brand ideas in each region.Its London 2012 Olympic sponsorship activity is an example of this.

Pritchard admitted that previously it had too many messages running concurrently for each brand around the globe which “diluted the message and didn’t add value.”

The efforts are part of P&G’s stated goals to reduce costs by $10bn including making $1bn savings in marketing costs.

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