P&G China moves media negotiation in-house

Monday, 01 June 2009 10:01

GUANGZHOU - Procter & Gamble is dramatically changing its media buying arrangements in China, taking its entire media negotiation business in-house.

The decision affects Starcom Guangzhou, the FMCG giant’s main media buying agency on the mainland. In a related move, P&G has shifted non-TV buying duties out of Starcom into an undisclosed agency, with MediaCom tipped to pick them up.

It is believed that P&G’s internal purchasing department will negotiate direct with media owners in China. Starcom will continue to manage the TV scheduling and communications planning. P&G will then work out pricing directly with the media owners before its agencies purchase media. The implementation of this plan is due to take place by September.

Sources indicate that P&G’s goal is to drive greater cost-efficiency, which it believes it can achieve on its own rather than relying on agencies that buy in bulk.

One insider said that the decision was “related to legal matters rather than performance of the agency”. Other sources close to P&G indicate that the company has had “challenges” with its media buying for some time.

Starcom Guangzhou has had a dedicated non-TV buying unit for several years; it is believed this will now close.

P&G’s associate director of media for Greater China, J Alfonso ‘Pon’ De Dios, recently relinquished his role after 14 years with P&G. The timing of the current initiative surprised one senior agency executive who works on P&G. “With Pon leaving, much of its China media experience has left China.”

It is not clear whether the changes will affect MediaCom. Last year, P&G transferred communications planning for Faceguard, Olay and Camay from Starcom to MediaCom without a pitch.

"Starcom Mediavest is proud of the work and partnership we bring, and will continue to bring, to P&G,” said Paul Maher, CEO, North Asia. “It is and will continue to be a critical partner for P&G."

Starcom refused to comment further. P&G declined to comment at press time.

Source: http://www.brandrepublic.asia/Media/newsarticle/2009_07/PG-China-moves-media-negotiation-in-house/36147