Value for money and quality of account handling are the most important criteria for clients when assessing direct marketing agencies.
These are the findings in new, exclusive research into client awareness and attitudes towards direct marketing agencies from
Marketing Week and the Direct Marketing Association (DMA).
Our investigation into a range of client concerns – from importance of given criteria in choosing an agency to the reputations of particular shops judged against those criteria – was undertaken by FDS Market Research Group. Interviews were conducted by post and telephone during September and October among 300 users and potential users of direct marketing agencies. The findings complement our annual advertising agency reputations survey, to be published later this year.
Eighty-six per cent of the sample said value for money was very important and 83 per cent rated quality of account handling at the same level. More than two-thirds of the sample (69 per cent) also considered ability to evaluate a campaign as very important, and relevant sector experience was also rated highly by more than half the respondents (58 per cent).
Interestingly, innovation was seen as highly important by only 51 per cent, while creativity as a criterion fared even less well. Less than half the sample (47 per cent) felt an agency’s creative department was very important, ensuring that creativity failed to feature in the top five criteria overall.
However, compared with users of advertising agencies, the value set on creativity © is low indeed. Last year’s Marketing Week advertising agency reputations survey showed that creativity is considered the most important criterion by ad agency clients. Indeed, creativity has been king of the criteria ratings since our above-the-line survey began in 1989, apart from two years during the height of the recession – 1992 and 1993 – when value for money triumphed.
Significantly, the ability to provide in-house database planning and management facilities was thought very important by only 25 per cent of the total, while media planning and buying fared even less well. Just seven per cent of the sample considered this facility very important, compared with nearly half of last year’s ad agency survey.
Other criteria not rated highly by direct marketing clients included an agency’s international links, its status – whether as an independent organisation or an ad agency subsidiary – and its client list. These, perhaps surprising, findings suggest that being part of a network, whether abroad or at home, is not as important as might have been expected in the shrinking world of the Nineties and that small agencies, with perhaps specialist experience, are not necessarily at a disadvantage when pitching for business against some of their larger competitors.
The split between users and non-users of agencies across most criteria was pretty even. However, actual clients clearly have learned the value of senior management involvement in their work. Agency users were more likely to stress the importance of this than non-users (48 per cent of the sample versus 28 per cent) in a finding that agencies should note well.
Senior management involvement, as well as international links, were considered very important by relatively high numbers of clients in the leisure and holiday company sector. Across other sectors, quality of account handling was perceived as particularly vital by charities, mail order companies and public utilities.
Strong views were also expressed when it came to paying for services rendered. When asked which method of remuneration they preferred when using a direct marketing agency, nearly half of all respondents (47 per cent) said fees, followed by 39 per cent who stated they preferred a combination of mark-up, fees and commission. Just ten per cent said they preferred mark -up alone and only nine per cent wanted agencies to work on commission alone.
However industrial/manufacturing and hi-tech companies have a significant bias towards mark-up. And, across all sectors, those companies using five or more agencies are less likely than those using only one agency to prefer this method.
Companies were asked which sources of recommendation and information they would refer to when selecting a direct marketing agency. Two particular methods stood out head and shoulders above the others. Word of mouth was the favoured type of recommendation of 89 per cent of the sample, while examples of the agency’s work were considered the best testimonial for a direct marketing agency by 86 per cent of the total.
Coverage in the trade press and an agency’s own marketing were considered important by 56 per cent and 51 per cent of the sample respectively. Less than half (44 per cent) were interested in referring to the Direct Marketing Agency register, though non-users of agencies were more likely to consult it than users. Less than a third of the sample (31 per cent) said they would turn to league tables when selecting an agency. There was little difference in preferred methods between agency users and non-users.
When asked how they would expect a direct marketing agency to demonstrate its commitment to the direct industry as a whole, most respondents plumped for some involvement with a direct trade body. More than two-thirds of the sample (68 per cent) said they would like to see involvement in the Direct Marketing Association, while 60 per cent wanted to see involvement with the Institute of Direct Marketing.
