RE: Stevoc196423 Jun 2019 18:28
Interesting article I’ve copied from the ft, re the likely future direction of travel for advertisers:-
Procter & Gamble, one of the world’s biggest advertising spenders, plans to shift more of its shrinking marketing budget away from big ad agencies and towards new players, the latest ominous sign for companies such as Publicis, WPP and Dentsu Aegis Network.
“We have reduced spending by close to $1bn in fees and production over the past four years and reinvested it in other creative partnerships,” Marc Pritchard, P&G’s chief brand officer, told the Financial Times.
The company said last year it would save $2bn by 2021, meaning there is more pain to come for big agencies already reeling from the rising dominance of Google and Facebook in the era of digital advertising.
Mr Pritchard, who last year vowed to “take back control” of P&G’s brands, said the proliferating use of ad blockers was forcing big companies to experiment more, trying to create ads that “people actually want to watch”.
Among the company’s new partners announced at this week’s Cannes Lions advertising festival was Ariana Huffington’s new behavioural health venture Thrive Global, which hopes internet-connected versions of some of P&G’s best known products — for instance Oral-B toothbrushes — can serve as “wellness boosters”.
Ad agencies have been shedding business from the automotive, pharmaceutical and consumer goods companies that have traditionally formed the backbone of their clientele. Huge sums are at stake — P&G alone spent $7.1bn on marketing last year.
Tim Andree, chief executive and chairman of Dentsu Aegis, said the agencies’ traditional clients were “not going to spend the way they have always spent”. The company, formed in 2012 by the £3bn acquisition of Aegis by Japanese communications group Dentsu, would instead focus on bigger opportunities in helping companies make sense of their own data, identify potential customers and target them better with tailored advertising, Mr Andree added.
Martin Sorrell, who founded S4 Capital following his departure from WPP last year after three decades in charge, has criticised the business models of his former company and its largest peers, saying they are too big to adapt to the new world of advertising dominated by data.
S4 has grown rapidly, acquiring a digital production company and a specialist in programmatic advertising, which involves the use of automation to buy and sell digital advertising space. Mr Sorrell said this year the approach was “resonating with clients” increasingly frustrated over limited access to consumer data when dealing directly with Google and Facebook.
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Publicis, the world’s third-biggest advertising group by revenues, this year paid $4.4bn for digital marketing agency Epsilon. WPP, on the other hand, has gone in the opposite direction, putting its data centre Kantar up for sale.
“Our view is that the best way to un
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