• by Joe Mandese , April 2, 2004

Procter & Gamble, the nation's largest advertiser, initiated a new kind of media services review on Thursday and it is one that could fundamentally change the type of media its agencies plan and buy. And like most things P&G throws its sizeable weight and influence behind, it will likely change how the rest of the advertising industry looks at media, especially the TV and print media that currently dominate the traditional advertising mix. Saying it wanted to "redesign its media planning agencies into communications planning agencies," P&G opened what is believed to be the first major review of a communications planning account whose mandate stems well beyond traditional media outlets and opens the door for a wide range of new and emerging communications outlets.

Those familiar with P&G's strategy say the move is more than a fine-tuning of P&G's media mix, but part of a corporate imperative stemming from a deep-rooted concern that the costs of some traditional media - particularly TV and magazines - are growing too inefficient for a marketer, who by its own estimates, serves consumers media impressions "two billion times a day."

"It may not look like much from year to year, but you have to look at it from the long-term perspective of their marketing team," said Steve Fajen, general manager and head of the media services practices at Morgan Anderson Consultants. "If you do some quick projections out ten years, it becomes very scary: 7% media inflation and a diminution of 3% a year in audience. Do the spreads and compound them. You're talking about a doubling of your costs over a ten-year period."

Advertising inflation aside, the move stems from a belief that a continuing reliance on traditional media would put a major marketer like P&G, which spends more than $2.5 billion on advertising annually, at a competitive disadvantage in terms of consumer reach.

"Given today's media fragmentation, we need to connect with our consumers and reach them at various touch points," stated Greg Ross, director of P&G North America Media & Marketing, utilizing some of the same com planning speak that's become popular with the major ad shops that have begun championing the practice. And while P&G already has some of those com planning leaders in its roster, including its media planning incumbents Starcom MediaVest Group and MediaCom, both of which have been invited to pitch, P&G said it was opening the pitch to "a select number of new agencies." Advertising Age reported that two other undisclosed shops had been invited. A P&G spokeswoman told MediaDailyNews the exact number had not been finalized.

Whatever the number, this is likely to become the most closely watched media review of the year, and quite possibly the new millennium, not just because of the size of the player involved and what's at stake for its roster of media agencies, but because of the residual impact it could have on the entire media marketplace.

"In the end, this is about being creative and pushing the boundaries of what their agencies can do with media. It's something they've done before. They've done that in the modeling area and they did it with optimization. Each time, they asked their agencies to stretch. And each time they've done it, something major has happened, because P&G got behind it," observed Morgan Anderson's Fajen.

In fact, media optimization - an approach that utilizes computerized systems to select optimal media schedules - had been common practice in Europe, but when P&G mandated it as part of a media planning review it initiated in the mid-1990s, it changed everything about the U.S. media marketplace and even led to the release of a new, more sophisticated kind of Nielsen ratings data.

And while P&G is not considered the pioneer in marketing mix modeling - Kraft was - it has embraced it and has just completed an ambitious modeling exercise that is believed to have completely overhauled the marketer's view of the marketing mix, including the types of communications options it should be using to talk to its consumers.

While that exercise likely had significant bearing on P&G's new com planning review, it also coincides with a variety of other market pressures that are rapidly evolving simple media planning into multi-dimensional com planning. The movement is already wildly popular and standard operating practice with major marketers outside the U.S. and has become a key selling point with vanguard media agencies in the U.S. In fact, most of the major U.S. media shops have created com planning groups - sometimes called "consumer context planning" - and working feverishly to spread the practice to the broader base of their traditional media planning departments. SMG and MediaCom have been leaders in this area. But the approach was actually pioneered by smaller, more entrepreneurial agencies, such as Michaelides and Bednash in the U.K. and more recently by hot boutiques like Media Kitchen and TargetCast TCM in the U.S.

From the agency's perspective, com planning offers a tremendous upside for a media shop, giving them the opportunity to play on a much bigger playing field than the so-called "Big 5" media: TV, magazines, newspapers, radio and outdoor - "Big 6," if you include the Internet. In theory, com planning can encompass medium or marketing platform that makes contact with a consumer, including below-the-line marketing services like promotions, direct response, package design and public relations.

"In essence, everything is a communication," noted Morgan Anderson's Fajen, "so the big question is, what exactly does P&G mean by communication planning?"

In the end, that will be up to P&G and its agencies to determine. P&G said it would handle the review through its own internal marketing and media team. And that process will move surprisingly quickly, given the potential implications of the changes. P&G said plans to appoint its new com planning shop in "early July 2004."