Madison Avenue is troubled by an expected change at the top of Procter & Gamble, as the new CEO is likely to reduce the number of ad agencies working for the company, according to the Wall Street Journal.
Procter & Gamble is expected to appoint a new chief executive today, triggering a rash of worry at big ad agencies over a trend among big marketers to winnow the number of advertising firms they use, according to a story in the Wall Street Journal.
Written by Suzanne Vranica, the story says P&G’s board is expected to approve a plan to replace longtime CEO A.G. Lafley with Robert McDonald, currently the company’s COO.
McDonald is known as a no-nonsense executive who, along with P&G’s global marketing chief Marc Pritchard, has been streamlining the way the company works with advertising and marketing companies.
This effort could cut a number of ad agencies and marketing firms out of the spoils, the story says. P&G, the world’s biggest advertiser, spends about $8.7 billion annually on promotions ranging from TV ads to in-store marketing programs for products like Tide laundry detergent and Pampers diapers.
Madison Avenue is undergoing a broad contraction sparked by the economic crisis and tumult in the auto industry, the story says. General Motors, which until last year was the second-largest ad spender in the U.S., behind P&G, has already slashed the fees it pays to its advertising agencies and is expected to cut down on the number of agencies it employs.
P&G slashed its U.S. ad spending on conventional media, including TV, print, and Web display ads by 6 percent last year to $3.2 billion, the story says.The company is expected to continue moving more of its spending to digital media.
WSJ Online subscribers may read the full story here.