P&G gets more from agencies by treating them as trusted advisers

Procter & Gamble’s decision to move the 135m Crest business out of Saatchi & Saatchi and into Publicis last week underlines its commitment to its Brand Agency Leader model.

The strategy, which sees one executive and one agency put in charge of a brand’s entire marketing, was started by former P&G marketing chief Jim Stengal but has been picked up by his replacement, Marc Pritchard. It is understood the pair had worked on it together when Pritchard was in his role as chief of strategy.

The BAL model has been introduced over the past two years and although sources say it does create cost savings it is not thought to be a reaction to falling spend and the credit crunch. Rather, it allows P&G more flexibility in its marketing spend, while reducing the amount of time its marketers have to spend with agencies.

It is understood that in the past P&G has been frustrated about not being able to react to shifting media trends because its budget was locked into a fixed fee with a single agency. One source adds: “You will get more flexibility if you hand the budget to one person to distribute.”

P&G introduced the BAL concept with Oral B in April 2007 and has since rolled it out to 11 other brands, including Gillette, Pampers and Pringles.

There have been a series of different formats for different brands, although in each a single agency holds the budget and is responsible for distributing it accordingly.

Old Spice, for example, was gradually moved into Wieden & Kennedy following positive results, rather than shifted all at once. For some brands, the BAL is working entirely with other agencies from the same group, for other brands it is a mix of group and non-group agencies. In each case, the BAL reports to the Brand Franchise Leader, who approves the strategy and spend client-side.

It has been suggested that the move is akin to P&G outsourcing its marketing, and while the agency is more accountable because it has control of the budget it must invest more management and process agency-side.

The agency is then renumerated on the strength of its results and, it is expected, will receive bonuses also based on success.

Follow the leader
That P&G, the world’s biggest advertiser, is changing the way it deals with agencies will be of interest to marketers everywhere. Where P&G leads, others invariably follow.

But Simon Rhind-Tutt, joint managing director at consultancy Relationship Audits & Managements, says although more clients are seeking to move to similar models, it is limited to some extent to companies that have “enormous faith and trust” in their agencies. “Agencies look enviously at the relationship between clients and management consultants or lawyers, who are seen as trusted advisers rather than suppliers.”

The BAL strategy, he adds, makes P&G’s agencies just that. “They sit at the top table and are seen as trusted advisers. This is reflected in their relationships, which means it gets more out of its agencies.”

With a number of BAL relationships in place for less than a year, the complexities of the initiative have yet to be fully tested, says another industry insider. In future, the BAL will be expected to review and pitch parts of the business as necessary, which could see a BAL forced to hand business to a rival.

With a further undisclosed brand to be added to the BAL scheme in July, it is a strategy that P&G appears to have growing faith in. However, the strategy is as yet unproven, at a time when marketing accountability is key.

Caroline Parry