FINANCE: JUGGLING FINANCIAL ACCOUNTS - DM agencies often have more than one financial services account. Ken Gofton explains how rival clients’ interests can be protected

Like snowmen in a glass globe, the financial services sector is being given a thorough shake. Out go personal equity plans (PEPs) and TESSA savings programmes and, with the new tax year, in come individual savings accounts (ISAs). The result, as the City tries to persuade investors to put their cash into one or more of these schemes, is a veritable blizzard of mailshots and direct response advertising.

Like snowmen in a glass globe, the financial services sector is

being given a thorough shake. Out go personal equity plans (PEPs) and

TESSA savings programmes and, with the new tax year, in come individual

savings accounts (ISAs). The result, as the City tries to persuade

investors to put their cash into one or more of these schemes, is a

veritable blizzard of mailshots and direct response advertising.



That makes it a busy time for direct marketing agencies, most of which

are beavering away on behalf of several financial clients. Omnicom’s

WWAV Rapp Collins group alone has 13, spread across its main London

office and its satellite agencies in Edinburgh, Leeds and Bristol. There

are out and out specialists, too, such as DMB&B Financial and Camp

Chipperfield Hill Murray.



This is a puzzle to many traditional ad agency people. How is it

possible to work for several companies in the same field? What happened

to conflict of interests? Do clients have one standard for

above-the-line, and another for below?



It’s not that the conflict question never arises. Towards the end of

1997, Lowe Direct had the chance to pitch for pounds 12 million worth of

business, but its existing client, Lloyds TSB, ruled it out.



’Then, last year, we had a similar approach,’ says Lowe Direct’s

managing partner, Tony Watson. ’We chatted it through within the Lowe

Group, and decided to set up a new outfit, Lowe Plus. Tess Doughty was

returning from maternity leave. She was transferred to the new unit,

with a handpicked team, to handle the new business - Prudential’s Egg.

Everyone got what they wanted.’



Lloyds TSB’s marketing services director, David Lewis, says he expects

all of the bank’s agencies to inform him when they are pitching.



’I’d say ’no’ to other clearing banks in particular, and to some others

as well,’ he adds. ’But even an organisation of our size and budget

would meet resistance to a blanket veto. We work with the bigger

agencies like WWAV and Lowe Direct, and want them to believe in the

value of our business. A total ban would be an unreasonable restriction

on their growth.’



It’s the handful of high street clearing banks and credit cards that are

touchiest about conflict. Elsewhere, simple confidentiality is the

greater issue, and client concerns can usually be set to rest through a

system of Chinese walls.



The fact is, financial services are a special case, even in direct

marketing.



’Renault wouldn’t countenance us working for another car manufacturer,

and nor would Rothmans let us work for another tobacco firm,’ says Mark

Sheard, founder and joint managing director of the DM and sales

promotion agency, Stretch the Horizon. ’There is more flexibility in

many of the financial areas, where, in the end, it comes down to

personal trust.’



Supply and demand is one of three main reasons why financial clients are

more pragmatic. Basically, there aren’t enough good DM agencies to go

round.



While the Campaign DM league table (30 October, 1998) listed just 40

agencies, the Building Societies Association has 71 members and the

Association of British Insurers has around 440. To drivethe point home,

the Direct Marketing Association estimates that almost a quarter (24 per

cent) of the DM sector’s revenue comes from financial services.



The second reason why clients are prepared to share agencies is that

financial services demand expertise, in understanding the regulatory

framework, and in knowing what motivates the customer. ’You really,

really, really need to know the products and the sector,’ says Lesley

Mair, managing director of WWAV Rapp Collins, London. ’Anyone who does

can see when it’s done badly.’



Mike Horne, managing director of Brann’s Bristol agency, and a former

pensions marketing manager with Eagle Star, agrees. ’As a client, I took

the view that pensions were a very complex product, and therefore you

needed agencies who understood them, and how they worked with the

consumer.’



Thirdly, there’s a distinction between what above-the-line and

below-the-line agencies do for their clients. Multi-million pound plans

for a new breakfast cereal or confectionery bar could be sabotaged by

competitors if word leaked out too soon. A lot of DM work is not like

that. In financial services in particular, it’s frequently an on-going

and evolving programme, targeted at the client’s existing and

confidential database.



’If Barclays knew we planned a loan mailing in two months’ time, I don’t

think it would bother them or us very much,’ Lloyds TSB’s Lewis

says.



What’s more, the nitty gritty of how a campaign is designed reflects the

positioning and objectives of the individual client, and may not be

relevant to rivals. ’The Prudential is driving leads for its sales

force, and that’s very different from Marks & Spencer, which is

primarily selling to its own customer base,’ WWAV’s Mair points out.

’Personalising the brand experience for the customers of those two

clients is not at all the same.’



For all these reasons, clients seem prepared to accept agency structures

that keep work confidential, without insisting on a ban on

competitors.



For bigger groups, it’s easier. Lowe set up a new agency for the right

client. Brann runs its three offices as separate agencies, ’and there’s

140 miles of motorway between Bristol and London,’ Horne points out.

WWAV has three agencies in the provinces, while in London there are

eight client service directors and 180 account management staff.



Others point out that if clients can glean sensitive details about their

rivals’ plans from their agency, they’ll assume their own secrets are

being passed on, too. Mair sums it up when she says: ’If you let them

down on confidentiality, you’re dead.’



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