Procter & Gamble adopts bolder advertising strategy to boost sales

In the wake of last week's 30-point plunge in its share price on the New York Stock Exchange, Procter and Gamble's decision to emphasise integrated marketing, might, industry observers said, be more of a cost-cutting exercise rather than a long-overdue change in direction. The latest of a series of revolutionary moves on the P&G account sees the Cincinnati-based conglomerate opening up brand planning and development to all of its external marketing and promotional resources in the first stage of planning, as of July 1, 2000. Previously, roster agencies Saatchi & Saatchi, Leo Burnett, D'arcy and Grey received first-call briefing on a total annual adspend last estimated to be in the region of US$3 billion. As reported in the Chicago Tribune at the end of last year, this latest initiative invites P&G's public relations, direct marketing, promotions, merchandising and interactive consultancies and a further US$1.6 billion worth of promotion spend, to sit down with roster agencies at first stage briefing with all the money on the same table. The move was viewed by many to be another indication of the company's commitment to both integrated marketing and greater competition among its external marketing divisions. Timed to coincide with the radical July 1 move to a fee and bonus related remuneration system for the company's roster agencies, the new era of quantifiable advertising results appeared to be well and truly established on the P&G account. And, in an unusual twist, the generally perceived "10 miles of bad road" creative view of the P&G account, might be turned on its head by the new initiatives. On the premise that the best creative work produces the best results, agencies which do not or cannot put excellent creative resources behind the account, suggested Craig Davis, regional creative director for Saatchi and Saatchi Asia-Pacific, stand to lose out. According to Mr Davis, "The creative door is open" on P&G accounts. What remains to be seen was whether the agencies can come up with the goods. "In the past, P&G did a very good job of looking at what they had achieved and what had worked. Reapplying previous successes meant that in some cases agencies were working almost to formula. "There was no question that P&G recognised that it might have been missing opportunities as markets started to develop and other competitors came in." P&G sent shock waves through the industry in 1998, when the company embarked on a radical internal restructuring programme overturning purportedly written-in-stone dictates, which governed every area of the FMCG giant's operations. Speculation among industry onlookers and the world's press has been rife. It seems most likely, however, that changes came about in response to an increase in velocity of its downward-moving share values, which if left unattended had the potential to knock the world-wide market leader out of the number one slot in its leading categories and markets. Concern over decreasing share values led to the implementation of a wide-range of organisational temperature-gauging exercises, which covered all areas of operation, including external marketing resources (P&G's agencies) and the creative work being produced. What they found, said Mr Davis, was that "their agencies' best work was not on their business (and) the agency's best people were not always working on their business." Employing high-profile creatives on P&G accounts has been a long- time policy for Leo Burnett, which in the new guise of BDM now holds 50 per cent of P&G's global business. According to Andrew Bell, who moved into Leo Burnett's newly-created role of regional creative director responsible for P&G hair care based in Thailand last year, "The need has been voiced for brands to stand out from the crowd in a more meaningful way. Our clients are being asked to take risks and make decisions based on gut feeling. "The production of rough test commercials is becoming rarer. Our clients are more inclined to air and test later." Having been recognised as generic to the category (as opposed to brand defining), so-called identifying hair shots are gradually disappearing from P&G's TV commercials". Finer points such as content requirements of hair shots and See-and-Say, plus testing procedures such as OAT's and Quick-and-Roughs are the thin end of the wedge when it comes to improving creative standards and business results in the world of P&G advertising. One of the biggest differences - reflecting what Saatchis regional planning director for P&G, Danny Logue, described as a fundamental attitude shift - is the re-framing of OAT's as a learning and development tool that might now happen after the event, rather than a pre-requisite which must be passed before a television commercial can run. The changes at P&G might yet prove to be a bit unsteady, but one that, if they can hit the bulls eye, will pay well for the FMCG global giant. As the Chicago Tribune suggested at the time of the announcement, new moves at P&G favour integration which, among other things, typically leads to an increase in below-the-line activity. This in turn would favour agencies, like BDM (Burnett, Dentsu, McManus), which through its union with PR leaders Manning Selvage and Lee can display substantial integrated expertise. With the new compensation structure due in place by the middle of this year, P&G and their roster agencies will, in the words of Saatchi's Mr Davis, operate far more as partners than just as agency and client. "There's a competitiveness to this new era and Saatchis would like to be the agency that makes the most of it." In the long run, the increased emphasis on integration may prove to be another kick-in-the-teeth to above-the-line and the creation of TVC advertising. In the short term, however, opportunities to improve the quality of creative produced on P&G accounts, are deemed by all to be increasing. As Mr Davis put it, "It's for the agencies now to take that opportunity and turn it into something". Carpe-Diem or 'seize the day' may be the motto for P&G roster agencies now, however, whether this translates into higher stock prices remains to be seen.

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