By Claire Billings, campaignlive.co.uk, Friday, 16 October 2009 12:00AM
Ten years ago, the notion that direct marketing would be commanding the respect of its advertising counterparts was about as unlikely as a black US presidential candidate getting elected.
How times change.
In the year that Barack Obama was sworn into the White House, could the world of advertising finally be ready to embrace as an equal the discipline that it once thought of as its embarrassing and slightly grubby cousin?
As the UK creeps through the worst recession since World War II, in which marketing budgets are being slashed indiscriminately across all media, agencies are emerging leaner and more focused, filled with only the most motivated and talented individuals. These staff are being stretched to produce their very best work for clients, who are themselves having to justify every penny of spend.
Meanwhile, digital has shot up the agenda because of its ability to engage with hard-to-reach, younger audiences, to deliver fast-turnaround, affordable results and to forge direct and interactive relationships with consumers.
So, as the emphasis of marketing shifts towards a greater need for accountability and results, it is hardly surprising that when direct marketers got together for Campaign's Direct Roundtable discussion, there was a new-found sense of confidence among them. The suggestion was that the recession has brought about the end of an era of inequality and prejudice and that DM's image as the dirty end of advertising is fast getting cleaned up.
Annette King, the chief executive of OgilvyOne London, believes that one of the effects of the recession is that as agencies have cut back, so staff have had to be open to a more varied workload. "People had become so specialist, particularly in the digital space, but it ended up that you needed such an army of them to get anything done. Now it turns out that people can turn their hands to lots of things," she says.
As Derek Holder, the managing director of the Institute of Direct Marketing, points out, a certain level of restructuring and cost-cutting at the beginning of any recession is normal. But the general feeling around the table is that, this time, something is fundamentally different.
Christoph Becker, the chief creative officer of GyroHSR, says that the way agencies are structured has changed. A broader base of staff from varying backgrounds means agencies from any discipline are capable of coming up with "the" creative idea: "In the past, there was advertising apartheid, but that has gone. DM shops used to just adapt from the brand idea, but it goes in both directions now. Clients don't have the luxury to operate like that anymore." If they do, then it is because agencies have put themselves in that position. Smart clients are not acting like that anymore and nor are smart agencies, he says.
If Becker is right, the Campaign editor, Claire Beale, says, does that mean a DM shop can come up with an idea such as Fallon's "gorilla" for Cadbury's Dairy Milk?
Gavin Wheeler, the chief executive of WDMP, argues that the definition of creativity has changed. While DM agencies should be capable of coming up with "gorilla", it's not necessarily what they are good at. Nor, perhaps, is it what's needed from them as we come out of a recession with a new focus on results.
"We have a different job to do now," Wheeler says. "We did a lot of press ads for the Aviva relaunch. They might not have been as pretty as Abbott Mead Vickers BBDO's, but they generated a response."
King believes that being charged to create an advertising idea like "gorilla" doesn't play to a direct agency's strengths. "We'd have been tempted to put a phone number or URL on it," she admits, adding, however, that a direct agency would have done more to adapt the TV ad for the web and make it more effective.
"With 'gorilla', they took the ad and just put it online," she says. "They didn't take the idea and change the language for the appropriate environment, which was a shame because it was such genius."
Mel Cruickshank, the managing director of Lida, believes a different type of creativity is required for different tasks. "A website and how to interact with it is an idea in itself and the idea comes from how you put that site together and the navigation of it. It's not about having an idea on the landing page; the idea is that site. That's a different type of creativity to 'gorilla' but just as key."
For a long time, the direct sector has talked about how digital is the ultimate tool in customer communications, but there has been little evidence of agencies and advertisers making the best use of it. This is changing, according to King.
"The direct industry at large has got digital more licked than the advertising industry at large," she says. "We have worked out how to make money out of it while the ad industry is generally still struggling with that. I'm sure they'll work it out, but they haven't done so yet."
The traditionally unglamorous area of data has risen in the credibility stakes because of its use in online activity, behavioural insight and targeting. Sue MacLure, the head of eCRM at EHS Brann, says: "The data person is no longer sat in the corner of the room and told under no circumstances to talk to anyone."
Mike Cullis, the managing partner at Elvis, reveals that the sister Cossette-owned agency Miles Calcraft Briginshaw Duffy often asks for Elvis' head of data planning to attend meetings because of the insight he brings.
Digital also brings DM benefits when it comes to graduate recruitment. The direct sector can find itself down the pecking order when graduates are choosing where to join the ad industry, but, according to Holder, digital's central position in DM is helping it prove more attractive in the beauty parade.
