Last year, many traditional agencies - responsible for work such as store visits, stock audits and compliance with manufacturer agreements - were struggling to secure growth. Younger experiential shops, meanwhile, continued to benefit from brands experimenting with live events, and many took on bigger projects from existing clients. Both, however, face challenges in the year ahead.
Experiential agencies such as BEcause, Iris and Candour have reported impressive growth figures for last year, which for the latter two has meant their turnover has almost doubled since 2005. However, the traditional agencies continue to dominate the top of the table. CPM and Reach take the top two spots, with their turnover significantly ahead of their nearest competitors listed in the tables. And with the industry under pressure, it is notable that some traditional agencies that have featured regularly among the top 10 in previous years, declined to take part in the survey this year.
Price continues to be the biggest issue affecting agencies, with many complaining of increasing commoditisation as competition squeezes fees. Agencies warn that clients need to be aware that they will get what they pay for; field staff represent brands, and if corners are cut, it will inevitably have a negative effect. 'The danger is we will see a decline in service delivery and it will give the industry a bad name,' says Mike Hughes, managing director of CPM and chair of the Direct Marketing Association's Field Marketing Council (FMC).
When repitching for accounts, incumbents are being forced to cut fees, in an effort to retain the business. Face-to-face work has also been affected as start-up brand experience agencies are driving prices down. 'There is oversupply and not enough demand,' says Nick Fennell, managing director at field marketing consultancy Archway Management. He also points to a lack of big-brand launch opportunities. Cadbury's Trident chewing gum debut in February was a notable exception, which saw RPM tasked with building brand awareness in a market dominated by Wrigley, as part of a £10m campaign.
It is vital, then, for agencies to identify ways to counter commoditisation. Fennell believes agencies must identify points of difference and demonstrate their value to clients. In an address to the FMC, one senior FMCG marketer said that agencies needed to address the 'vanillaisation' of the industry. 'We have become a bit staid,' agrees Steve Radford, operations director at IMS and vice-chairman of the FMC. 'The traditional side of field marketing isn't new or exciting to many people now.'
Cosine has addressed this challenge by tying with customer publishing house Seven Squared to create a unique point of difference. The publisher already has relationships with advertisers featured in Sainsbury's Magazine, which allows Cosine to extend the publication's content to in-store activity. 'We can put a recipe in the title, then sample the ingredients in store,' explains Jacqui Sheldon, Cosine's sales and marketing director. 'It allows us to join up the activity.'
Data and insight is high on the agenda for field marketers, particularly analysis, which should also help differentiate agencies. By examining EPOS data and identifying issues and trends, information can be used more intelligently. It is not just field-marketing data that can be collected in store, but multiple-source information, which enables agencies to devolve decision-making to the people on the ground.
Working with the retail trade is also an ongoing challenge for traditional field marketers. The growth of big-brand convenience stores such as Tesco Metro and Sainsbury's Local is fuelling interest from FMCG manufacturers and, in turn, creating work for field marketers. However, relations between retailers and field marketers appear frosty. Field staff, employed by FMCG brands to set up in-store displays, fight for space, often flouting agreements the supermarkets have in place with other brands. But, retailers are now flexing their muscles and Sainsbury's, among others, is considering limiting the access of staff working in its stores on behalf of suppliers (Marketing, 11 April).
Gail Tunesi, managing director at PMI, argues that such an outcome is unlikely. 'It is a three-way deal - the third-party retailer is of equal importance to the manufacturers now.' Archway's Fennell believes Sainsbury's actions are a warning that should galvanise the industry to adopt higher standards to ensure no supermarket would want to exclude field marketers.
Quality, and more specifically the need for an industry standard, has been a persistent issue. The FMC is unveiling its long-awaited accreditation scheme next month, designed to help clients choose an agency, as well as offer a modicum of protection in an industry that is home to countless start-ups. Such a standard should also reassure retailers.
In an attempt to boost credibility, a few agencies have brought in senior staff from the retail industry. Two years ago, Jack Sinclair, ex-marketing and trading director at Safeway, joined Scottish agency McCurrach, and earlier this year, one-time Sainsbury's director Laurence Clube joined REL as commercial director. With manufacturer experience, too, having run field marketing for Guinness at Diageo, Clube believes it makes sense to 'put people who have sat on the other side of the table into the industry, because it will give you a better appreciation of what the customer wants'. Fennell agrees. 'Field marketing is all about what you're able to do within retailers, so understanding how they think is key,' he says.
Clube adds that there is also a broader issue concerning the need to attract and retain good quality people. 'Field marketing lacks employer branding,' he says. 'If you can bring people in who can build that brand and find sources of additional experience, it has to be helpful.'