Staff training and development was considered important by 56 per cent of the survey, reflecting the common client complaint of low levels of skill and experience in agencies dealing with their work. More than half the sample would also be impressed by use of the List Warranty Register, or links with the Telephone or Mailing Preference Service. Perhaps not surprisingly, non direct-based trade associations, such as the Institute of Practitioners in Advertising (IPA), Institute of Sales Promotion (ISP) and Sales Promotion Consultants Association (SPCA), did not rate so highly with clients. Neither did attendance at the annual Wembley Direct Marketing Fair.
A breakdown of response by sector shows that financial services and charity and mail order companies rate the use of list warranty register or mailing/telephone preference service more highly than involvement with a trade body, perhaps reflecting the more sensitive and potentially intrusive nature of their direct output. Industrial/manufacturing and hi-tech companies have a bias towards staff training and development, while public utilities companies show an even stronger interest in DMA or IDM involvement than other sectors.
Interestingly, the split between users and non-users of agencies reveals few differences in attitude. The only significant difference is that those not using agencies would be much more likely to require membership of the IDM than users.
Our survey also investigated levels of direct marketing awareness and use among client companies. The overwhelming majority (91 per cent) of companies asked had heard of at least five agencies and the average number of agencies known was 16.
User findings revealed a different pattern. Just over half the sample claimed to have used an agency and, across users, the average number employed was between two and three agencies. When it came to specific agencies, more respondents had heard of Ogilvy & Mather (known of by 87 per cent of the sample) than any other shop.
O&M was closely followed by McCann Communications (71 per cent) and then WWAV Rapp Collins, Grey Direct and Brann (63, 63, and 61 per cent respectively). However, the picture changed significantly when it came to use.
Brann was the most widely-used agency, employed by 16 per cent of the sample; WWAV had been used by 14 per cent, and Judith Donovan Associates, O&M Direct and McCann had each been used by ten per cent or less of the sample.
When the findings are broken down by the number of agencies used, it emerges that those companies who have used only one agency are more likely to have employed WWAV than any other, but for users of two or more agencies Brann is top and WWAV second.
Some differences also appear when the predilections of the various sectors are taken into account. Packaged goods companies are less likely than other sectors to be aware of O&M, WWAV and Brann, while, in terms of actual use, financial services outfits are more than twice as likely to turn to Brann or WWAV than other agencies.
An investigation into the ranking order of agencies across specific criteria found the same five agencies coming out on top time and again. First choice for clients was consistently O&M Direct, followed by WWAV Rapp Collins, Brann, Judith Donovan Associations and, in fifth place, Grey Direct.
This order prevailed across all criteria under consideration: strategic marketing planning, expertise in a client’s sector, expertise across a broad range of sectors, expertise across a range of media, media planning and buying ability, creativity, database planning and management, quality of senior management, quality of account handling, ability to evaluate a campaign and value for money in results achieved.
McCann, Wunderman Cato Johnson and Option One also showed strongly across all criteria. When it came to the most important criteria for clients – evaluating a direct marketing campaign and value for money – MHA Carlson performed well, coming eighth in the evaluation and ninth in the value for money categories. Chapter One made it into the top ten for evaluation and expertise in the client’s sector, while GGT made it to ninth place for both account handling and creativity. IMP consistently bubbled under the top ten, coming ninth in the expertise in the client’s sector category.
There is little difference in the findings between users and non-users of direct marketing agencies. However non-users are more likely than users to rate O&M, while those who use five or more agencies are less likely to allocate points to that agency, suggesting O&M Direct has made a remarkable success of self-publicity.
At a lower level, non-users are also more likely than users to allocate points to Grey and GGT.
When it comes to the individual sector choices, O&M is clearly the most significant agency among food/drink/tobacco, industrial/manufacturing/hi-tech, leisure/holiday, packaged goods and public utilities sectors. Meanwhile, WWAV has pre-eminence among finan cial services and retail/wholesale companies.
It is clear that these latest findings hold many lessons for agencies. Most importantly, each outfit must concentrate on offering clients a cocktail of value for money and skilled staff to manage and evaluate campaigns if they are to compete seriously in the industry.
Copies of the full survey are available at 95, including postage and packing, from Louise Williams on 0171-439 4222.