Traditionally HMV had grown fast without long-term strategic marketing plans. This is related to the nature of the record industry where records are sold with short bursts of intensive marketing. Records are sold as individual products with the artist as the brand. HMV’s marketing spend grew out of co-operative marketing with record companies, so it had a substantial spend but no “blue-chip brand marketing expertise”.
The marketing department was restructured following the appointment of Wilf Walsh as personnel director from PepsiCo, who was charged with creating a new marketing team.
A new department was put together including those who would lead the review team, head of marketing Paul Goodwin (formerly of Scottish & Newcastle) and advertising manager Cormac Loughran, previously at Bartle Bogle Hegarty. The total department increased from nine staff to 16.
As part of the strategic plan new creative and media agencies were sought. On the media side, HMV’s team were unhappy with the service they were receiving. This they felt was due less to the incumbent, CIA Medianetwork, than to the way the marketing department had been run. “Marketing had been deemed as unimportant because the business was thriving, and the stores were seen as the driving force,” says Goodwin.
There had also been no review since the previous media buyer London Media had been taken over by CIA Medianetwork.
Drawing up a shortlist
“We looked at who was in the market,” says Goodwin. “We looked at what our competition was doing, we looked at the trade press and we picked up some of the mailings we were being sent.” As a new marketing team, it was being bombarded with cold-calls and letters of introduction from new business directors.
“If the cold calls were relevant we would listen to them,” says Loughran. “But we couldn’t afford to get it wrong so we spent a month seeing 20 media and 20 creative agencies. Six or seven of them seemed to have a view on our market. If they had knowledge or something to add, we would talk to them. An awful lot of them were very bland mailings.”
“We also had to decide if we wanted to be with a big agency and feel less important, or with a smaller one with more dedicated service.”
HMV’s marketing team got down to a final shortlist of five: CIA Medianetwork, BMP DDB, Universal McCann, TMD Carat and, as usual, one which remained anonymous because of worries about conflicting business.
At this point HMV felt it did not have sufficient knowledge of media agencies and decided to employ the services of a consultant, in this case Media Audits. Audits says half of its clients usually ask it to draw up a shortlist, but not in this case. In half the pitches it works on – probably the same half – Audits will also write the brief, something which some media directors say they can spot and do not like because they are written to make sure nothing is missed out and become mechanical.
“We felt we wanted another view, as well as perhaps an endorsement of our view,” says Goodwin. “Audits’ role was to bring a knowledge of agencies, objectivity and to act as facilitator of the pitch, to help run it smoothly.”
The consultancy also helps convince the boards the choice has been “copper bottomed”, says Goodwin.
“We try to match the priorities of the client with the culture of an agency,” says John Storey, Audits board director. “Because we deal with all the agencies constantly we have a better idea of what they offer.”
HMV, with John Storey, saw all five agencies over a week and HMV says it was seriously impressed by the amount of work all but one of the agencies put in. It now believes agencies should get some payment towards pitch costs, although you could say it is a bit late now.
Certain agencies had created ads for the pitches, including a radio commercial, and another put an HMV Web site on the Internet for the day. Another used role-playing games, acting out the parts of HMV’s marketing heads discussing problems.
One agency – mindful of HMV’s need for co-operative marketing with record companies – had created sponsored Rizla rolling paper packets that could be used to promote the band Supergrass.
The atmosphere created by the different agencies ranged from too formal to too relaxed. One agency got plus points for having bacon sandwiches and cups of tea to start with. Another had pop music playing in reception, while another went too far and had the music playing throughout the pitch, which was not appreciated.
One agency lost credit because a member of the pitching team lit a cigarette during the pitch without asking. Not a good idea as Paul Goodwin is asthmatic. Had he been asked he might not have objected.
In the brief, HMV had asked to be allowed ten minutes to make a statement before the pitches began. In fact, it wanted the ten minutes to spring a music quiz on the pitch teams – something HMV employees have to go through.
The answers to the music quiz were less important to HMV than the way in which the teams worked on the quiz – one of the questions was simply “what is at number one” – it wanted to test the agencies’ teamwork.
One agency worked completely individually and then asked at the end if it was allowed to add their correct answers together.
Storey says he does ask agencies questions during pitches, but only when he wants to create a level playing field or because they may have touched on something he knows is important to the client.
Making the decision
Immediately after each pitch HMV’s team would retire to a local pub and work through a score card prepared in advance by Audits. The score card comprised a set of weighted criteria – different for each client – which Audits maintains is used to discipline conversations and maintain fairness. Pitches are not decided by a mechanical box-ticking exercise.
In HMV’s case, strategic thinking and market knowledge were more important than buying or the agency’s fee – unusual in a retailer.
The score card, marked out of 100, gave a weighting of ten to basic quality requirements, such as post-campaign research and identification of the target audience. Thirty points were available for an understanding of HMV’s business needs and a further 30 for the resource and service offered by the agency.
As an example of the help an auditor’s knowledge can bring, in this case Audits knew that one agency had an “ongoing middle management problem” that did not tally quite with what was being offered to them in service terms.
A weighting of 20 was given to the media value, or buying ability, of the agency along with its fee requirements. A further ten went on the market vision offered.
The benefit of the scoring system is that it provided the marketing team with notes allowing it to justify the decision to the losing agencies.
In the end two agencies, TMD Carat and BMP, were chosen for a final pitch because of their understanding of HMV’s market. Previously an agency had failed to discuss videotapes and computer games, which make up 30 per cent of HMV’s business.
Audits, for its part, says that it never has a vote in pitches. It is there to see everything discussed equally, to be a referee but no more.
The selected agencies pitched to the complete board and HMV maintains that the contest was so close it would have been difficult to slide a piece of paper between the two agencies. In March this year, BMP was chosen because it got closest to what HMV had internally agreed that it wanted: media that would allow it to create a point of difference from its competitors and give added value. It was also important that the agency could work with the culture of the agency.
The pitch process began in November 1995. BMP is contracted to start work for HMV on June 5.