One-Stop Shops

Privately-owned businesses are increasingly acquiring field marketing companies in their quest for one-stop shops. What are the prospects for independent field marketing agencies?

The field marketing industry has always been slightly insecure about how it is perceived by traditional marketers. There is still confusion among agencies and clients about exactly what services field marketing companies should offer. But one thing is certain – full service marketing agencies have decided they can no longer afford to ignore this sector’s impressive growth.

This is evident by the consolidation witnessed at the top end of the market in recent years. The largest field marketing company CPM is a subsidiary of Omnicom; Ellert has become part of Snyder Communications; FMCG is owned by Mosaic Group; and Headcount Field Marketing is now an arm of Cordiant after its purchase of Headcount’s previous parent Healthworld Corp in March.

This acquisition activity has left the remaining privately-owned businesses feeling it is inevitable that many of them will ultimately join forces with one of the big boys. Companies such as Aspen Field Marketing, which was the subject of a management buy-out only last year; and RPM, which claims its sales have risen by almost 300 per cent in the past year, confirm that the discreet enquiries and regular approaches they are receiving have become a distraction.

The fact that field marketing agencies are still in demand is further proof that the sector has come of age. The large marketing groups were taken by surprise by the sector’s sales growth which is running at about 30 per cent a year (source: Field Marketing Council). But they have come to realise that by purchasing successful and respected independent field marketing companies with ready-made clients they can add to their service offer while improving their bottom line and share value at the same time.

For the owners of those private companies being approached there is usually a strong financial incentive to sell, while any acquisition will hopefully provide most of its employees with longer-term job security.

For clients it is unclear whether they receive any obvious added value from a field marketing company that is part of a full-service agency. They can take advantage of a one-stop shop if they want to combine their field marketing needs with direct marketing and advertising, for example, but a specialist independent agency would argue that it can be more responsive and flexible, especially if a client is using the discipline for the first time.

Companies such as CPM and Headcount claim they are in the best position to help clients because they have the financial backing to invest in staff and the latest technology to guarantee the best service. Clients may also already be working with other marketing businesses within the group.

CPM managing director Tom Preece says: “This means it would not be in our interest to give a poor field marketing service because this might jeopardise other existing business.

“Clients want partners that can work with them strategically. The focus has to be on achieving their objectives and field marketing is just one element of that.”

Headcount recently invested £100,000 in a new telephone system. Managing director Mike Garnham says the financial support it can call on at short notice means the company is in a strong position to meet the broader spread of activities that field marketing companies are asked to undertake nowadays. These include roadshows requiring consumer and retail outlet targeting and strategic nationwide door-to-door selling campaigns for the utilities.

“There are also new roles requiring heavy investment. In the area of field sales for packaged goods manufacturers fast and efficient data capture is almost as important as selling. The latest hand-held computers and WAP (wireless application protocol) mobile phones need to be purchased. This can mean spending hundreds of thousands of pounds to prepare for a campaign, which is what we had to do when we won the ONdigital account,” he says.

When field marketing companies are acquired they are usually expected to run as autonomously as possible within the parent group. Like CPM they will also be encouraged wherever possible to work with sister businesses in the organisation if it benefits the client.

FMCG managing director Kate Carr says her clients receive the skills of a specialist field marketing agency, but the Mosaic infrastructure provides other advantages too. “Nothing has changed about the way we do business, but as part of Mosaic we can provide ‘barriers to exits’ for clients, which means the service level they receive ensures they will not want to leave,” she says.

One client Carr believes FMCG would have been unable to attract, if it had remained independent, is Prudential, which has outsourced its 700-strong Prudential Cash Collectors team responsible for gathering insurance premiums from more than 1 million homes. Alan Cook, chief executive of Prudential Insurance Services, confirms that the scale of the collection service means it would only ever have been outsourced to a larger agency.

Always be role for independents

Despite the consolidation in the market there is a consensus between large and small field marketing companies that there will always be a role for independents, especially if they have specialist knowledge of niche markets.

Richard Finch was sales and marketing director of Headcount until he left to become managing director at three-year old Sure Field Marketing earlier this year. It’s his ambition to make Sure a major player.

He says: “Smaller companies can still compete on a domestic and international level by forming strategic partnerships with other specialists, such as telemarketing or event companies, and investing in staff and IT. There is a shortage of good people out there, which means smaller companies must work harder to attract them, and they can.”

One of Sure’s clients is Mirror Group Newspapers, which focuses its field marketing activities on its national titles The Mirror, Sunday Mirror, The Sunday People and Racing Post. Sure operates a full-time 30-strong field team branded as MGN’s regional development executives working in England and Wales where MGN has a retail network of 46,000 outlets.

MGN circulation sales director Wally Cowley says working with a smaller specialist company means he has one point of contact and regular feedback. “Having a dedicated team means Sure has a good understanding of our business. Its representatives attend regular meetings with our circulation department so our needs are addressed quickly.”

The only top five field marketing company privately owned is Aspen Field Marketing, which was bought by the management a year ago. Joint managing directors Gary MacManus and Katie Lowe have spent the past few months building the business which has a client base that includes Electronic Arts, Nestlé and Sony.

The company is the largest employer of full-time field personnel in Europe, which MacManus says is of interest to the large groups that express an interest in acquiring the business. “The approaches we have been getting are a distraction, but our commitment to full-time staff is helping us to win business in what has become a competitive market. Yet with the direction the market is moving I think it is almost certain we will eventually become part of a bigger group – but that is in the medium to longer term,” he says.

Risk of losing individuality

All companies have their own distinct culture, but many field marketing independents fear this would be lost if they sold up. RPM managing director Ross Urquhart says he is determined his company will remain independent, claiming its individual approach is one of the main reasons for its success.

“People do not have to sell. Clients must remember that the companies being bought are the ones that are up for sale – not necessarily the best ones,” he says. “If we were taken over, I am convinced we would lose the culture of the company as well as key staff, who would not want to buy into the parent brand or accept the inevitable politics that go with such an acquisition, such as shared internal accounting procedures and arguments over who is responsible for the creative work.”

Understandably, considering its broad membership, The Field Marketing Council (FMC) sits firmly on the fence on the subject of whether large marketing groups or independent agencies offer clients the best service. FMC chairman and managing director of independent FDS Alison Williams says field marketing is a specialised discipline and the most important issue is that standards are maintained to ensure that a client’s experience of field marketing is a good one.

“The FMC does have a role to play at a time when we are seeing such consolidation. Large marketing agencies that have got into this discipline through acquisition rather than setting up departments in-house from scratch are going about it the right way, because field marketing is not as easy as some agencies think,” she says.

Williams does not believe independents will ever be pushed out of the market completely, claiming clients using field marketing for the first time and which have a limited budget may want to be guided by a smaller specialist company, while confidentiality contracts stop large agencies from serving competing clients. There will, he believes, always be enough work to go around.

Ultimately it is up to clients to decide which companies best serve their needs. James Moyies, managing director of privately-owned PMI Marketing, says all companies are in danger of being swallowed up by larger agencies. “For many that may be exactly what they want. The real issue is whether consolidation poses a danger to clients who are best served when they have a choice. The continued existence of specialist independents will ensure they retain that choice,” he says.

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