Partners in line

Mergers between companies engaged in complementary marketing activities have become commonplace. The link-up of field marketing company Ellert Retail with through-the-line agency Brann have, nonetheless, attracted interest, especially as the merger has appeared to proceed with minimal disruption to all parties concerned.

When Rob Ellert, managing director of Ellert Retail, first negotiated the merger early last year, he had no idea of the imminent acquisition of Brann by American company Snyder. Now, Ellert and Brann are happily ensconced in the Snyder stable and it is business as usual all round.

Ellert explains why he as a field marketer sought the merger with an agency.

“When I looked at the market and where it was going, I questioned if we could continue to grow fast enough to keep up with our major clients. And, clearly, on our own we weren’t going to get there.

“Manufacturers, suppliers and clients are becoming more aware of the importance of a contact strategy, particularly on an international scale. On my own, I wasn’t going to be able to cross no-man’s land, having seen that some of my competitors were already aligned with international companies (particularly the CPM/Omnicom alliance).

“I looked at where there were companies to acquire. But acquisition didn’t seem practical because what I could afford wouldn’t have the latest technology and the depth of management and resource to compete in the big game. I wanted to go to a large agency, and that is where Brann met the requirements,” says Ellert.

Alan Styler is planning director for Brann. For him, the Ellert merger fulfilled a key requirement that was unavailable within his organisation. “We have grown from being a leading exponent of direct marketing to a position where we were able to offer a relationship marketing deliverable to our clients by adding new components to the business.

“We realised that we were in a position to influence the whole buying process that a client’s customer might go through. Then we recognised that it would be sensible to continue to add to the services that we offered our clients. The field sales operation was an obvious one and we are very pleased that we can deal with Rob, because that really does give both of us a greater advantage.”

Critical mass is a key factor in the equation for Styler. “Clearly, if you take any one component that we can offer – let’s say telemarketing – then we’re in competition with any number of providers. But when you put the whole thing together, then clearly that gives us a significant competitive advantage.”

Styler shares Ellert’s reluctance to step outside areas of competence. “We have been very careful to recognise what we are good at and where our core competencies lie. It is highly unlikely that we would have been able to develop that capability from scratch. We recognise that Ellert is a key player in the field marketing sector. The company’s reputation was strong and the linkage was an obvious one,” says Styler.

Styler feels that Brann’s acquisition by Snyder was good experience for the alliance with Ellert.

“We have been through this process from the other end by becoming part of the Snyder group. That has given us significant strengths in being able to partner with other companies – both here and on an international scale – although we haven’t merged other organisations into the business in the same way as we have with Ellert,” says Styler.

Ellert sees Snyder’s involvement as crucial to the success of the merger. “Snyder is a specialist outsourcing company. Over the years a number of companies had spoken to me about trying an acquisition, but I never felt that they either understood or were seriously committed to the sector.

“When I first started talking to the Snyder executives, not only were they committed to the sector, but they actually understood it – which was refreshing.”

Jonathan Baggott, sales and marketing manager for Eastern

Natural Gas, has dealt with both Brann and Ellert for several years. In his view, it is important that the companies never diluted their individual identities.

“We use Brann and Ellert for two entirely different types of activity. Ellert Retail is very strong in terms of field marketing; Brann in terms of advertising and data manipulation. So I think it gives the entity a much stronger market presence.

“Their coming together doesn’t really pose any great problems and it doesn’t at the moment open up any new opportunities either. Maybe, once we start thinking a little more laterally, we might uncover some more opportunities. But we’ve got existing processes, systems and techniques that I don’t think this is going to influence in the short term,” says Baggott.

Even on a database and communications level, the impact so far is minimal. “Brann is the data capture agency for us and we don’t involve the agency in targeting. If we decided to target a particular geographical area, then we would be communicating that through one of our sales agencies, which is where Ellert comes in.

“The first thing Brann would know about it is that it would receive contracts from a different part of the country, or from a different part of the town. So there’s no great synergy and there’s no great effect on Brann,” adds Baggott.

Nick Fennell, sales and marketing director of rival field marketing agency CPM, views the Ellert/Brann merger with interest, having been through the Omnicom alliance with his company.”It’s a position we’ve been in for quite some time and it’s good to see other people catching up. As part of the Omnicom group, we are the final executioner at the point of purchase and as such we consider ourselves a vital part of the marketing mix.

“We get people to acknowledge that there’s no substitute for face-to-face contact, whether with a retailer, a business or indeed a consumer. We also point out that you can’t afford to do that all the time. So what we usually suggest is a way of categorising people that you want to contact. We’ve sold an integrated solution to most of our clients,” says Fennell.

The question remains whether the Ellert/Brann link-up is part of a new wave of mergers in the field marketing sector. Another field marketing company looking to joint ventures for solutions is EMS. Chairman, Richard Thomson explains: “We’re unusual for a field marketing company in that we specialise in one sector, IT. Because of that focus, integration with the overall marketing mix, and our activity above and below the line, is essential. We have developed very powerful mechanisms to measure activity and to gather data from the field, and we tend to work very closely with the client to do that.

“We’re just in the process of launching a joint venture with sales promotion company Interactive New Media (INM). We’ve addressed the fact that there’s a whole generation of technophobic users who have not been fully engaged or turned on by IT. So we’ve launched an organisation called the Millennium Road Show Company with the aim of putting a series of roadshows to-gether. Through a joint venture and integrating more of the marketing mix, we’ve now launched this sales promotion campaign to support that.”

He stresses, however, that this is not a merger. “These are two independently owned companies which have recognised that they’ve got certain key strengths, and so together we’ve formed this organisation to focus on both sets of clients on this one activity of IT-based roadshows.”

Ellert believes that tactical link-ups are likely to be increasingly replaced by strategic alliances for the field marketing industry.

“The industry is shifting, and some of the more menial tasks that were undertaken historically by low-value-added operations are now shifting up the scale into the more value-added end of the business. Once you start being able to integrate it totally into a campaign strategy, as well as just making a couple of calls, it becomes a total operation; a strategic rather than a tactical decision.”

Styler’s perception of the strategic benefits of the merger with Ellert is clear. “It’s very much part of our growth strategy and in terms of the logistics of bringing the two businesses together, it has been very successful. We’ve brought key people together to go through briefing sessions so that everybody understands what we can do jointly and is comfortable with that. The way forward is a very positive and clear one.”

For Baggott of ENG, strategic alliances are a key part of industry trends. “It’s no longer acceptable for a company just to offer one small component of a sales process or of the marketing mix.

“Companies have to be integrated right through all parts of their business systems. I think we’ll see an accelerating trend towards these types of link-ups between organisations that operate in different parts of the marketing chain.”

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