THE DIRECT APPROACH: Forget the chilly sidelines of advertising Client demand, improved creativity and healthy contributions to group revenues are all helping to raise direct marketing's status on the global stage, Ian Darby says

The global advertising networks have been interested in direct

marketing for many years. Over the past decade, successful independents

across the globe have been snapped up as networks realise the importance

of offering direct marketing expertise. However, the suspicion has

remained that the direct marketers have been tucked away and ignored,

seen as ugly sisters by their more glamorous advertising siblings who

won't allow them to go to the ball.



This might just be changing. Direct marketing has moved up the agenda

both for clients and within advertising networks. And there are three

clear reasons why: clients are demanding a wider range of services;

technology is driving ever more impressive one-to-one techniques, and

growth levels and profit margins can be larger in direct marketing than

traditional advertising.



The facts are hard to ignore. In the UK, for example, recently released

IPA figures show that the two largest direct marketing agencies,

Omnicom's WWAV Rapp Collins and WPP's OgilvyOne, are the 12th and 20th

largest agencies in the UK based on income. The talent in direct

marketing agencies is also rising to the top of the networks - Shelly

Lazarus, the chief executive at Ogilvy & Mather, and John Farrell, the

global chief at D'Arcy, are both examples of direct marketing exponents

who have gone on to run ad networks.



However, the networks differ in their attitudes to their direct

marketing properties. John Shaw, the managing director of European

agencies for Havas-owned Brann, says: 'There is a big difference between

the Young & Rubicam and Havas networks. In Y&R, the ad agency managing

directors took the lead with clients. Senior people in direct marketing

were very much second best, but at Havas we're all on the same playing

field.'



Ogilvy claims that its direct marketing agency works very closely with

its advertising business. Reimer Thedens, the worldwide chairman and

chief executive of OgilvyOne, says: 'The Ogilvy strategy is 360-degree

brand building and this requires us to have close relations with other

parts of Ogilvy. Our relationships have always been close but have

become closer. We seem to be seen as equal partners.'



Thedens puts this change down to increased client spend on direct

marketing and the move upstream into the CRM arena. He says:

'Traditional direct marketing as defined by direct mail has become less

important. But building customer equity both online and offline is a

powerful service.'



Generally, the quality of the management in direct marketing agencies is

improving and with this the reputation of the agencies is growing within

their networks. Campaign spoke to direct marketing chiefs at three

networks (Omnicom, Havas and Interpublic) and WPP's group chief

executive, Martin Sorrell, to gauge exactly how direct marketing is

viewed by the networks.



MARTIN SORRELL - WPP Group



WPP owns the world's two largest direct marketing networks, Impiric and

OgilvyOne. It also owns several other direct and promotional agencies

including Perspectives Red Cell, Promotional Campaigns Group and

EWA.



Impiric is run as part of Young & Rubicam and OgilvyOne as part of

Ogilvy but both have relationships with other WPP agencies.



Sorrell has been a great advocate of non-core advertising businesses

(particularly direct marketing and PR) in building the WPP Group. He

says: 'The attraction to clients of direct marketing is that it provides

quantitative backing to activity: it is far faster than traditional

advertising in achieving results and is more international in character.

Technology has speeded its advance.'



Sorrell says that the pace of growth in direct marketing agencies has

made agency chiefs sit up and take notice: 'Growth levels of between 15

and 20 per cent are much stronger in direct and interactive than in

advertising.'



Specialist communications, of which direct marketing forms the major

part, contributes 25 per cent to WPP group revenue. Sorrell expects this

to continue to rise.



He says that attitudes to direct marketing have changed within WPP.

'Below the line was always seen as below-the-salt. It didn't have the

status but when there are people like Shelly Lazarus at Ogilvy, who has

a strong feel for that side of the business, then the profile is

raised.'



Sorrell says that the key aspect in WPP's approach is integrating its

direct marketing activity with other disciplines. 'This is what

communications is all about. If you ignore direct marketing then there

is a risk of lack of integration.'



Martin Sorrell is WPP's group chief executive.



MICHAEL BIRKIN - Omnicom



As boss of Omnicom's Diversified Agency Services operation, Birkin has

control of more than 100 companies in the direct marketing, PR,

promotional and branding fields. These include Rapp Collins Worldwide,

Claydon Heeley Jones Mason and the US agency Direct Partners.



