Telegraph unveils financial vision

The Daily Telegraph is launching a new division that will sell financial services products to its readers in the next few weeks.

The division, called Telegraph Enterprises, is headed by former Midland Bank marketing director Kevin Gavaghan.

Telegraph Enterprises aims to sell goods and services to readers through a direct operation carrying The Telegraph logo.

The first service includes execution-only selling of PEPs and Tessas from approved investment companies. Gavaghan says the service will use a telephone sales operation based in Bristol. This will undercut more expensive commission-based products sold by IFAs and direct salesforces.

Gavaghan says that whereas a 6,000 PEP would probably cost someone hundreds of pounds in commission, a Telegraph PEP offers consumers much cheaper terms.

Although the service will not offer advice, Gavaghan says it will use The Telegraph’s reputation among its readers. “Branded reader offers gain 20 to 25 per cent more responses than standard direct response ads,” he adds.

He says the decision to launch the financial service was taken to cash in on the 10bn-15bn of savings in Tessas and PEPs that come to maturity this year . “If we gain less than one per cent of that market over five years, we will be successful.”

Gavaghan says other financial service products will also become available as Telegraph Enterprises expands. However, he rules out pensions because of the level of advice needed. Mortgage, life and general insurance are other possibilities.

“The Telegraph has strong associations with travel, cars, arts, sport and leisure,” he says. He adds that it is possible to sell tickets to sporting events, as well as sports goods.

Gavaghan says it also intends to launch an electronic shopping mall, where advertisers can buy space. “Companies like Habitat and Lands’ End are showing us it is possible to sell middle range goods and clothing off the page and by catalogue.”

Gavaghan claims he has not received negative reaction to the venture from retailers or manufacturers claiming it will cut down distribution costs.

The Telegraph’s board decided to support the venture because of a squeeze in ad and circulation revenue, according to Gavaghan. “After the price wars, competition is very keen and finding other sources of revenue has become essential.”

He claims the Reader Offers division of the newspaper is antiquated. Although it generates a turnover for the group of 14m and a profit of 3m, he says the new-look branded sales operation aims to be a much bigger income generator. Gavaghan is looking for a managing director for Telegraph Enterprises.