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P&G pilots putting its separate ad agencies to work together under one roof

Procter and Gamble, one of the world's largest advertisers, is putting several of its agencies together to work as one team in a pilot that it hopes will eliminate bureaucracy and lead to better advertising.

The team behind Tide detergent, which has the largest piece of the U.S. laundry market by far, will work together under P&G's North America Fabric Care (NA FC) Marketing Director Vedran Miletic and Andrea Diquez, chief executive of Saatchi & Saatchi New York.

P&G has already trialed this approach with its Tide Super Bowl campaign "It's a Tide Ad," which starred "Stranger Things" actor David Harbour sending up typical ads for cars, beer and perfume in a spot that had more than 5 million views on YouTube.

Having a small, multi-agency team work on the campaign helped P&G in "eliminating unproductive day-to-day transactions and distractions," according to its Chief Brand Officer Marc Pritchard, in a summary of his remarks at an industry conference this week, which were emailed to CNBC.

Pritchard was taking part in a panel discussion at 4A's Accelerate, an ad agency event held in Miami. He added that agencies including media experts, influencer marketing companies and those that specialize in store promotions would work closely together. The "NA FC Agency" is expected to be operational from July 1.

Brand clients such as P&G and agencies work together on ad campaigns in a process that often begins with the client briefing a lead agency, usually its advertising agency, giving information including business targets and the type of audience they want to reach.

The agency then turns that information into a brief that will inspire creative teams — typically made up of an art director and a copywriter — to come up with imaginative ideas. People with roles such as account planner, a strategic thinker who brings in consumer research, and account manager, who looks after the relationship with the client, will also be involved in a process that can take several weeks or even months before any ideas are shown to a client.

But in a world where technology means people can make and distribute their own videos or photos in minutes, this process is antiquated, and Pritchard wants to get to good creative ideas much more quickly.

P&G's Marc Pritchard at Cannes Lions in June 2016
Christian Alminana | Cannes Lions
P&G's Marc Pritchard at Cannes Lions in June 2016

The announcement of the new agency model comes after Pritchard criticized ad agencies for being too complex. "We want and need brilliant creative, and we will invest in creative talent. But creatives represent less than half of agency resources, because they're surrounded by excess management, buildings and overhead," Pritchard said at a speech given at the Association of National Advertisers (ANA) conference in Florida last month, in a transcript seen by CNBC.

The company has worked with its agencies in a buddy system, which sees agency personnel pair up with relevant clients, in a complex process in which P&G is partly to blame, said Pritchard. "This leads to spending way too much energy on conference calls, meetings and offsites, traveling to see each other, and wasting time with conference reports, PowerPoint presentations, dimming and ultimately extinguishing creativity," he said at the ANA conference.

P&G reduced its ad budgets, saving $750 million in agency and production costs, it said in January, and it is set to save a further $400 million "in the next phase", according to Chief Financial Officer Jon Moeller.

In April 2017, Pritchard said the business wanted to run fewer ad campaigns. "We've cut the amount of work we do, but we can go much further by focusing on fewer and better ideas that last longer. We get tired of ads a lot faster than consumers do," he told an industry conference.

Pritchard has previously warned the media planning and buying industry to clean up its act or risk losing P&G's business, partly because of misreporting of the effectiveness of digital marketing.

P&G has reduced the number of marketing agencies it works with by almost half to 2,500, and this will be cut by another 50 percent by 2021.