This month the Sales Promotion Consultancy Association (SPCA) relaunches as the Marketing Communication Consultancy Association (MCCA). The man at the top, chairman Matthew Hooper, remains the same, as do the members, but the organisation has widened its horizons from simply focusing on sales promotion. As Hooper says: “The new body is not marketing discipline-specific.”
A quick glance at the changes that have taken place within the industry shows a clear rationale for such a move. Hooper says: “There are many more ways to reach consumers than there were ten years ago. Also, agency rosters used to comprise a traditional mix of agencies – advertising, direct marketing, public relations and sales promotion. These days, client rosters are much more diverse and might include agencies that specialise in customer relationship management, sponsorship, data houses, new media and so on. Reaching consumers requires a number of disciplines and solutions and the industry has had to become more mature and professional in order to meet these demands.”
Indeed, the majority of sales promotion agencies no longer limit their services to just sales promotions – even those who might have started out in this field – and the term “sales promotion” itself seems to have disappeared altogether from major players’ descriptions. For instance, 141 recently merged with fellow sales promotion agency Communicator and ad agency ARCOM to create a multinational company with a London office, which describes itself as an integrated marketing agency. Communicator managing director Paul Seligman explains that 141 now undertakes a wide range of marketing activities, from handling most of Halifax Bank’s direct marketing to running tactical marketing support programmes for Safeway and producing TV advertising for Kenwood.
Finger in every pie
Nick Cunningham, managing director of promotional marketing specialists Dynamo, says that, in addition to sales promotion, Dynamo provides clients such as Tesco, Mattel/Fisher Price and MoÃÂ«t & Chandon with “a full range of below-the-line services, including promotional marketing, direct marketing, advertising, visibility and event management, new media, packaging design and field marketing”.
Stephen Callender, managing director of direct response agency Black Cat, says his agency offers “direct marketing, with a particularly strong emphasis on data and loyalty – and an increasing proportion of interactive work”.
Tequila/London managing director Tim Bonnet, in a similar vein, describes his company as an integrated marketing agency which “carries out fully integrated below-theline campaigns both in the UK and on a European basis”.
Callender says: “I guess that the key issue is that there are so very few of the traditional sales promotion agencies left.”
This view is shared by Seligman, who has been in the industry for 18 years and who says: “I think the typical sales promotion agency of the Seventies is now obsolete.”
He continues: “Promotional activity is becoming more integrated. Indeed, the lines between sales promotion, direct marketing and advertising are becoming very blurred.”
This view is shared by Bonnet, who suggests: “There has been a shift away from tactical activity and agencies earning commission through ‘widget-based’ promotions.”
It’s clear that the new integrated agencies have adapted themselves to stay ahead of technological advances and client demands. Seligman says: “We now have planners, data planners, media planners – a lot more specialists. Our product range is now much larger.”
Callender says of Black Cat: “We now have a large creative team, a strong interactive team and a very strong data-planning team. Our approach is more multi-dimensional than ever before.”
Cunningham says: “We have introduced a planning department to add depth and breadth to our strategic solutions and have continued to build up our creative resources.”
Give a good account of yourself
As with any marketing discipline, accountability is one of the key issues the old sales promotion and new integrated agencies face. Seligman notes: “Clients are taking promotional activity much more seriously – it is no longer the domain of the junior brand manager.” This may be a reflection of clients’ increasing eagerness to see a better return on investment, but it could also reflect the increasing sophistication of consumers.
Cunningham says: “Consumers expect more from an offer if it’s to get a response. Campaigns have to work harder to cut through the noise, capture the imagination and achieve the desired result.”
He does, however, feel that the “integrated” label is applied too liberally. He says: “Many of our competitors position themselves as integrated or ‘media-neutral’, but very few are actually responsible for large clients’ ad strategies.”
Does integration help weather economic downturns – and how have these agencies fared during the recent economic uncertainties? Seligman says: “That there is a downturn is undeniable. To what extent it affects any company depends largely on its product mix. While our dot-com clients are no more, most of our packaged goods clients are increasing their spend.”
Callender says: “There has been some effect on some client budgets, but overall the downturn can only be good for the below-the-line industry – clients are taking money out of advertising and diverting it into below-the-line activity.”
Bonnet points out that: “The area being hit right now is above-the-line activity. While this is an area we include in our integrated campaigns, it is not our main activity, so we continue to have strong business in direct marketing and sales promotion.”
Cunningham has seen no major effects yet, but says: “It seems sensible to proceed cautiously, keep a close eye on costs and make sure that we are paid for the work that we do.”
Larger agencies are less vulnerable to the “single-client risk” factor, where the loss of one major client can tip profitability into loss, but on a positive note Seligman reports major account wins, and both he and Callender say that they have been recruiting recently. While it may be easier for larger agencies – especially those that have protection from larger group owners, Seligman says: “I think a close analysis would suggest that the major growth and revenue winners in a recession are small agencies working from a comparatively low cost base – as well as being more cost-efficient, they are generally able to respond to downturns more rapidly.”
In his role as chairman of the MCCA, Hooper has other concerns. He explains: “In the last recession, a third of those people who were laid off didn’t return to the industry. We have to look after the interests of agencies by making recruitment, retention and training of people who can deliver marketing communications in its broadest sense a primary concern.” To that end, the MCCA has been emphasising training and launching a freelance recruitment service to ensure that any brain drain is arrested.
Keep away from the edges
But in this new era of integration, are those agencies that started out in sales promotion in danger of being marginalised? Cunningham doesn’t think so. He says: “Clients see a role for promotional specialists who are strategic and creative, but who also understand how to implement campaigns in all channels and have the resources to do so.”
Callender says: “We use our sales promotion skills to make our extensive direct marketing even more effective. The conceptual thinking and creativity of sales promotion, combined with highly sophisticated data and direct marketing thinking is really a very powerful force. These days, most agencies are becoming multi-disciplinary and those that started out as sales promotion agencies have this as a key benefit over those that have only ever offered direct marketing.”