Much of the savings from PMP deals and ad tech were because P&G is in-housing those capabilities and drastically reducing agency outlays.
P&G trimmed its global agency roster last year from 6,000 to 2,500, and expects to cut about half of the remaining agencies in 2018, Moeller said. The cuts translated to $750 million savings in agency fees and production costs in 2017, likely growing to more than $1 billion in agency reductions by the end of this year.
“We need the contribution of creative talent and are prepared to pay for that,” he said. But content production and media-buying margins will be further compressed as P&G in-houses more of the marketing stack.
P&G didn’t comment on changes to its board in Q4, after activist investor Nelson Peltz claimed a director seat in the wake of a contentious shareholder vote. Peltz had petitioned P&G investors to support his bid based in part on opposition to the company’s marketing strategy and its failure to preempt ecommerce-first CPG startups from claiming market share.