SUPPLEMENT: SALES PROMOTION; Agencies of co-operation

A tougher business climate is leading clients to pick and choose the promotional mix. Agencies need to be capable and flexible to survive, writes Cathy Bond

A tougher business climate is leading clients to pick and choose the

promotional mix. Agencies need to be capable and flexible to survive,

writes Cathy Bond



Alan Thompson, chief executive of IMP, is rightly proud of the range of

skills he can call on. ‘We’ve got all the marketing tools at our

disposal and we can help clients to find the appropriate mix,’ he says.

After a pause, he adds: ‘And combine with other agencies where

necessary.’



Did he have to spit that last bit out? Of course not - it’s more of a

safety clause. Much as they hate to pass up the chance to make more

profit out of what they’ve got on offer, sales promotion consultancies

have to live in the real world.



And the truth is that there are plenty of clients out there keen to mix

and match promotional agencies, often with a very healthy motive. Others

prefer the one-stop shopping approach and even more will window-shop for

that elusive big idea, hiring and firing agencies as and when they need

them.



So if the biggest threat to a stable relationship between client and

agency is uncertainty, it’s surprising that any manage to thrive in the

current climate.



Agencies wax and wane according to their success - or lack of it - as

specialists, generalists or ‘integrated’ communications groups. ‘They

broadened to respond to a demand that wasn’t there,’ explains Mia

Dickson, a consultant to the promotional marketing industry and former

managing director of Tequila.



‘Companies needed agencies to understand integration, but not

necessarily to implement it. While they are buying integrated solutions,

it doesn’t have to be from one source.’



Meanwhile, both sides continue to haggle over fees, which agencies say

should reflect the broader sphere of work they are doing. The old

commission-based system is losing ground and won’t be missed, but

agencies are fretting about fee-based remuneration, which delivers a

percentage of budget. At around 10%, it’s unrealistic, they say - and ad

agencies carry off more.



Beyond that, marketing buzzwords come and go, forcing agencies to

anticipate and adapt at a frightening rate. Those with a handle on

developments, such as creative trade marketing, category management and

Efficient Customer Response (ECR) can push back the boundaries of sales

promotion, because lines of communication are being redrawn and the very

culture of client companies is changing.



It’s accepted on both sides of the fence that hot-house creativity and

the long, cool, strategic view grow out of long-term working

relationships. Adding value to the agency/client relationship feeds the

same benefits of increased profitablity over time into the brand.



So agencies could do without a hangover from the bad old days. But it

won’t be shaken off so easily. ‘In practice, sales promotion is still

treated as a tactical activity, in which agencies can be chopped and

changed with relative impunity compared with advertising or direct

marketing,’ says David Croydon, managing director of Marketing

Principles.



‘This is particularly ironic, because there are far more marketing

strategists with real client-side experience in the sales promotion

sector than in the glittering-but-shallow world of ad agencies,’ he

adds.



HP Foods marketing director Andrew Marsden calls it a ‘terrible legacy’

from the days when sprog marketers cut their teeth on harmless,

undemanding sales promotion campaigns ‘and made the most of the only

power they had by wheeling agencies endlessly in and out’.



The future is brighter. An obvious sign is the bigger slice of

promotional budgets which go below-the-line - making sales promotion a

boardroom issue.



‘We’re dealing with more senior people on the client side, such as

marketing directors and managing directors, as budgets grow larger,’

says Ian Billington, managing partner of Billington Cartmell.



‘Hoover, believe it or not, helped the agency-client relationship to

develop,’ suggests Simon Mahoney, joint managing director of SMP.



‘Chief executives asked how much their company was spending on sales

promotion and when they found out - and recovered - they realised

involvement had to be at a more senior level.’



A slightly different angle comes from Mike Halstead, joint managing

director of HH&S. A move into direct marketing, he discovered, has meant

that his agency is increasingly involved in boardroom strategy

discussions.



A bigger investment upfront is encouraging clients to give their sales

promotion partners the kind of back-up and continuous involvement that

they have long given to ad agencies.



Organisations are well aware that fast-track marketers hopping in and

out of job slots on a lower level are not in the best position to drive,

unaided, a programme designed to pay dividends over time.



‘I’d expect agencies to understand brands and target markets, probably

better than the average peripatetic brand manager,’ says Mike Slipper,

brand activities manager at Van den Bergh and chair of ISBA’s sales

promotion committe.



It’s human nature to trust a long-term associate and it makes sound

business sense, too, says Clive Mishon, managing director of Marketing

Drive.



‘We work exclusively on annual programmes, not individual events. It’s

the only way to get to grips with the problem,’ he explains.



Moira Hamill, promotions manager with Heinz, which prefers to deal with

specialist agencies, outlines a new sense of detente. Historically, she

says, an agency would get minimal information from clients as background

to a brief, ‘but today, the relationship is much closer. A long-term one

reaps many benefits, as the agency will go through a steep learning

curve at the beginning and during the first year.’



Heinz’s retained sales promotion shop, The Marketing Store, is always

involved in internal strategy sessions and it gets to present, meet and

deal with not only brand-oriented category managers, but sales-led

national account managers. It also liaises on Heinz’s behalf with key

retail contacts ‘in the course of making it all happen’, says Hamill.



‘We have restructured our business dramatically in the past couple of

years to enhance the focus on the consumer,’ she explains.



Heinz is not alone in this and the natural result is that sales

promotion expertise is being called upon by more people on the client

side.



‘It’s putting the salesmanship back into marketing and that’s

influencing the way in which some clients handle promotional activity

and their agencies,’ says Bob Wood, managing director of Teamwork

Marketing.



‘It’s not that marketing departments are slimmed down - marketing is

just getting cleverer,’ insists Marsden. ‘It’s essential to gather the

right resources and if they come from outside, so be it. Sales promotion

now works across all areas.’



