Procter & Gamble announced on Monday that they are switching its North American advertising business to Omnicom from the Publicis Groupe.
Big companies like Unilever and Coca-Cola have also scrutinized their expenses on advertisement as they looked to cut costs in an increasingly growing advertisement in digital age. Advertisers now mostly rely on sophisticated technology to show tailored ads to specific audience, a practice to change the way in placing ads.
Ad agencies are now being increasingly pressured by advertisers to offer more services for less money, competing against one another in what advertising executives see them racing to the bottom. Advertising spending this year is estimated by analysts and agencies to be around $30 billion.
According to the New York Times report, Procter & Gamble, whose top products include Tide laundry detergent and Pampers diapers, said that their decision was part of an effort to reach more buying audiences that have fragmented.
"The entire ecosystem of media and advertising is transforming," said Procter & Gamble's global brand officer Marc Pritchard. "We still want to get mass reach, but we also want to be able to do it with a greater degree of precision."
Procter & Gamble has reduced its spending on advertising in the United States to $2.7 billion from $3.1 billion in 2013, according to Kantar Media.
Publicis's media agency Starcom Mediavest Group will retain other brands of Procter & Gamble including its battery brand Duracell, along with its fragrances, and cosmetics.
According to people with knowledge about the move, Publicis could lose $50 million to $100 million in annual revenues.
With the cut of Procter & Gamble's number of advertising agencies they work with, they are hoping to save up to half-a-billion dollars annually in advertising fees as reported by the Wall Street Journal news.
The consumer giant is also joined by other big companies including Unilever, Coca-Cola, S.C. Johnson and Visa in evaluating their ad accounts.
Overall, companies spending advertising expenses annually have some part of their agency business under evaluation.
