P&G chief lays out $1bn marketing efficiency vision

Bob McDonald: P&G's chief executive
Bob McDonald: P&G's chief executive

P&G's chief executive Bob McDonald has promised to deliver $1bn (£632m) in savings throughout the next five years with more efficient marketing, while stressing "we are not looking to make significant cuts in marketing support behind our brands".

The $1bn target for cost savings in marketing is part of an overall $10bn target for cost savings across the company by 2016.

The target is designed to restrain cost growth at P&G from $65bn last year to $75bn in 2016, rather than $85bn.

R&D would be relatively protected, McDonald said, but 5,700 roles will go across the 127,000-strong workforce by June 2013 as part of a $3bn target for savings in overheads.

"We plan to reduce enrolment in non-manufacturing organisations by 10%, roughly 5,700 roles by the end of next fiscal year. This includes the 3% reduction we have already announced for this year," he told analysts in New York yesterday.

Marketing roles could be among those to be cut through "selective hiring, attrition and restructuring" but it is not clear at this stage how many are affected.

P&G's marketing costs were $9.3bn in the year to 30 June 2011, and McDonald said he expected this year "to be roughly on par" with 2011.

McDonald said: "Similar to R&D we are not looking to make dramatic cuts in the support of our brands.

"In fact we want to increase reach, increase frequency, and increase the effectiveness of our advertising impressions with consumers.

"Even delivering a modest level of efficiency each year can amount to nearly a billion dollars of savings versus simply letting these costs grow at the same rate as sales.

"We’re very confident we can still do this while increasing the number and quality of impressions each year."

This week Marketing analysed whether cuts at P&G, Coca-Cola and PepsiCo amid significant ROI from digital signify a shift away from traditional marketing in our ‘Digital killed the marketing star’ feature.

McDonald was clear that P&G was shifting more spend to digital.

"We’re using technology to shift our spending from more traditional advertising on television to digital and mobile advertising.

"We’re using technology to more effectively and efficiently target consumers, allowing us to build one on one personal relationships with every consumer."

His presentation also included P&G’s expansion into developing markets and a promise the company could still grow in developed markets, where many FMCG companies are currently struggling.

P&G’s chief financial officer Jon R Moeller conceded that "developed markets have struggled to grow with market growth above 1% in only one of the past 10 quarters".

P&G brands include Gillette, Febreze, Oral B, Old Spice, Pantene, Ariel and Flash.

Creative agencies on its roster around the world include Leo Burnett, Publicis, Saatchi & Saatchi, Wieden & Kennedy and social media agency Mr Youth (acquired by Lbi last year).

Media agencies include Starcom MediaVest, ZenithOptimedia and MediaCom.

Follow Daniel Farey-Jones on Twitter @danfareyjones

Discussion

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now

Latest

Center Parcs ad banned for encouraging parents to take kids out of school
Coca-Cola, Cadbury and Amazon named top brands for targeting youth market
Leaked document shows Nokia to be rebranded as Microsoft Mobile
Nike lays-off hardware staff in move that casts doubt on future of FuelBand
Greenpeace says save the bees or humans will die
What brands need to know about changes to VAT and online downloads in 2015
Jimmy Savile victims urged to claim compensation in new ad campaign
UKIP launches biggest  ad campaign and stirs up 'racist' accusations
Apple boss Tim Cook provides voiceover on ad touting firm's renewed green commitments
John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message
Lynx unleashes £9m 'Peace invasion' campaign
Social Brands 100 Youth: Pizza Hut most social youth brand in UK
Cheryl Cole is wild and arresting in new L'Oreal work
Morrisons told not to show alcohol ads during YouTube nursery rhymes
O2 head of brand Shadi Halliwell departs after 23 years at company in restructure
Tesco hit by further sales decline as it turns to digital Clubcard and social network