The recession has brought mixed fortunes to field marketing agencies. Tactical work has taken a hit as clients trim their budgets and postpone product launches, but long-term contract activity is flourishing, thanks to the need of food and drinks brands to maintain standout in retail.
Depending on who you ask and the type of product involved, up to 90% of purchase decisions are made at the point of sale.
see also Experiential League Table 2009
‘In the current economic climate it has never been more important to ensure brand availability and visibility at the point of purchase,' says Mike Price, retail execution strategy manager at Unilever.
As often happens in a downturn, the middle of the market is being squeezed hardest. A high-profile casualty this year was The Blue Water Agency, which fell victim to the demise of its parent company, Jencks. Another is PMI, which went into voluntary liquidation in May.
However, bigger agencies, particularly those with solid, long-term relationships, are benefiting from brands' focus on direct sales. Top-ranked CPM has registered a 9% increase in turnover, while Reach, in second place, has achieved a 20% boost. REL, meanwhile, reports that business is better than at any time in its 14-year history, despite a slight fall in turnover.
‘Our industry is faring better than some other marketing services, because it primarily supports FMCG products and retail, and, as we know, the retailers are having a great time at the moment,' says CPM managing director Mike Hughes, who is also chairman of the DMA's Field Marketing Council.
Companies have to keep selling in a recession, he adds, and field marketing offers a more flexible outsourcing model - exactly what they need in a time of crisis. Far from retrenching, many of CPM's big clients are spending more, and not just FMCG brands, but also firms such as GlaxoSmithKline, Sky and Royal Mail.
Nonetheless, Hughes also notes some desperate selling going on. He says that some marketers have reported that rival agencies are cold-calling them with implausible claims about the ROI they can achieve, a sign that some are struggling.
This is a thorny issue that dominated a recent Marketing round table discussion involving field marketing agencies, where Hughes accused some in the industry of making ‘outlandish claims', leading to them appearing ‘desperate'; Reach managing director Gary Mac Manus, meanwhile, described them as ‘blaggers'.
‘A lot of agencies are chasing tactical work and slashing prices ridiculously,' agrees Jacqui Sheldon, sales and marketing director of third-placed agency Cosine. ‘We have taken a stance that we are not buying business and have been declining unprofitable work.'
The difficult circumstances have concentrated minds on payback. Unilever's Price, for one, stresses the importance of demonstrating ROI and using relevant EPOS till data to optimise calls.
Agencies have taken this to heart, recognising the need to target only those stores that will benefit from a visit, saving their clients money. ‘We have spent a lot of time developing our ability to analyse EPOS data as a means to get the most from calls, and that raises clients' trust,' says REL's chief executive, David Norbury.
Reach, meanwhile, reports big gains from its work combining information on retail outlets with EPOS data and demographics. Pooling data offers a ¬ winning formula for ROI, according to the agency's client services director, Colin Martin.
The challenge for field marketers is to accommodate three opposing realities, Martin argues. The brand wants visibility and successful promotions; retailers want to maximise the value they get for the space; and the shopper is looking for choice, value and deals. ‘The insight we get from pooled data helps clients talk to their customers and retail partners in the right way,' he says.
At Service Innovation Group, managing director Tracey Bagshaw agrees that brands are showing greater interest in shopper insight. She also notes that some have downsized their own insight departments to cut costs, which puts the onus on agencies to provide it themselves.
‘Keeping abreast of developments in this area is very helpful to us in devising more effective campaigns,' she adds.
Some agencies are responding to the pressure for payback by focusing on modelling ROI before starting campaigns. Cosine has been making considerable investment in this area. ‘It's not just about fixing something to boost the rate of sale, but finding out the return we get from carrying out particular tasks in store,' says Sheldon.
As a consequence, Cosine has gone back to basics in many cases, focusing on stock availability and less on activities that do not have an immediate impact, such as trying to ensure that every product range is listed.
One effect of the recession is that clients expect immediate action. ‘We have seen a lot more urgency in relation to getting from the planning and evaluation stage to implementation,' says Sheldon.
Perhaps not surprisingly, the agency's activity on behalf of financial-services firms has taken a dive, and a major programme promoting the use of credit cards by retailers has been mothballed, although Sheldon is confident this will be restored after a couple of years.
However, Cosine is one of several agencies to report continuing investment by technology firms. Since May, it has been sending teams to electronics stores on behalf of Nokia, to raise staff awareness of new products and services.
Gekko carried out similar activity for Toshiba in the run-up to Christmas last year, with teams motivating retail staff and helping to demonstrate products to customers. Many IT and consumer electronic brands are losing sales in the downturn, and the challenge was to justify to consumers why they should buy a premium rather than value brand.
The agency recruited and trained suitable staff, who were incentivised with bonuses and prizes. The campaign achieved nearly 5800 sales, which it claims represents an ROI of 2000%.
This kind of activity gives field marketers a chance to demonstrate different skills from those with which they are more usually associated - stock-checking, merchandising and data analysis.
Field Sales Solutions (FSS) has been running staff incentivisation events to motivate the telesales team at 3663 First for Foodservice. FSS managing director Kate Carr is encouraged that brands are looking for this sort of activity to be carried out by field marketers, who are normally associated with commodity-based work.
‘It's the sort of thing they would once have used a business development agency to run, and it's good that they now they see it as a role for field marketers,' she says.
Experts predict a wave of consolidation ahead, as marketers outsource their field marketing to agencies that can deliver national coverage and demonstrate a clear ROI, even before a campaign has been rolled out.
With no recovery expected before next year, there is a sense of nervousness about the future. Even bosses of agencies that have done well so far are keeping their fingers crossed, while those that rely on one-off tactical campaigns will need every bit of skill to weather the storm.
Conair and BaByliss
Electronic planning is a growing part of field marketing activity. Conair has been carrying out merchandising visits to Boots and Superdrug stores for its BaByliss personal care and beauty products.
A team of 400 merchandisers provided by Service Innovation Group makes weekly visits, accessing a web system via PDAs and mobile phones. The system also optimises journey-planning to ensure that the maximum number of visits are made at the lowest achievable mileage.
Conair's divisional manager, Graeme MacPhee, says the approach means that the company can micro-manage a wide range of stock on a virtually minute-by-minute basis, by store, product or price, or any combination of these.
‘We initially implemented a trial last year in 54 stores, with such success that we have now rolled it out across the estate,' he says.
Methodology and Sarbanes-Oxley
Information was collated by Marketing by sending a survey to each agency directly. This year, for the first time, we have separated field marketing and experiential agencies into separate leagues, reflecting the increased distinction between the disciplines.
All the respondents have been ranked according to their 2008 turnover, apart from RPM, TomTom Nation and REL, which have submitted figures for their financial years ending March 2008, March 2009 and June 2009 respectively. Momentum UK is affected by the Sarbanes-Oxley Act and cannot extrapolate its field marketing figures from the rest of its marketing services, so we have been unable to include it in the table. CPM purchased TRO in August 2008 and, therefore, five months of TRO's turnover are included in CPM's overall turnover figure for 2008. TRO's full-year figures are listed separately.
Marketing takes care to publish accurate company data, but cannot be held responsible for any errors or omissions in the leagues.