This year's winner found an innovative way of inoculating itself against a generally flat market and generating new revenues. Instead of relying solely on its FMCG clients, REL has turned the industry's business model on its head by winning work from a supermarket. Its relationship with the UK's third-biggest grocer, Sainsbury's, which they embarked on 13 months ago, is the main factor behind REL's 25% rise in turnover to £15m.
Until the 70s, FMCG manufacturers relied on in-house armies of sales reps to visit supermarkets to make sure their brands were being stocked as agreed in temporary merchandising displays. Since then, brand owners have hired field marketing agencies to make sure retailers are complying with agreed promotions.
That business pattern was shaken up when Sainsbury's and REL jointly developed a concept to simplify off-shelf promotions. In October 2004, after training 500 dedicated staff, the agency launched the Sainsbury's Retail Support Merchandising programme across 419 branches. REL took responsibility for changing all end-of-aisle gondola displays and all free-standing promotions weekly, regardless of the brand owner or its field marketing agency.
Other field marketing agencies will continue to work on stock availability and merchandising on-shelf, but the head of a competing agency estimates that the number of visits by field marketing agencies to a Sainsbury's store in a typical week has fallen from about 120 to 40, reducing store managers' co-ordination work. 'It's going well,' the head of a competing agency says. 'Even though I don't have the contract, I see the sense in a retailer having one agency.'
The initiative marks the first time a retailer has awarded one field marketing agency such a comprehensive contract to ensure compliance. Nick Fennell, managing director of Archway Management, which provides field marketing consultancy to both agencies and manufacturers, says REL's new business model is significant. 'It has seized an opportunity to win new income by working for a multiple and proving the added value field marketing can bring,' he says.
The in-store initiative neatly dovetails with corporate strategy. When Justin King became chief executive of Sainsbury's in March 2004, he identified product availability as its top priority and brought in human workers to sort out problems at the company's automated distribution centres so that products got to stores in a timely fashion.
REL's in-store arrangement has contributed to Sainsbury's recovery by boosting the customer offering, and thus increasing sales, improving the accuracy of forecasting and ensuring merchandising compliance at reduced cost to brand owners.
REL's big strategic win hasn't come at the cost of other clients. It successfully defended its hold on Reckitt Benckiser's Household division following a review last autumn.
Waitrose remains REL's main client. This year incremental wins have included helping take-up of John Lewis Partnership credit cards, overseeing branch convergence of former Safeway stores that were taken over by Waitrose, and providing corporate hospitality teams at Waitrose-backed events.
REL is also responsible for the free-standing seasonal displays of Ferrero's Rocher chocolates that have driven the brand's incremental sales, and has been appointed to develop Ferrero's national impulse teams following successful trials in London.
Internally, REL has introduced an online learning and assessment system to speed the training of its staff in merchandising skills and help them understand client strategies.
Chief executive Patrick Rooney has expanded his management team during the agency's growth spurt. Lynda Asquith, formerly of FDS and Headcount, was hired as client operations director, and business development capability was expanded with the appointments of Steve Johnson and Rodger Godfrey as business and marketing development directors respectively.
REL has also launched several services, including a mystery shopping customer service monitor. In January, it set up REL Sales Consulting, which helps FMCG clients improve the sales skills of their in-house international sales teams. Clients include Maxxium, Heineken and Diageo. In its first 10 months the company has worked with clients in more than 15 countries.
PREVIOUS WINNERS 2004: CPM 2003: RPM 2002: FDS
BEST OF THE REST
The field marketing industry has been suffering a dearth of new business since the utility industry bonanza of a few years ago dried up.
The effects of a general retail slowdown have begun to be felt, so companies that achieve strong growth are doing well.
None of the bigger agencies have returned double-digit growth quite as consistently as PMI in recent years. In the 12 months to 31 October, its turnover rose 45%, and in 2004 it achieved the fastest growth in Marketing's field marketing leagues for the second year running, at 64%.
Managing director Gail Tunesi says the agency has been able to maintain margins despite the industry's commoditisation by migrating clients from tactical to strategic activity.
Clients that have taken this journey include Kodak, Red Bull, Scottish Courage and Universal Pictures UK. PMI is also on Unilever's roster until December 2006 after winning a contract extension. New business wins include Hasbro, Osram, Orchard World, Ginsters, Bayer, Cow & Gate and Danone.
Although several field marketing agencies are using web-based systems to link retail electronic point-of-sale (EPOS) data with handheld PDAs used by field marketing staff, PMI has been successful in marrying data to individual stores. For Heinz, it is using its electronic availability tool to search the supply chain and use store-specific data to identify why a product is not selling as well as expected. Once alerted, staff visit the stores to investigate why specific products are not on-shelf, check inventory and resolve the problem. Heinz has received a 1.4% boost in staple product sales among its top retailers as a result.
Another company that has increased its turnover is Headcount, which has done so by targeting clients that have not traditionally used field marketing, such as mobile marketing and government departments.
As one of a handful of field marketing agencies on the COI roster, it has convinced several government departments to commission work. For the Department for Environment, Food and Rural Affairs (Defra) it sent out teams to remind people visiting livestock markets to practice good hygiene to prevent the spread of diseases such as foot and mouth.
The agency carried out two projects for the Learning Skills Council to raise awareness of modern apprenticeships and Bitesize courses, and promoted recycling for Guildford and Waverly Council.
Mobile marketing is another sector Headcount has helped pioneer. In July it trained staff and customers at Sainsbury's at Jacksons to use a loyalty scheme that sends personalised electronic coupons to customers' mobile phones. The Light Agency, the company behind Shop Scan Save, hired Headcount to implement the scheme.
While regulators have reined in utility companies' door-to-door energy sales, Headcount has picked up new business from Powergen to sell cavity wall and loft insulation products.
New clients include L'Oreal and foreign payment service Fexco, and it has picked up incremental work from Centura, HSBC and Alliance & Leicester. Headcount's turnover rose 6.2% during 2004 to reach £14.4m.
Among agencies that specialise in experiential marketing, LoewyBe has increased its billings by 53%, propelled by £2.5m worth of new business and incremental wins. New clients in the past 12 months include Nestle, Disney, E&J Gallo Winery, PetPlan, Diageo and 3.
The agency has significantly increased existing business from clients including Scottish Courage and Danone Waters, while Procter & Gamble has increased its experiential spend on Pampers by 51%.
LoewyBe created the brand's World of Babies roadshow, which lets parents experience the world through babies' eyes; 580,000 consumers saw the roadshow and Pampers' overall market share rose 5% as a direct result of the campaign.
The industry's biggest player, and last year's Field Marketing Agency of the Year, CPM, continued to pick up new clients, including Sky.
In the past, the broadcaster had relied on a 24-strong in-house team to train store staff at major electrical retailers about products and to oversee in-store activity. Sky wanted to upgrade these visits from a training role to a sales role, so it hired CPM to field a team of 14 to call on 900 stores. The team has regional marketing budgets to develop activities and drive retail sales.
CPM also won Nokia's contract field marketing activity, which involves retail range compliance and in-store training of staff on the mobile handset manufacturer's range.