•        1997-06-09
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By Cristina Merrill / By Adweek


A few weeks back, shocking word arrived that one of the three partners of TeleVest, the national television buying unit that handles much of Procter & Gamble’s broadcast media, was leaving. TeleVest perceived the rumor–since proven completely false–to be so inimical to its relationship with P&G that the unit felt compelled to make a damage-control phone call to P&G. TeleVest denied the ‘vile gossip,’ feeling it was planted by a rival to lessen TeleVest’s credibility with its most important client, right before the crucial media review.

Such is the passion and the tension inspired by P&G, now made even more frantic by the company’s call last week for the largest media consolidation ever.

The winner could score $1.2 billion.

‘This is the biggest assignment any of us will probably get a chance at in our lifetime,’ says a media executive who requested anonymity.

The quintessential American marketer, as well as arguably the world’s largest, is making a move that is likely to affect the way television planning and buying works in this country and the relationship that the packaged-goods company has with its agencies. The review has tremendous implications for the entire advertising industry, even for those who don’t have P&G’s $3 billion to spend on image.

With the review, P&G, led by its director of worldwide media and programming, Daryl Simm, is looking at consolidating the buying and most of the planning at one agency, which will allow the marketer to not only streamline buying and planning duties, but also bring about a newer, European-like planning model that directly involves the participation of the buyers. As a result, the division of planners and buyers would become less clear.

Currently, broadcast buying duties are mostly divided among four of P&G’s eight roster shops: D’Arcy Masius Benton & Bowles and its national TV buying powerhouse, TeleVest; Wells Rich Greene BDDP; Euro RSCG Tatham; and Leo Burnett. Media planning is conducted by the respective creative agencies for each brand.

For $1.2 billion, the winning agency will garner P&G’s combined network, syndicated, spot and cable TV buying and most of the planning. The rest are likely to lose all but the creative portion of their P&G business, a departure from the way the company has politely apportioned its business in the past.

It would not be the first time the world took notes when P&G sneezed. Marketers copied in droves P&G’s entry into everyday low pricing in the early 1990s. And it was P&G’s Ed Artzt’s wakeup call at an industry gathering three years ago that sent ad execs scrambling to embrace new media.

More immediately, the review stands to affect P&G’s own agencies. D’Arcy Masius Benton & Bowles and TeleVest have the most to lose, given the nearly $800 million in network, spot and syndicated buying they handle for P&G; Wells Rich Greene BDDP could also part with about $200 million in cable and sports time.

On the other hand, Saatchi & Saatchi, hungry from its loss of P&G print buying to Leo Burnett, would gladly embrace, with Zenith Media, P&G’s TV assignments. So would Leo Burnett, which handles only a portion of P&G’s spot buying. The same with P&G’s other shops, including Euro RSCG Tatham, Grey Advertising, Jordan, McGrath, Case & Taylor or N.W. Ayer & Partners.

It is way too early to predict the outcome (the decision is expected by December), but the handicapping has already started. Sources say the sheer size of the assignment automatically divides P&G roster agencies into the haves and have-nots–in favor of those with the research and technical capabilities to digest more than $1 billion in media duties. The same sources predict a showdown between P&G’s four global shops: DMB&B/TeleVest, Leo Burnett, Grey and Saatchi.

At the same time, P&G’s agencies are learning two things: There are few rules to this review, and the Cincinnati-based P&G is open to ideas. ‘Creative approaches are A-OK,’ says Kristen Hall, a spokesperson for P&G.

One approach, for example, could find two or more of P&G’s smaller agencies forging a cooperative arrangement to pitch the assignment. Another possibility is that a smaller P&G shop could bring in an outside media buying service such as Western International Media to pitch the business. At press time, it was unclear whether these scenarios were under consideration.

‘If an agency chooses to pitch it that way, we’re in no position to say yes or no,’ Hall explains. ‘We’re looking to each agency to define the best skill set to pitch this assignment. We are looking for the best resources and we are looking to our agencies to provide them.’

Why now?

‘The single AOR assignment is consistent with P&G’s companywide efforts to streamline our operations,’ Hall says. ‘This will simplify the current scheduling, buying and planning processes by more efficiently organizing and redefining what needs to get done in all of these areas.’

The company has also begun pursuing a simultaneous goal of consolidating creative duties for each of its leading brands at its multinational agencies, as part of its ‘Marketing Breakthrough 2000’ program. That goal calls for reducing marketing spending while increasing efficiencies.

Sources say P&G media director Simm himself, whom insiders refer to as a brilliant and savvy media executive, is a driving force behind the review. Simm, they say, has risen through the ranks at the company and is ready to make his mark. Having joined P&G in the 1980s, he took up various positions in the U.S. A few years ago, he was sent to Brussels, as P&G’s media manager, to preside over a $450 million pan-European media buying consolidation. (Simm declined to be interviewed for this article.) Simm and P&G executives grew accustomed to the European way of handling media buying and planning–that is, media buyers have a wider range of expertise than in the U.S. and planners are more closely linked to the creative process.

In Europe, Simm grew fond of optimizers, a computer-based technology that claims to make planning and buying more efficient and economical (see Media Agencies, April 14). Some say this kind of cutting-edge planning and buying technology, which advises how best to spread media dollars and maximize coverage by computing thousands of formulations in just minutes, could be a key factor in the pitch. One parameter of P&G’s TV review may be the requirement of this type of advanced technology–sources speculate that the agencies without such advanced optimizer systems could be at a disadvantage.

Simm recently left his mark on the P&G print buying and planning review. First came an unusual test two years ago, whereby print buying agency-of-record Saatchi & Saatchi was awarded scheduling and planning duties. P&G then called a review–not unlike the current TV review–for the entire ($293 million) print business, which went to Leo Burnett this year.

The decision to incite this television consolidation did not happen overnight, sources say. It is the result of a couple of years of brainstorming by Simm and other media executives. Sources close to P&G report that the company also briefly toyed with the idea of bringing all media in-house. And late last year, P&G formed a steering committee, made up of roster-agency and P&G representatives, to study the feasibility of the TV review. The committee’s efforts, which continued through the spring, were inconclusive, sources say.

So who will win?

It’s anyone’s guess, although aggressive forecasters see the final stages as a showdown among the four global agencies. For one, P&G gave Leo Burnett a strong vote of confidence by awarding it the print AOR. That, some say, could also work against the agency, given P&G’s reluctance to place ‘all of its eggs in one basket.’ At the same time, P&G has also had a longtime relationship with TeleVest, which handles its estimated $776 million in national buying.

Thanks to Irwin Gotlieb, TeleVest’s chief executive officer, the buying unit has been instrumental in negotiating P&G’s production deals with various studios to the point that P&G is now one of the country’s largest suppliers of original programming.

‘P&G would be foolish not to keep TeleVest,’ says a media director at a non-P&G shop. ‘That is unless Daryl (Simm) wants to shake this up. And ever since his return to the U.S., he’s done nothing but shake things up.’ 

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