When CMP was drawing up its budgets for 2002, the UK's largest field agency had caution as its watchword. Despite two previous, successive years of rapid expansion in the field marketing sector, CMP chose to opt for pragmatic targets.
"We knew 2002 was going to be tight," CMP's managing director, Mike Hughes, explains. "In the end we did have to defend a number of contracts, because clients were examining their spend, but these were successfully retendered."
CMP's experiences in 2002 echo those of other large field marketing agencies, the top six of which account for 70 per cent of the market. They admit that, in common with other services, field marketing has suffered from cuts in overall marketing budgets.
"It was hard to win big business last year, as there wasn't much new big business coming on," Bruce Ellison, the business unit director of Ellert Field Marketing, a top five agency, says.
The field marketing industry as a whole showed a decline in turnover of 5 per cent for 2001-2002 and a greater emphasis on short-term, tactical projects. This is at the expense of long-term, strategic contracts, considered the province of larger agencies because of the resources required. Tactical work such as merchandising, because of its low cost of entry, can be handled quite comfortably by smaller players.
So where does this switch in buying behaviour leave the industry's larger agencies? The effects, in terms of hard numbers at least, are not likely to show for a while owing to the nature of strategic field marketing contracts. "The bigger slices of business tend to be contracted for a minimum of a year to 18 months, and because of this it's less likely to be turned off quickly," Ellison says.
In the meantime there is anecdotal evidence that clients are reacting to tightening budgets by spending in tactical spurts. "FMCG clients are matching up what they need to do promotionally with the key sales periods without making a full commitment throughout the year," Stephen Smith, the sales and marketing director at the top ten agency REL Field Marketing, says. The agency has recently won just such a contract with HP Foods.
Contract selling is also considered the domain of the bigger agencies because of the need for large field forces. Volumes of this type of work are likely to decline given a slowdown in telecommunications activity and a growing disenchantment with door-to-door selling techniques by utilities.
On the available quantitative evidence, though, indications are that, while not recession-proof, larger agencies are holding steady in this downturn. Out of the top ten companies, two suffered negative growth in 2001-2002 while four managed double-digit growth. Hughes says: "Large agencies should do better as clients want stability and to take fewer risks."
That's the theory, anyway. But one straw in the wind of recession was the demise late last year of Mosaic UK, formerly FMCG and the second-largest field agency in the country. After recording a near-20 per cent decline in revenues in 2001-2002, and further losses since, the company is now in administration.
Opinion is divided over whether to blame Mosaic UK's woes on internal management problems post-acquisition by Mosaic, the Canadian marketing services group, or on market conditions. Whatever the cause, having a bigger parent wasn't enough to save Mosaic UK. Yet a number of agencies that are part of marketing conglomerates claim this is a unique selling point in tougher times.
The independent sector argues otherwise. Four out of the UK's top ten agencies are independent, and all recorded healthy growth in 2001-2002.
FDS, the UK's largest privately owned field agency, says its business to date is up 20 per cent year on year. The secret, according to James Moyies, the managing director of FDS's field marketing business, is the freedom independence confers.
"Most of our competitors have shareholders or parent companies to answer to," he says. "As an independent there's no limit to what we can do." In 2002, FDS won Interbrew, Nestle, Asda, Charles Worthington, V-Net and Business Link.
One silver lining for large field marketing operations is a desire by clients to cut costs by outsourcing their sales forces. Derek Noakes, the managing director of Momentum, points to his agency's win in 2002 of a contract to promote Siemens' mobile communications.
"We provide a team of brand ambassadors with as much mobile phone experience as any full-time company rep," Noakes says. "All they need is product knowledge, which can be instilled very quickly. We can put a whole sales force into the market in six weeks." Ellert Field Marketing picked up similar work for Weetabix and Reebok.
To cash-strapped clients, the other benefit of field marketing is its measurability. Proven ability to quantify the effects of roadshows, merchandising and auditing is now a "must" for successful pitches. "In every single pitch clients come back down to 'how do you measure this to make sure it works'," Moyies says.
Though 2002 was tough, there were bright spots that augur well for 2003.
Several agencies highlight merchandising and auditing in grocery multiples as a growth area. REL Field Marketing says its 16 per cent growth in 2001-2002 was down to point-of-sale placement, merchandising and auditing.
"FMCG companies are maximising sales in multiple retailers by ensuring stock is on the shelves and presented in the right way," Mike Garnham, the managing director of Headcount Worldwide Field Marketing, a top five agency, says. "In a growth economy this activity is often overlooked but when manufacturers have to fight for sales, it it essential."
The bigger agencies say the last quarter of 2002 saw an upswing in business.
The feeling among field marketers is their discipline was tested in 2002 and has come through, with its reputation for measurable return on investment enhanced.
Keeping it in the family
Few can blame agencies within marketing conglomerates for leveraging their parental connections in tougher times.
Momentum, a subsidiary of McCann-Erickson, grew revenues by 20.6 per cent in 2001-2002. For American Express it carries out credit card acquisitions through events, road shows and guerrilla marketing.
"It's about maximising the McCann relationship," Derek Noakes, Momentum's managing director, says. "American Express is a McCann client worldwide, but we still had to win the business on merit."
Other groups are integrating field marketing more closely to avail of cross-selling opportunities. CMP and WWAV Rapp Collins share Omnicom as a parent, and last year CMP moved to sit within WWAV Rapp Collins' Media Group.
Proximity, a DM agency affiliated with Omnicom's Abbott Mead Vickers BBDO, rebranded its Touchdown Proximity field division as Proximity Events.
According to Andrew Warlock, the head of Proximity Events, this enables the business to promote an integrated solution to BBDO's clients.
"Clients who haven't tried field tend to be a bit shy about it," Warlock says. "Panasonic wanted to launch its photo phone through cinema and TV.
We successfully argued it also needed to get the product in the hands of the consumer through field marketing."