Promotions & Incentives

But there does seem to be some light at the end of the tunnel that is sales promotion. Nowadays the sales promotion and incentives industry is a world away from the old perception of key ring and pen giveaways.

In fact, the sales promotion industry has been, by all accounts, relatively buoyant over the past few months, with many companies managing to buck the economic trend.

The reason for this is simple, says Ward Mulvey of Draft Worldwide. The sales promotion industry is always in demand as they deal with goods that aren’t a luxury for many – food and alcohol being prime examples. Draft currently counts The Edrington Group, Kellogg’s, Burger King and Scottish Courage as clients. “I think that the reason our industry is in such robust shape is due to the clients we deal with. We tend to deal with goods that aren’t deemed a luxury, and if a company has a beverage on their books then they are doing well. People don’t seem to cut down on things like booze or food so we are always going to do well even in times like this.”

However, managing director of Blue Chip Marketing, Fiona Laurie, disagrees – believing that clients normally cut their advertising budgets and, in turn, plough more money into promotions. “I don’t think that it has anything to do with the companies we work for. It is more about the money involved. An advertising budget is going to be substantially more than sales promotion, therefore it makes sense to make cuts there. Unusually enough for us, we tend to get more budget if others have been cut.”

Laurie maintains that the industry is affected before others. “I think we had our really tough times before the advertising industry and we were able to make the necessary changes back then. For us, this year has been far better than last – we have won clients and are recruiting – but I think that no-one within the industry is resting on their laurels at the moment.”

The industry has changed over the past few years, and things within sales promotion are different from a decade ago. Managing director of Bd-Ntwk, Claire Hardy, is all too well aware of that fact – and thinks, because of the changes, that things can only get better. Bd-Ntwk counts Lurpak, Anchor, Coca Cola and Esporta as clients.

“Clients are very open minded when it comes to realising the value adding sales promotion has on the overall marketing spend. But there does need to be education within the industry so that people realise what we are doing and what the point of sales promotion is,” says Hardy.

She continues: “In fairness, clients are looking for us to be innovative and do more promotional activities. They are looking for us to be innovative and aware of our strategic approach to selling the product. They also want to know that the work we’re doing fits into their concept of development and that we’re implementing the ideas to their fullest effects.”

Hardy maintains that the company is busy with clients who are wanting more than a simple giveaway that some might associate with sales promotion. “What we are aiming to do with all our clients is to try to get them to understand the importance of working with us and what we can add if used as an integrated part of the whole account.”

The outlook looks both bright and busy for the sales promotions and incentives industry. But Mark Fowlestone, managing director of KLP Euro RSCG, believes that, in order for sales promotion to go forward, work will need to be consolidated, and that the marketing mix will soon be more akin to a marketing melting pot.

Fowlestone insists that this is the reason why the company has won seven consecutive pitches since February. “I think that the future for sales promotion is to integrate it with different disciplines, along with thinking about a solution that will actually work. We have been working with Kimberly Clark on a variety of brands, including Huggies, Kleenex and Fiesta, and are finding that clients are very receptive to us actually thinking about different solutions to the problem in a varied way.”

For Fowlestone, sales promotion needs to be integrated in order to make a difference. “Sales promotion can offer a short-term boost, but we need to be doing something more with that also. We come up with new creative ideas, something that I think the larger clients are looking for. The process and planning needs to be more creative these days, along with offering a varied approach to the task at hand.”

However, it is not just sales promotions that are affected when marketing budgets are cut. So how does the industry aim to change these perceptions and make people more aware of the effect sales promotions and incentives can have on the rest of their marketing mix?

Kommando is the newest sales promotions company on the block and is headed up by Mark Evans. Evans believes that clients are looking for both accountability and responsibility from their sales promotion company. “Clients have always wanted to have a form of accountability, and in the past that has been difficult to find unless it has been something as simple as sampling, which is then directly shown in the uptake of the product locally,” says Evans.

“There is also far more pressure on cowboy companies who are simply not able to cope with the demands that clients are placing on them and, because of that, they are going under, leaving the reputable and best within the industry. And that is the way it should be.”

The company has worked in recent times with Hutchison – launching their new 3G mobile phones – and EMAP. Evans recognises the fact that even though the company is based in Scotland they need to have a nationwide presence in order to target campaigns, or “guerrilla marketing” properly. “We want to break into people’s personal zone – that is where the new fight zone is. The age of viral marketing is dead. With the new generation of mobile phones we can target people direct and make them aware of the product we are promoting.”

Manchester-based sales promotion agency Tequila works with a variety of clients, including Cusson’s, John West and Nissan. The company is headed up by Matthew Bell, who believes that accountability really is the key when it comes to finding and keeping a client: “We have always been a results driven company, and we are now finding that the client is taking far more of an active interest in the procurement that is involved and how much profit is involved. We want to show clients that you can’t cut corners, and that if a promotion is to really work then there needs to be a constant level of quality. You can’t simply cut corners – consumers won’t stand for it.”

For Bell the future of the industry looks strong, although he does have concerns. “Something that alarms me is the number of companies that set themselves up to do everything, and will even undercut their prices by fifty per cent, as they see being a loss leader as better than having no customers at all. They can’t just knock something out and hope that it will work. When budgets begin to pick up again clients will realise that customers want money to be spent on them and will do their best to keep customers happy.”