Field marketing is going through a sea change, and many of those involved in the industry argue that within five years, the small independent firms, which have traditionally been the backbone of the industry, will no longer exist in their present form.
The past year has seen a rash of mergers and acquisitions within the industry, involving many of the better-known names in the sector. The driving force behind this rationalisation is twofold.
Firstly, there is the increasingly international nature of packaged goods sales and marketing. Clients are looking at concentrating their budgets with a smaller number of suppliers (a phenomenon which is not restricted to marketing services – it is also behind the new wave of mergers within the accountancy profession, and extends beyond the service sector). What they are offering these suppliers is the promise of longer-term relationships: in return, they are looking for a variety of benefits. They are demanding that those suppliers should be of a certain size; able to offer a range of marketing disciplines; able to service them in more than one country; and able to deliver better value for money.
Secondly, the major marketing services groups are now finding themselves with cash in the bank for the first time since the recession began, and are beginning to snap up smaller firms in order to broaden what they offer, both in terms of marketing techniques, and also geographically.
So Omnicom, the group which owns CPM International, has recently bought German field marketing company PPD, which will give CPM offices in 14 countries and a turnover of about 130m.
Meanwhile, Barnett Fletcher Promotions has been bought by McCann-Erickson, in September; earlier this year FMCG was bought by Canadian group Mosaic; and
Milton Marketing Group, the specialist medical marketing company which owns Headcount, is merging with a US company, GHBM.
Smaller field marketing firms, some industry experts argue, will simply not be able to carry on as they are because it won’t be possible for them to compete in offering the range of services that clients are demanding, at the price they are willing to pay. To use the familiar buzzword, they are just not integrated.
As Gary MacManus, joint managing director at Aspen Field Marketing, says: “In the future, there will not be a role for the specialist field marketing company – at least not for a profitable and viable one.”
MacManus believes that such firms will be replaced with “organisations which truly offer outsourced expertise and seamless service, from basic understanding of client needs and markets through to the provision of live data direct from the market”.
MacManus says that marketers increasingly want to reduce the number of companies they use for both consumer and trade marketing, with the result that the field marketing industry has gone through “backward integration into trade marketing, with an obvious spin-off being the increasing role of field marketers in the sales promotion and training needs of clients”.
MacManus also argues that there is a growing need for investment in IT solutions if a company is to offer its clients the best possible level of service.
He adds: “Information will make or break the field marketer and valuable information can only be successfully sourced through quality teams in the field which are full time and committed – and not second-generation sales people – supported with the latest developments in IT. Anything else simply won’t serve a client’s needs in a competitive market, but will merely line the pockets of field marketers unable and unwilling to commit to their clients and invest in the service they offer.”
Others, however, believe that there is no real threat to the continued existence of the smaller field marketing firms.
Steve Cook, chief executive of Carlson, suggests that the make-up of the sales promotion industry makes it unlikely that small field marketing companies will disappear. While he believes that there is a concentration of power with a few large companies at the top of the market, he suggests that there will always be a need for specialist one-service firms.
His reasoning is simple. Despite the wide range of sales promotion, direct marketing and public relations agencies which now claim to offer field marketing as part of an integrated marketing services package, few of them, with the exception of Carlson, actually have an in-house field marketing division.
Cook says: “Field marketing is an extremely specialised area.
If you’re going to offer it, then you must have someone within the company who has field marketing as their specialisation, whether you are selling it as part of a package with other marketing services or whether it’s all that you do.”
Those agencies which do not have it in-house will have to outsource and, while some bigger sales promotion consultancies are happy to use, for example, Carlson’s field marketing division, others prefer not to put their business with a significant rival.
Nick Fennell, sales and marketing director of CPM International, is another who believes there will always be a need for smaller firms. But his reasoning is slightly different to Cook’s.
Fennell says that the problem with the current concentration on integration is that it is driven by the integration of marketing services – yet, he points out, the majority of field marketing work comes from the sales director, not the marketing director.
He adds: “The core of the field marketing industry does not rely on the marketing department.”
To a large extent, this is because of the origins of the field marketing industry. The traditional view of the field marketer is of a part-timer, usually a housewife with children in school, handing out leaflets, providing the classic sausage on a stick samples in a supermarket or visiting small newsagents to check that a client’s brands are in stock and on-shelf. And many still see field marketing companies as one-woman bands, operating out of small offices and relying on a little black book with the names and phone numbers of a few hundred part-timers.
Field marketers have always been used by sales departments as an outsourced extension to the salesforce, which can be called upon when needed.
The use of field marketing by the marketing department on a large scale to support major brand pushes has really only come in the past five years, partly as a result of the recession of the early Nineties, which saw budgets slashed and staff numbers cut to the bone, and partly because marketers have realised that integrated marketing campaigns, using a wide range of different but complementary techniques, really do work.
Field marketing companies are also increasingly being asked to provide temporary staff for a range of non-sales tasks such as training.
Even so, the vast majority of the spend in field marketing still comes from the sales budget, not the marketing budget.
CPM’s field marketing division, for example, spends about 75 per cent of its time working on the sales side and only 25 per cent working on the marketing side. Fennel says: “Large blue-chip clients are still going to need agencies which can undertake selling as well as marketing activities and which can provide access to a large, flexible workforce, which might not sit comfortably in a dedicated marketing organisation.”
Mike Garnham, managing director of Headcount, says: “There will always be a need for smaller firms, because there will always be small clients with small budgets”.
As with CPM, the majority of Headcount’s business comes through the sales director, and, says Garnham, “integration is really only an issue for the marketing director. The sales director’s main concern is getting the product on the shelf on a regular basis”.
Garnham – whose own background, like that of many in the field marketing industry, is in sales – suggests that there is still a fundamental difference in how the sales and marketing departments perceive company strategy.
He says: “Not very many marketing directors have been on sales teams – so they don’t know just how important it is to get things on shelf.”
He argues that while marketing directors are looking at the short-term and the tactical, sales directors are looking more to the longer-term and strategic.
Many marketers may find it strange that they are seen as the short-term ones. But Garnham’s view is shared by many in the field marketing industry, who feel that it is the marketing directors who tend to move on every couple of years, while the sales directors seem to stay for life.
That may be true. But the use of field marketing by the marketing department is on the rise, as is its use for non-traditional types of products – computers, for example. Suppliers in the industry are going to have to learn how to answer the demands of a new sort of client.
Richard Thompson is chairman of EMS, a specialist in hi-tech field marketing. EMS staff will often be found in-store, demonstrating the latest new computer, and Thompson says: “As far as the consumer is concerned, the staff are from Hewlett-Packard or IBM, or whoever the manufacturer is.”
He adds: “The days of Molly Merchandiser or Dolly Duster, the days of rack jobbing, making sure the leaflets are out there, checking gondola ends, are almost over. Field marketing companies have to adapt, or become extinct.”