P&G Reaffirms Need for Supplier Diversity

Using diverse suppliers has been a key goal of major U.S. corporations for years, and a recent e-mail from Procter & Gamble, obtained exclusively by Adweek, shows that the company is now stepping up those efforts, especially in the realm of marketing.

“Tremendous opportunity remains” in marketing expenses, Stew Atkinson, P&G’s manager of global brand-building purchases, wrote to the company’s roster of agencies. P&G, he also wrote, is urging its shops to help the company meet its goal of spending 16 percent of its U.S. marketing dollars on minority- and women-owned suppliers in its current fiscal year, which ends June 30.

“Supplier diversity is a strategy that enables P&G to remain in touch with consumers, customers and suppliers who are becoming more diverse every day,” explained Atkinson in the e-mail.

The marketing goal represents an uptick from past years, according to P&G representative Barbara Hauser, who said that U.S. spending on all minority suppliers totaled about $2 billion in the last fiscal year.

P&G isn’t threatening to fire agencies that lag behind its goals, and agency performance in supplier diversity isn’t tied to compensation. Still, the world’s biggest spending advertiser does track each shop’s performance and “it’s an issue in the agency’s overall rating,” said an executive at a P&G shop. “They tell us how we’re doing quarterly.” An exec at another P&G agency added that company leaders “have ramped up their efforts on diversity [and are] very keen on it.”

Hauser characterized agency spending on diverse suppliers as “part of the total value offered as a partner. It’s part of our selection criteria. It has become a standard expectation and it’s part of doing business with P&G.”

Atkinson’s note followed a two-day summit between P&G and its agencies, which include Publicis Groupe units Saatchi & Saatchi, Leo Burnett and Publicis; WPP Group’s Grey; and independent Wieden + Kennedy. “We wanted agencies to understand some of the key priorities coming out of those meetings, particularly … our purpose-inspired growth strategy to touch and improve more consumers lives in more parts of the world,” explained Hauser.

Other companies focusing on diversity include Kraft Foods, which poured 6 percent of its total U.S. expenditures into minority- and women-owned businesses last year, up from 5 percent in 2007.

While P&G and others achieve a portion of their goals directly via the hiring of minority-owned agencies, they also rely considerably on general-market shops to help them when outsourcing speciality services, such as those related to the production of ads. Examples range from the hiring of casting companies and photo retouching firms to those that provide focus group research.

In pursuit of diversity at this level, Kraft is also “stepping up” efforts to “build second-tier programs for diverse suppliers,” said a Kraft rep. Directly and indirectly, Kraft used some 2,200 minority- and women-owned suppliers last year, and between 2000 and 2008 the company’s spending with minority-owned firms rose 88 percent, the rep said. This year, Kraft aims to match its 2008 performance of 6 percent of U.S. expenditures.