P&G crisis forces agency cutbacks

Procter & Gamble is freezing capital investment and new marketing initiatives in what could be one of its worst crises of the past 20 years, according to a confidential memo from head of European operations Wolfgang Berndt.

Procter & Gamble is freezing capital investment and new marketing initiatives in what could be one of its worst crises of the past 20 years, according to a confidential memo from head of European operations Wolfgang Berndt.

The company has asked ad agencies for their urgent assistance in cutting advertising and marketing costs by at least five per cent, though it suggests cuts of up to ten per cent could be made.

P&G wants cuts in business travel of one third, and has called for training, the use of consultancies and conferences to be postponed.

The memo says: “Unless we fix our fundamental growth issue, we have no way to hit our forecasts…We must operate in a crisis mode.”

Net sales volume in one country where P&G operates “will be close to zero”, according to the memo. The memo says the “major business crisis” will be overcome through “prudence and stretch”.

“Stretch” is P&G’s term for globalising brands.

The comments express in dramatic terms the problems that P&G faces in meeting its sales and growth targets.

In September, the company replaced chief executive John

Pepper with his deputy Durk Jager with a brief to shake up the company and pave the way for world- wide brand launches (MW September 17).

But the prospect of cuts in marketing costs could undermine the aim of doubling its $37bn (22.4bn) worldwide sales over ten years.

No one at P&G was available for comment as Marketing Week went to press.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here