The IDM and the IPA run summer schools for graduates and students to educate them about DM and give them the opportunity to gain experience in agencies.
"It's (about) changing that awareness at the universities, and it will come, because digital is the sexy part of the business and that's what they want to enter," Holder says. "And it's the accountability of direct marketing, such as research and data that you can actually apply in the real world, that they're really fascinated by."
It is not only the adoption of digital that has been accelerated by the recession, however. According to Wheeler, strategy has also raced up the agenda in direct agencies, as clients recognise the importance of idea generation and because some are taking production in-house. As a result, Wheeler says, agencies are investing in their strategy departments instead of studios.
Cullis says clients want all their different agencies to challenge each other with ideas, create a collective answer to their business problems and work with each other to achieve the most effective strategy.
An issue this raises is how budgets are divided between agencies - do they work it out for themselves or are clients still operating with separate budgets for different channels?
In most cases, a client's agencies are on separate retainers and have to work out between them how best to spend the marketing budget. This collaboration is extended as far as media agencies working with direct agencies to determine how much will be spent on eCRM and what it will deliver. However, there's still a feeling that media agencies will safeguard a chunk of a client's budget to spend on above-the-line channels because it knows what they will deliver for a brand.
Sometimes media allocations can be too dependent on traditional advertising and hold clients back from making the most of digital opportunities, according to King. But, increasingly, collaboration and equality between disciplines is becoming more common, Cullis says.
"We work with a couple of Virgin brands and we are expected to work with the media agency Manning Gottlieb OMD to figure out how to hit the ROI target and deliver shareholder value, right down to how much eCRM is going to deliver. It's down to culture," he adds.
It's not only reduced budgets that are forcing agencies to work more closely together. Advances in technology such as mobile (which King describes as "a dream come true - in my pocket") demand greater understanding and, therefore, investment.
One way to spread that cost, particularly if you're in a group, is to share it with subsidiary agencies.
Cruickshank explains that Lida and its sister ad agency M&C Saatchi share the cost of specialists in areas such as mobile. "As well as saving money, it delivers better results," she says. "We have one central strategy unit where everybody from each of the different agencies sits and it works. You get the benefit of a planning director who is able to bounce things off a pure brand planner and a direct planner and an information architect. But everyone has a distinct role."
MacLure agrees: "The sort of person you are fits into the sort of specialism you have. Data people come at it from one viewpoint and digital people from another. You learn from each other but you work together."
The discussion then turned to the perennial issue of DM's image and whether the sector needs to change its name. The general consensus was that the name is fine, because it represents what it is - direct marketing across all channels - but that the meaning needs redefining. The old association with mass-market, untargeted direct mail has been difficult to shake but, with the divides coming down between disciplines, it is less of a problem.
"What has to change is how you approach the business, Becker says. "Any discipline could be the door to anything. That's what's changing. It's a positioning problem rather than a name problem."
The idea of clients giving agencies an equal shot at coming up with creative ideas and encouraging greater collaboration provides tangible evidence of a new level of respect and recognition for DM's strengths. But, Beale asks, is there a danger that clients might question whether they need separate agencies and move all their business into one?
Wheeler suggests that agencies still have differences, but they are no longer segregated by above and below the line, but by those who focus on creativity and those who focus on data and what it enables.
King takes this further, believing the differentiator is actually who owns the customer and who owns the brand.
"We work with Bartle Bogle Hegarty on British Airways and Abbott Mead Vickers BBDO on BT. We all work closely together, but they respect that we understand the customer and we respect that they understand the brand, and we wouldn't dream of questioning that. But if you have one without the other, then you're in dangerous territory," she says.
If ownership of the customer versus the brand really is the difference between advertising and direct marketing, could the customer's growing power really mean an end to advertising apartheid? It would certainly be an unexpected side-effect of the global financial crisis, but it's not impossible.
Claire Beale - editor, Campaign
Sue MacLure - head of eCRM, EHS Brann
Mike Cullis - managing partner, Elvis
Mel Cruickshank - managing director, Lida
Suzanne Bidlake - associate editor (reports), Campaign
Hadassah Nymark - editorial assistant/junior reporter, Campaign
Lisa Spencer-Hayes - senior ad manager, Campaign
Ade Adefale - senior sales executive, Campaign
Derek Holder - managing director, Institute of Direct Marketing
Sarah Paez - account manager, Campaign
Claire Billings - journalist, Campaign
Christoph Becker - chief creative officer, GyroHSR
Annette King - chief executive, OgilvyOne London
Gavin Wheeler - chief executive, WDMP
This article was first published on campaignlive.co.uk