The announcement of the new agency model comes after Pritchard criticized ad agencies for being too complex. “We want and need brilliant creative, and we will invest in creative talent. But creatives represent less than half of agency resources, because they’re surrounded by excess management, buildings and overhead,” Pritchard said at a speech given at the Association of National Advertisers (ANA) conference in Florida last month, in a transcript seen by CNBC.
The company has worked with its agencies in a buddy system, which sees agency personnel pair up with relevant clients, in a complex process in which P&G is partly to blame, said Pritchard. “This leads to spending way too much energy on conference calls, meetings and offsites, traveling to see each other, and wasting time with conference reports, PowerPoint presentations, dimming and ultimately extinguishing creativity,” he said at the ANA conference.
P&G reduced its ad budgets, saving $750 million in agency and production costs, it said in January, and it is set to save a further $400 million “in the next phase”, according to Chief Financial Officer Jon Moeller.
In April 2017, Pritchard said the business wanted to run fewer ad campaigns. “We’ve cut the amount of work we do, but we can go much further by focusing on fewer and better ideas that last longer. We get tired of ads a lot faster than consumers do,” he told an industry conference.
Pritchard has previously warned the media planning and buying industry to clean up its act or risk losing P&G’s business, partly because of misreporting of the effectiveness of digital marketing.
P&G has reduced the number of marketing agencies it works with by almost half to 2,500, and this will be cut by another 50 percent by 2021.