There may have been a few raised eyebrows last week when Travelex was announced as the &£3m sponsor of ITV’s World Cup coverage, a property that in the past has been snapped by major brands.
Travelex is the world’s largest foreign exchange operator, with 600 retail branches worldwide. Some 200 of these are in the UK, and result from the company purchase of the financial services division of Thomas Cook for &£440m last March. And it is this purchase that has accelerated the company’s move into advertising and sponsorship, in an effort to raise the profile of the Travelex brand.
As part of the deal, Travelex has secured the rights to use the Thomas Cook financial services brand for five years, although the company also managed to acquire the rights to the travellers’ cheques brand in perpetuity. However, the company is planning to drop the Thomas Cook retail brand across the UK and Europe by the end of next year, and therefore needs to raise the profile of the Travelex brand.
This is a major task, as Travelex head of grou
p marketing and communications Anthony Wagerman admits: “Travelex has made the decision to do what Thomas Cook did over more than 160 years in less than five years. It doesn’t make sense to keep investing in a brand that Travelex can’t control because it’s so bound up in the travel agency side.”
The sponsorship is the company’s first dedicated UK advertising activity, having only begun advertising at all two years ago. Last year, in an effort to attract business customers, the company carried out a &£3m business press, and in-flight magazine campaign across the US, Australasia and Europe.
The campaign was created by Lida – a division of M&C Saatchi – with buying through Walker Media, both of which will work on Travelex’s World Cup sponsorship idents.
This year, Travelex also signed a five-year deal, reported to be worth &£2m, to sponsor the Australian cricket team’s away matches. It is also a small sponsor of the Toyota Formula One team and provides money-changing services for the team.
Industry observers believe that Travelex may have sealed a good deal on World Cup coverage – but think the sponsorship needs to be backed by further advertising, something the company is not planning to do.
Alastair Macdonald, director of sponsorship agency Connexus Group, says: “Travelex needs to build on that strategy and make sure it’s not a short-term approach.”
Given that ITV is in tough competition with the BBC for World Cup coverage, Travelex will have to make its World Cup ads as impressive as possible.
Initiative Media sponsorship director Richard Davies says: “A creative execution is even more important with the World Cup, because you have to stand out from the event sponsors and advertisers.”
The World Cup sponsorship will also have a dual role for the company. As well as being at the right time of year to attract customers planning to change money for their summer holidays, the sponsorship will also enable Travelex to highlight the outsourcing and commercial services it provides, which account for about 70 per cent of revenue. For instance, the company provides the in-branch foreign exchange services for Barclays, NatWest and Lunn Poly.
In its last financial year to December 2001, the company reported pre-tax profits of &£68.2m – an increase of 130 per cent on the previous year. Revenues also increased by 162 per cent, to &£398m – bolstered by the acquisition of Thomas Cook’s financial services division.
Wagerman says: “The foreign exchange market is competitive and Travelex wants people to know that it is not only about retail exchange.”
This non-retail element of the business is also essential to its growth, because, as Wagerman notes, the strength of the brand is only a small part of what the public wants from a company when they exchange money.
He says: “When tourists are in an airport, they will assume that the exchange companies are reputable. After that it’s just about the size of the queue and location.”
The company is evaluating the impact of the euro on the business. For instance, Wagerman says a decision on whether to float will not be taken until it knows more about the Government’s plans to join the euro, and the opportunities and threats this will pose.
At present, the company is 66 per cent owned by chairman, chief executive and founder Lloyd Dorfman, with the other 33 per cent owned by venture capital company 3i.
Dorfman acknowledges that the euro has had an impact on trade this year, but also sees it as an opportunity. As Wagerman says: “Euro trading represents a small proportion of Travelex’s business. But smaller operators are choosing to leave the industry as a result of the euro, so what Travelex is likely to end up with is a larger slice of a smaller cake.”
He adds: “Some companies are choosing to outsource foreign exchange to Travelex because of the euro.” Dutch bank Rabobank was the latest to do this last month.
Apart from the euro, the company will also have to deal with an increased use of Switch and credit cards abroad, through banks’ ATMs.
The World Cup sponsorship is a key event for Travelex as it tries to raise its profile during a transitional phase in its business. With the euro creating uncertainty in the competitive foreign exchange market, a strong brand could be the difference between success and failure, particularly on the all-important commercial side. But unless the company can build on the impact of this sponsorship, it may find rivals such as American Express sneaking up on it.