Consumer goods giant Procter & Gamble is in trouble. Fourth quarter revenue missed target narrowly ($16.5bn against $16.54bn as did sales growth (one per cent against 2.3 per cent). Net income was down a thumping 14.9 per cent to $1.89bn year-on-year.
All this while announcing substantial cost savings from its cull of agencies (down to 1300 from a scarcely credible 6000) and savings from better targeting of digital ads – running fewer campaigns for longer.
Embattled CEO David Taylor (below) also said the company was returning: “returning to one-stop shops and reuniting media and creative’ by implementing a “fix-and-flow model, reducing the number of agencies on retainer and flowing creative resources in-and-out. This has not only saved money but leads to better and faster work.”
All of which might lead you to think the company has been wasting its time for the past decade or so as, along with rivals like Unilever, it led the charge into digital and the mushrooming number of specialist agencies formed to deal with all aspects of the all-transforming digital ecosystem. It finally seems to have dawned on these advertisers that not so many people were actually seeing these ads and those who did were unconvinced, to put it mildly, by their blandishments.
Other smaller advertisers across the world also seem to be getting the message. The UK’s GoCompare price comparison website has cut the number of marketing campaigns it runs and started to switch money back to traditional media, even – yikes – print.
When growth is as slow as it is at P&G then agencies can expect more price culls and enforced experiments like P&G’s mooted ‘People First’ agency in the US, pooling people from its various holding company agencies. Another $1bn saving might keep CEO Taylor and CMO Marc Pritchard in their jobs as activist investors chivvy away at these long-established businesses.
But this constant modelling and re-modelling begins to look like shuffling the deck chairs on the Titanic. Just as with agencies – WPP’s Ogilvy is the latest example – it’s surely a distraction. P&G needs to create big marketing campaigns that connect with the public. Something it used to be pretty good at.