P&G slashing spending to save $1bn in marketing
After announcing it will cut 1600 jobs earlier in the year, consumer goods giant Procter & Gamble plans to wipe out another 4000 to streamline its marketing budget and save $10 billion by 2016.
The cuts, announced by CEO Bob McDonald, will see the company reduce headcount, shift more money to digital, use more multi-brand approaches and cut its external marketing spending by $1 billion.
AdAge reports that McDonald said the cuts will focus on all areas of marketing, not just media or agency costs. “We’re not looking to make dramatic cuts in the support of our brands,” he commented.
“Even delivering a modest level of efficiency each year can amount to nearly a billion [dollars] of savings versus just letting these costs grow at the same rate as sales. We’re very confident we can do this while building the number and quality of consumer impressions each year.”
Marketing costs are the third-biggest spend pool, behind people and materials, for the company which spends nearly $10 billion a year on TV, print and online advertising.
The cost-cutting in developed markets comes at a time when the company is looking to expand into developing markets. AdAge reports that it is looking to establish its toothpaste brands, including Oral-B and Crest, to almost every country in the world by 2015.
The consumer goods giant has already embarked on a major multi-brand effort with a host of initiatives built around the 2012 Summer Olympics spanning 30 brands.
McDonald says P&G’s Summer Olympics program, which launched in January, delivered more than 2.5 billion impressions in traditional and social media in the first month alone producing a bigger overall impact than the brands could have individually.
A local spokesperson told Marketing that the restructuring was a global program, but the impact on specific countries had not yet been announced.