Change of direction?

Will the AA’s merger with Saga see the iconic British motoring brand – which also covers the insurance and financial services sectors – adopt a more integrated strategy? asks Rupi Gohlar

MechanicThe AA (Automobile Association) is understood to be undertaking a “root and branch” review of its brand and advertising following the private equity-driven merger with over-50s specialist Saga to create Acromas Holdings (MW last week).

It has appointed former Saga financial services marketing director Michael Cutbill to lead the brand’s roadside and insurance services divisions, prompting some to suggest Saga is firmly in the driving seat following the merger. Weight is added to that suggestion by news that sales and marketing director for AA Roads Kerry Cooper and marketing director for AA Insurance Services David Tyers are both understood to be leaving the company.

Yet one agency executive questions whether the AA – “a fundamental part of British life” – will be able to sustain its “iconic” image under Acromas Holdings.

The brand was born in 1905 when a group of motoring enthusiasts formed the Automobile Association to help motorists avoid police speed traps.

It expanded into the financial services sector with its insurance brokering service in 1967 and in the 1990s it created the AA driving school, which competes against RAC-owned BSM.

The executive believes that Cutbill’s appointment signifies a more integrated, strategy for the business, saying: “This is good news because it will lead to a better focused and more consistent message from the brand.”

That message is underlined by Interbrand chief executive Rune Gustafson, who believes the AA possesses a strong heritage in terms of its breakdown service customer base, but that the company should exploit this more.

He says: “It has a huge professional image that is based on its reputation as the fourth emergency service, but it has suffered in recent months in trying to define what it stands for. It is much more than just a breakdown service. The brand is still strong because of its history, but is also weak because it is known only for its breakdown service.”

Such an assessment may have been behind the decision three years ago to separate the incumbent parts of the business into autonomous units.

Since 2001, when it dropped its tagline “the fourth emergency service” and with it ad agency HHCL in favour of M&C Saatchi, the company has been repositioning itself as a multi-product provider. The AA, then owned by Centrica, adopted the “Just Aask” strapline to bring its motoring services under the same umbrella as its insurance products and driving school.

However, another change of ownership in October 2004, when venture capitalists CVC Capital Partners and Permira took the company over, saw an even more marked departure, when it split itself into three autonomous businesses covering road services, insurance and loans, without any centralised functions.

The AA’s advertising is split between Delaney Lund Knox Warren (DLKW), which handles AA Roads, and Rapier, which manages through-the-line activity for insurance and financial products. However, that is expected to change; sources suggest a consolidation pitch across the brand is imminent.

AA%20LogoQuestions remain as to how well the “You’ve Got AA Friend” activity created by DLKW runs alongside the “Kev and Bev” campaigns.

One industry insider maintains that the segregated business was an effective strategy reflected by equally successful advertising, but another says that future AA strategy will be influenced by Saga’s more customer-focused approach.

One source says: “Saga grew up in an entrepreneurial world where the emphasis is people-focused and it spends most of its marketing budget on direct work. Its strength of relationship with customers is greater than the AA’s so the focus will probably change. It will do more direct marketing and start using its customer data more effectively.”

Despite this, the AA remains the UK’s largest breakdown company, with about 15 million members and 4,000 patrols in an increasingly varied and competitive environment. Its services include Roadside to Relay Plus cover, vehicle membership and breakdown repair. The roadside assistance service remains core to its activities, but it is also the UK’s number one independent insurance intermediary (Mintel) and is a growing provider of personal loans and financial services.

Competition comes from the RAC, now owned by Norwich Union parent company Aviva and said to be readying a new assault of its own; and Greenflag, owned by Direct Line and part of the RBS Insurance group.

Other competitors include Mondial of the Allianz-owned Mondial Assistance Group and Europ Assistance, which according to Mintel, is losing momentum in the market and poses no great threat to the three main players. Meanwhile, Saga itself operates in the insurance sector, albeit for the over-50s.

All signs point to a more centralised AA brand and a more consistent marketing message, although as one source points out that strategy did not work under Centrica. The forthcoming pitch could be key to making it work this time around. 

Facts and figures: AA 

1905 The Automobile Association is founded by a group of motoring enthusiasts 

1910 First hand-written routes introduced. Since then, the AA has published a wide range of routes and travel guides 

1949 Night-time breakdown service launched in London and gradually expanded to cover the whole of Britain

1967 The AA Insurance brokering service is introduced 

1999 The AA is bought by the Centrica group for £1.1bn. Centrica sells the company to venture capitalists CVC Capital Partners and Permira for £1.75bn in 2004 

2007 In September, the AA and Saga formally merged to create parent company Acromas Holdings.

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