The Direct Approach: Creative business

The first thing a client wants from its direct agency is a clear understanding of its business - this knowledge must be the catalyst that sparks all creative ideas.

At the risk of sounding like a Mastermind contestant with the specialist subject of "the bleeding obvious", targeting and measurability have always been direct marketing's big advantages over advertising.

Imbued with a need to produce tailored communications - and measure their effectiveness - in less than ten years advertisers have doubled the amount they spend on DM to around £14 billion in 2004 (according to the Direct Marketing Association), while advertising spend has levelled off.

The fact this investment has generated sales worth more than £100 billion suggests the shift below the line is set to continue for the foreseeable future, whether the adland stalwarts like it or not. And as the signs on the high street point to an economic downturn, direct marketers have found they need to make their competitive edge even sharper.

With UK retail sales at a 22-year low, growth at a 12-year low and inflation at a nine-year high, now is a good time to assess whether DM agencies are as accountable as they could be.

We all know that financial pressures and media fragmentation have altered clients' needs. They are demanding work that achieves measurable business goals while delivering brand-building creative cut-through. A tall order?

Maybe. But why shouldn't our clients know exactly what they are going to get for their money? Buy a packet of corn flakes and you'll see it says "500g" on the box - not "may contain anything from nothing to really quite a lot". So is it unreasonable for companies to demand the same kind of transparency and certainty from their agencies that we expect when shopping in our local store?

The World Advertising Research Centre places total spend on advertising in the UK at around £17 billion. Coupled with the £14 billion companies are spending below the line, we are talking about a figure comparable to the amount that is invested in manufacturing. You can bet all those manufacturing investors demanded (and got) detailed projections before they stumped up the money, not to mention an accurately measured return afterwards. The same cannot be said for most marketing investors.

As a result, clients are re-evaluating the way they approach communications and how they work with agencies. When clients are asked what they are looking for, the answer is invariably "agencies that really understand our business needs". We have done our best to evolve - through the line, media neutrality and joined-up thinking are just some of the clever terms we have devised to add value to the great ideas we have been delivering for decades. But ask a client and they will always say the same thing - it all comes down to knowing their business inside out. This kind of understanding should be the catalyst for all our ideas.

Tesco Clubcard is a classic example of creative thinking founded on solid business strategy. Here is an idea that satisfies two business objectives in one: it increases customer loyalty by incentivising repeat purchase, while providing Tesco with a database of information on customers' spending habits. This information is then used not only for targeted DM, but also to change store configuration and give the customers what they want. Loyalty cards may seem like old news - with other retailers such as Boots and Marks & Spencer using them very successfully - but Tesco was first. Now there is an example of creativity hardwired with business objectives.

And it's not just DM practitioners who are capable of delivering these accountable, well-grounded ideas.

More than 20 years ago, Pepsi practically invented the "taste test" category with its Pepsi Challenge - a creative idea so successful it has become part of the modern vernacular. Pepsi's aim was to emerge from under Coca-Cola's shadow and to compete on something other than price. The insight came when Pepsi discovered it actually outperformed the market leader on taste.

Rather than spending millions on a glitzy ad campaign boasting about this amazing revelation, Pepsi let people find out for themselves with the taste test. This revolutionised the brand, while scaring Coca-Cola into making a disastrous business move - its ill-fated (and very expensive) New Coke launch.

Clients increasingly want "big ideas" that can help them achieve specific goals. New diligence and rigour is being applied to marketing spend, leading to a tough operating environment for agencies. One client asked us recently for a whole host of ideas to generate not a 2 per cent uplift in sales but 5 per cent. We are being asked to know what we cannot possibly know. We are being asked to guarantee certainty in an uncertain world. But these demands can actually create the perfect environment in which to produce the best work for the client; it is simply a case of coming up with new ways of thinking and working in order to achieve this.

We need to move away from the usual way of running things - passing the baton from account handling to planning to creative and back. For a start, it is too sequential when it should be simultaneous; it also has no place in a business where thinking differently is the currency. We need planners to be the gatekeepers of ideas. We need suits who are as likely to come up with clever creative executions as anyone else. We need creatives who can reel off a client's business objectives as fluidly as the next person.

It is all about creating a shared ownership of a client's business needs and putting return on investment and brand objectives right at the heart of the creative idea.

The truth is, we can no longer separate the challenging business realities of today's increasingly tough climate from the creative work. However, we can reconcile creative ideas with proven returns. Perhaps the term "creative idea" is outdated and what we are really talking about now are creative business ideas. The mindset we are advocating - a creative way of thinking about business, rather than a business-like way of thinking about creativity - will ensure we keep reaping rewards for our clients while picking up awards for ourselves.

- Catherine Gale and Shelford Chandler are the European chief executive and group creative director respectively of The Marketing Store Worldwide.

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