On a separate note, REL's impending sale to Australian firm The Photon Group could be a sign of things to come within the industry. Many agency insiders claim that there are plenty of other UK shops awaiting similar suitors.
One thing on which traditional and experiential firms agree is that early involvement with clients at the brand planning and strategy stage is vital. If excluded from these discussions, brands' creative can be affected. 'Often you'll see PR or ad agencies with propositions that create fantastic advertising or magazine features, but that work would fall flat in a live environment,' says Jez Paxman, strategic director at Sledge.
Mike Garnham, chief executive of MSF, says he is already talking to Unilever about campaigns for 2008, having worked on the introduction of AdeZ this year. A blend of fruit juice and soya protein, the drink was a major launch for the FMCG company in a category with relatively low awareness among customers in the UK. In order to boost consumers' knowledge of soya, trials were seen as a key part of the launch campaign. During the activity, 77,000 samples were distributed and it led to a sustained increase in sales of 106% in the following weeks.
The success of such work has resulted in some field marketing agencies taking a lead role in marketing campaigns. Last October, RPM partnered Baxters for a campaign to promote its fresh soup range. The activity, which saw samples and lunch gifts distributed in Edinburgh, Birmingham and Manchester, was supported by a competition to win a culinary trip to India, which was promoted in print and outdoor media in and around the targeted cities.
Many experiential agencies are also reporting an increase in the budgets allocated to live events from existing clients, with Leyton Ede, Closer's client services director, estimating that the average rise could be as much as 20%. One of the biggest users of experiential has been brewer Scottish & Newcastle, which this year is investing £7m in its 'Biggest round' promotion. Offering free drinks from brands such as Foster's, Strongbow and John Smith's, the BEcause-driven initiative illustrates a trend toward multi-brand campaigns, which can be cost-effective, as well as helping organisations reach a wider audience.
Another tactic for clients is to be promiscuous. O2, for instance, works with a number of agencies on a variety of brand experience-driven work, such as The O2 Wireless Festival, sponsorship of the Rugby Football Union and its rebranding of the Dome to The O2. Last year, it launched a text-alert service for club-specific rugby news, which was advertised around grounds, but take-up was low. Sense was called in to turn it around, and launched a campaign called 'Battle of the fans'. This included an exclusive event at the rugby clubs comprising a quiz, the chance to meet players and the opportunity to learn more about the club's history. Text subscriptions increased by about 35% as a consequence.
Such measurable results are vital if it is to be proved that field marketing, be it traditional or experiential, is worth the money. ROI has been a challenge, particularly for experiential agencies; the traditional players, however, are confident that they can demonstrate easily the difference they make.
This need to illustrate ROI is driving most experiential agencies to develop detailed evaluation capabilities. 'The bigger the budget, the more likely it is that the measurement question will be asked,' says Sharon Richey, managing director of BEcause. She is, however, suspicious of generic ROI models built by agencies. 'To understand true ROI, you need access to confidential client information', she argues. 'Every brand is different, every sector in which that brand operates is different too.'
But on the experiential side at least, some clients are tiring of the focus on ROI. 'As an agency, we are thinking that it is what clients want, but actually some aren't that interested,' says Wendy Hooper, chair of the Experiential Marketing Committee and managing director at Carbon Marketing. 'The majority of clients are looking for a measurement, not necessarily a return on investment.'
Cameron Day, business development director at Iris Experience, agrees. 'Some clients are tired of experiential agencies banging on about evaluation and ROI. It is less about how you evaluate it, and more about how you plan it,' he says.
Debates such as these are augmented by concerns about the future, especially the potential impact of environmental matters. 'As an industry, we have a lot of people driving cars around the UK. It is going to become an issue,' admits CPM's Hughes. He has asked fleet provider Lex about providing CPM with hybrid cars in two or three years' time. On the experiential side, events are now being designed with green concerns in mind. Ben & Jerry's Sundae on the Common festival last month, for example, was promoted as 'climate-neutral', with the profits from ticket sales supporting a solar-panel project in India.
More green initiatives are sure to follow, and, as with other marketing disciplines, there will undoubtedly be opportunities for agencies able to think creatively. The year ahead will demonstrate whether they can rise to the challenge.
THE SARBANES-OXLEY EFFECT
For US-owned companies restricted by the Sarbanes-Oxley Act, which limits the financial information that can be disclosed, we have used Companies House data provided by Willott Kingston Smith. In the case of Headcount, the latest data available was for the 2005 financial year. While not perfect, this data gives an indication of the size and status of these agencies. All agencies affected by the Sarbanes-Oxley Act are listed under their group names rather than their subsidiaries. Up-to-date financial data could not be found for SIG or InStore Field Marketing (a division of WH Smith).