War of independence

SBHD: The fear is that Brussels will attempt to introduce regulations based on the rigid, legalistic framework in force in Germany

In principle, any move to harmonise the laws governing sales promotion and the use of premiums and incentives across Europe is one that marketers should welcome.

With every country following exactly the same rules and regulations, there are potentially major savings to be achieved in terms of economies of scale. At present, such economies of scale are largely impossible, because the rules and regulations differ so widely from country to country.

There are, however, two problems with this vision of pan-European harmonisation. First, many countries fear losing their autonomy and there is no consensus on whether cross-border promotions actually work any better than promotions specific to an individual country.

A battle has been raging on the issue of a single sales promotion framework in the European Union for the past couple of years. For a while it seemed to countries with a relatively liberal policy on promotions and incentives (such as the UK and Ireland) as if those liberal rights were in danger of being sacrificed. The fear was that Brussels would attempt to introduce regulations into the European Union based on the rigid, legalistic framework which is in place in countries such as Germany and Luxembourg.

The Institute of Sales Promotion is one of the organisations battling to defeat attempts to impose this style of regulation. ISP secretary general Sue Short explains: “We want to maintain our members’ freedom to promote. The laws in the UK are some of the most liberal in Europe, mainly because we have a self-regulatory system. Our aim is to make the EU aware of how well self-regulation works. We want to avoid any move towards the German system, where they go to law over everything.”

The ISP, in conjunction with the British Promotional Merchandise Association and the European Federation of Sales Promotion, retains a lobbyist in Brussels to ensure it is aware of any proposals likely to affect sales promotion.

Roisin Joyce, managing director of Irish sales promotion agency Marketing Network and vice-president of the European Federation of Sales Promotion (EFSP), believes the tide has now turned in favour of regimes such as those which exist in the UK and Ireland, particularly with the current consultation process on the European Union’s proposed Green Paper on Commercial Communications.

The EU has asked for companies involved in commercial communications, which it defines as advertising, sales promotion, public relations, direct marketing and a number of other media, to provide it with details of how the different regulatory frameworks in Europe impede attempts to do business. Joyce says: “The EU has told us its objective is to make the movement of goods and services freer.”

The EFSP is made up of groups representing the sales promotion industries in Holland, Ireland, the UK, Spain, Italy, France, Denmark, Germany and Belgium. The organisation believes there will have to be some common framework governing sales promotion introduced across Europe. However, Joyce stresses it is important that any solution is not an imposed one. “We don’t want to see legislation imposed across Europe: we want to see restrictions removed.”

The British and Irish position is that they would rather contend with a multiplicity of rules and regulations than give up what they see as their own freedom to promote. Whether or not this view eventually wins the day, marketers are likely to have to contendwith widely differing legal restrictions on promotional act-ivities for many years to come.

At times, these differences seem almost arbitrary. For example, giving away money-off vouchers is legal in countries such as the UK, the Irish Republic and Spain, but illegal in Germany, Norway and Switzerland. Similarly, self-liquidating premiums are legal in the UK, Germany, France and many other countries, but illegal in Luxembourg, Norway and Switzerland, while they may be allowed in the Netherlands, depending on exactly what form they take.

William McDonald, European business development director of sales promotion agency IMP, argues that, contrary to popular marketing belief, Germany is not the most difficult place in Europe to run a promotion. “Norway is the most restrictive country, far more so than Germany,” he says.

“In fact, Germany can be a very good country in which to run promotions. There is more focus on event and creative communications. There is much more effort put into making these communications more effective. It’s true you can’t do some things, like couponing, but that doesn’t mean you can’t run promotions there.”

IMP has been compiling a guide to how promotional legislation differs in Europe since 1988: originally covering just the EU countries, the guide has now been extended to include the Scandinavian countries, the European Free Trade Association countries and some of the countries of the former Eastern bloc, such as Hungary and Russia.

In certain countries, the problems which face marketers in running sales promotions is due not to legal restrictions, but to other issues. McDonald says: “The most difficult thing about promoting in eastern Europe is that there are no major retail chains. Also, consumers in eastern European countries are just not used to entering competitions, sending off coupons and so on.”

Brian Francis, creative director of sales promotion consultancy Cramm Francis Woolf, was one of the founding partners of FKB. He recalls that, in the mid-Eighties, when FKB set up a European network of sales promotion consultancies under the name Network Marketing International, “the City loved it, and our share price went up. But we never made any money out of it. Cross-border promotions are very difficult, and there’s not a lot of money in them for agencies. There is the up-side of nice trips to places like Paris, but no money.”

Francis believes that if cross-border promotions can work at all, it will only be for the biggest of big name brands. He says: “Brands such as Coca-Cola might be able to achieve successful multinational promotions, particularly if linked in with major events with an international appeal, such as the Olympics. A lot of it depends on the advertising. If it is `global advertising’, then you may be able to run `global promotions’.”

McDonald takes a slightly different view. He makes a distinction between using the same promotional technique, such as money-off vouchers, and using the same promotional strategy. “There are not many significant multi-country executions. But there are a significant number of promotions where the same strategy is being run, but on a country-by-country basis. It’s not difficult to run the same strategy in different markets: but you can’t just translate the promotional technique and expect it to work.”

Sales promotion consultancy Black Cat has some experience of adapting a pan-European strategy to different legislation in different countries. As partner Stephen Callender says, the agency has been running a promotion for 3M diskettes, data cartridges, mini cartridges, optical disks and transparency film, with 1 million prizes on offer. In most European countries, this has taken the form of an “instant-win” promotion, with the game mechanism in the box. However, in some countries, such as Germany, the competition has had to be adapted to include a “write-in-a-slogan” competition.

Obviously, one of the first things an agency has to do when it has developed an idea to run in a number of European countries is to check on the legality of it across those markets. In the UK, the first point of reference should probably be the ISP, which can advise on what is allowed where.

But not all agencies believe that you should even try to run the same, or even similar promotions, in each country. Sally Butcher, deputy managing director of KLP London, says that KLP, with its parent company EURO RSCG, is involved in a number of cross-border promotions, but the agency deliberately avoids using similar ideas or techniques.

“We could easily find something which could run in all countries. But we need to achieve different aims in all countries. What appeals to the Germans won’t necessarily appeal to the Italians, and so on,” she says.