Birkin says: 'In Omnicom, there is no doubt that direct marketing has

grown in stature. Technology and the internet allow for targeted

approaches. This is an extremely important area of development.'



Birkin feels that the quality of creative has also helped raise

recognition of direct marketing: 'The quality of talent it attracts is

now very high and most clients see the value of a mixed-media

approach.'



He feels that there is closer co-operation between traditional

advertising and direct marketing. 'In the 70s and 80s, integrated

marketing failed because advertising agencies didn't honour services

other than advertising. There was a spate of acquisitions in the 80s

that didn't work out because the ad agency was too much the focal point

and the subsidiary agencies weren't motivated.'



As direct marketing has matured so have opportunities for its key

management, Birkin argues. He says: 'There have been some incredibly

successful entrepreneurs in the past. There have been talented people

all along but ten years ago it was more difficult for them to grab

people's attention. Ad agencies also had first pick of people, but this

is all changing.'



Birkin explains the importance of direct marketing to the networks:

'Direct marketing has moved from being run by an entrepreneurial bunch

of people to an area that is at the forefront of a marketing director's

priorities.'



Michael Birkin is the president of DAS Worldwide.



STAN RAPP - Interpublic Group



Rapp is one of the great names in direct marketing, having founded the

Rapp Collins network, leaving in 1988 to become a consultant and author,

and then joining McCann four years ago to lead its McCann Relationship

Marketing division.



Rapp says that during the past four years marketing services has come to

be regarded as as important as advertising within the McCann-Erickson

network.



Customer relationship marketing is the most important of the marketing

services to the network.



He says: 'The demand is coming from our clients. This has been

responsible for the advance in information technology, opportunities

with the internet and the growth of other tools to interact with the

customer.'



McCann made a decision four years ago to elevate the status of direct

marketing and other marketing services. Its then boss, John Dooner, who

now runs Interpublic, restructured the group board and introduced

'leaders' for each service: Rapp in the direct marketing field, and

others in PR and promotional marketing. The aim was to increase share of

group revenue from marketing services from 10 per cent to 50 per cent.

The balance is shifting, with 40 per cent of revenue now coming from

marketing services.



Rapp agrees that this has indeed elevated the status of direct

marketing.



'It's no longer the case that advertising takes care of the brand and

everything else is ancillary. The clients now want to build brand

relationships and so need strong brand work and relationships with

customers.'



The status of direct marketing management has increased accordingly:

'The new board of the McCann-Erickson world group has integration, or

collaboration as we call it, as its fundamental concept. This is being

pushed down through the organisation to every manager across the

world.'



Stan Rapp is the chairman and chief operating officer of MRM

Worldwide.



JEAN-MICHEL CARLO - Havas



Carlo heads Havas' Diversified operations, which includes direct

marketing agencies such as Brann, ehsrealtime and the global network The

Sales Machine.



He says: 'Direct marketing has become more and more important in most

global organisations and is an increasingly powerful tool for big

brands.'



However, he says advertising is still at the forefront of clients'

minds: 'Direct marketing is the second most important discipline after

advertising.'



When asked if direct marketing will overtake advertising as a

discipline, Carlo is cautious: 'I don't know. The two are different.

Advertising is so powerful for building brand awareness but direct

marketing already represents between 30 per cent and 40 per cent of some

clients' spends and this will increase.'



Carlo points out that direct marketing is used mainly in mature markets

where advertising has already been in existence for decades. He says:

'You don't need it in China because it's easier and cheaper to use

billboards.'



He is convinced that integration between advertising, PR and direct

marketing is key in meeting client requirements. He feels that

technology is presenting direct marketers with great opportunities: 'The

discipline is so involved with technology. Interactive TV has huge

potential and DM agencies are key players in it. Advertising people

don't really understand how to use it.'



An advertising man himself, Carlo was chairman of Y&R in Europe and

France and then BDDP in France. He has also noticed that direct

marketing has moved up the pecking order in the large networks.

'Advertising people used to be arrogant but now have to deal with direct

marketing because clients want it. If you work for a major car dealer or

a company like Tesco, then the DM agency is vitally important.'



Jean-Michel Carlo is the vice-chairman of the Diversified Agencies

Group.



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).