P&G cuts back on production firms

Procter & Gamble in Britain is expected to instruct all its advertising agencies to use no more than two production companies for its 150m-plus advertising business.

The move comes at a time when P&G is trying to beat down its long-term marketing costs worldwide from 25 to 20 per cent of sales revenue. The consumer goods giant uses five main agencies.

The drive for fewer production companies has already started in continental Europe, where P&G has told its agencies in Germany, Austria and the German-speaking parts of Switzerland to use a maximum of three production firms.

Industry sources say the rest of the company’s European operation will soon follow.

P&G’s UK environmental manager, David Hammond, says: “In Germany, we have merely consolidated TV production. Here in Britain, we always aim to improve both our efficiency and quality. But as usual we don’t discuss plans.”

The move is in line with a memo written last year and leaked to Marketing Week at P&G’s Cincinnati head office (MW February 23).

In the case of advertising, it stressed “saving opportunities (including pool policy and talent re-use)”.