He adds that the right chemistry is essential. ‘We use specialists and I

treat them in an integrated way, but they’ve got to be able to get along

without me just as much as when we meet. If you’re making a team, you

need real team players.’



Simon Knight, managing director of BDP, says that marketing departments

are under pressure not only from within the company, to deliver tougher

and more precise commercial objectives, but also in the market place.



‘They seem increasingly embattled, particularly in the face of the

increasing power of the multiple grocery trade,’ he points out.



That power balance is shifting as the retailers look for ways of adding

value to what they offer. ‘There was a time when they only wanted to

talk about margins,’ says Billington.



‘Sales teams have been bludgeoned into submission over the past ten

years and there’s little creativity left. Sales promotion can put it

back, to benefit both retailer and manufacturers’ brands. A company like

Tesco is very open to new ideas about how to promote inside and outside

its stores.’



But as Mahoney points out, the agency is expected to come up with more

than just a creative idea. ‘Clients are looking for strategic input and

a disciplined evaluation of results,’ he says.



Whether consultancies are able to take a sharper business view is

questioned by some in the promotions industry. ‘Most understand the

consumer better than the trade,’ says Slipper, while Dickson is quite

horrified by the lack of formal business education in most agencies.



‘It would be a lot more useful than the huge amount of cross-discipline

training that goes on,’ she says.



It’s when input spreads far beyond the mechanics of supplying promotions

that the sales promotion team begins to be riled by its ‘agency’ tag.

But ‘consultancy’ is only another label and ‘communications consultancy’

hardly clarifies the issue, which is to define precisely what skills are

on offer.



‘We are all grouped together in one sector, but it really is difficult

to find a common thread,’ admits Mishon.



What matters in the end are the individual client’s needs. Whatever the

agency doctrine, it should be as pliable as possible. ‘There are as many

different types of client/agency relationships as there are clients,’

says Croydon.



McVitie’s new product development brand group manager David Bolsher, for

example, likes to have direct input into the creative side at the three

or four agencies he regularly works with when developing brands such as

the recently-launched Go Ahead.



‘It’s taken for granted that all the agencies know our business very

well by now; the longer-term relationship pays back over time,’ he says.



And as BDP’s Knight puts it: ‘Trust won’t be born out of a one-night

stand.’



There’s no doubt that even a gritty issue like fees negotiation is

handled more smoothly in a constructive partnership where neither side

feels it is being ripped off, not least because the sales promotion

sector is notorious for the open-ended nature of its workload.



‘Good clients know that their agencies will turn themselves inside out

to do the job,’ says Billington.



But what makes a good client? ‘One that treats its agency with the right

level of respect and gives commitment and support. Of course,’ he

quickly adds, ‘it goes both ways.’



Texaco and IMP



Texaco is truly a client to die for. Dismayed by the lack of logic in

dealing with squadrons of agencies on its various accounts from

forecourt promotions to retail activity, it is putting IMP in charge of

them all.



IMP gets a huge slice of business while Texaco reaps economies of scale

and the chance to absorb IMP’s integrated marketing skills into its own

organisation. The agency’s USP is the client team, a group of 15-20

people designed to cover every discipline from sales promotion through

direct marketing to multimedia, planning and production.



‘Our focus changed,’ says Guy Vigar, sales manager at Texaco. ‘We’d

tended to rely heavily on agencies for help with the huge number of

promotions run by the separate parts of our business. It made sense to

bring them all together and we’ve developed integrated marketing teams

with IMP.’



According to IMP’s Alan Thompson, the client teams are designed to make

the right resources available whenever the client might need them. ‘It’s

broad, not rigidly pyramidical and at the most practical level, it saves

time,’ he explains.



But has Vigar belted himself into a strait-jacket? ‘I’m sure there might

be something out there we’re missing, but the benefits of this are

large,’ he says. To begin with, there are the cost savings of

amalgamating all promotional activity to calculate fees - enhanced by

the use of sister companies, such as DMB&B and its media centre.



Second, Texaco’s commitment brings clout: a quarterly renegotiation of

fees and staffing levels; daily contact at the most senior level; even

the chance to vet potential newcomers to the account team. ‘There is a

lot of trust required on both sides,’ admits Vigar, ‘but the long-term

relationship means that they really do know how our company works.’



KP and Billington Cartmel



‘Sales promotion is much more complex and sophisticated, so agencies

need to be much more strategic in outlook,’ says Jude Bridge, snacks

marketing controller of KP Foods’ snacks division.



Of course, it helps when client companies are willing to involve

consultants at a project’s inception, which is what KP aims to do with

each of the agencies it works with. ‘We always work as partners,’ says

Ian Billington of Billington Cartmel, a KP agency for around four years.

‘There were some 18 months of brand positioning sessions before the

launch of KP’s Hula Hoops ‘Shape’ campaign, for example.’



He’s referring to the three award-winning ‘shape’ promotions which

kicked off last year with the peg ‘Who’s stolen the hole?’ It is claimed

to have scored sales increases of up to 40% for the brand, KP’s biggest

snacks line at around pounds 100m.



‘The sales promotion agency becomes part of the brand team because it

needs to get more involved in strategic planning, blue skies work,

whatever - we expect them to be involved,’ says Bridge.



She doesn’t necessarily expect to draw on a full range of marketing

skills within one agency, but insists that the bigger role that sales

promotion now takes in development work demands at least a thorough

knowledge of multiple skills.



‘We tend to recruit heavily from the client side to get a good mix,’

says Billington, who was himself marketing director of HP Bulmer’s soft

drinks division before setting up the agency with Paul Cartmel, from

SmithKline Beecham.



‘It’s the only way to understand issues like distribution and production

logistics - the general business issues that clients face.’



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