Branded-goods manufacturers spent £25.6 Billion in the 2007/8 financial year on sales promotion activity within retailers, according to figures just released by the Institute of Sales Promotion.

That compares with a total above-the-line advertising spend of £18.6bn in 2008, according to the Advertising Association.

The research is the first project overseen by highly-respected retail industry researcher Colin Harper, who was recently named as the ISP’s first-ever head of insight.

Harper says:

“People only tend to notice the obvious marketing spend, on above-the-line advertising or obvious Point of Sale (POS) activity, for example. But sales promotion is a bit like an iceberg — there is far more going on below the surface than immediately meets the eye.”

Putting a figure on sales promotion investment by branded goods manufacturers has involved far more than just tracking advertising spend, Harper adds, as SP activity is not solely under the control of the marketing department but can be initiated by the sales, commercial or trading teams.

It is further complicated by the fact that some companies may not even realise that what they are doing could be classified as sales promotion.

Harper, who, as well as working with the ISP, continues to run his own consultancy, Storecheck, will now be looking at sales promotion spend by companies and public sector bodies in channels other than retail, including cars, technology, services providers and business-to-business, with a view to compiling a figure for the total UK annual spend on all sales promotion activity.

REAL VALUE FOR MONEY NEEDS REAL CREATIVITY BELOW THE LINE, ARGUES PHIL PAWSEY, CREATIVE DIRECTOR OF WAX COMMUNICATIONS

Wander down any high street and you’ll see the promotional noise has grown toa deafening din in the past year or so.

Price promotions are popular at the best of times, and especially so in a recession.

Not only do they appeal to budget conscious shoppers – even the affluent are elbow-in the bargain bins, according to recent reports- but marketing directors like them for their accountability and tactical impact.

Retailers, who want to outsell the merchant up the road, have been passionate in their demand for them to hook in customers.

But are consumers starting to suffer from ‘discount fatigue’?

While a money-saving deal will always catch the eye, it’s been proved that when times are tough people are inclined to turn to the warmth and reassuring nature of established brands.

Brands like these tend to want to protect their brand equity.

Discounts can harm brands

Deep discounts can cause the consumer to believe that something is ‘wrong’.

Frequent discounting serves to lower the value of the brand because of an almost subconscious consumer reaction – they believe that quality has also been lowered.

Or, in a ‘value rebound’, as identified by US based branding experts Killian and Company, consumers begin to perceive the usual, non-discounted price as too high.

It’s often debated whether Stella Artois’‘Reassuringly Expensive’ above the line premium positioning was damaged by constant price promotions below the line. It was confusing for consumers, to say the least.

A recession doesn’t mean all brand communications should be about price.

It’s arguably even more important that brands build a distinct personality and image in tough times than in better days, because they need to achieve stand out.

With people looking for better value, having a genuine reason other than price to choose one product over another is all the more important.

Above the line agencies talk a lot about the fact that brands which continue advertising through a recession come out of it the strongest. Recent research by Oregon State University and Western Oregon University showed that advertising expenditures contributed to increased earnings by firms for up to three years following; the greatest impact occurring in the year immediately following a recession.

So building brands, both above and below the line, during a recession ensures that when the good times return, the strongest brands reap those benefits.

The good news is building brands and driving sales is not such a stark choice these days. With creative thought and proper insight, sales promotion can do both.

Take our latest work for United Biscuits, which extended the above the line campaign in a neat sales promotion in
this way.

Our integrated campaign for Hula Hoops was born out of the insight that people love to play with the hoops, usually sticking them on their fingers. So building on from the great ads that Publicis delivered, we created a campaign inviting consumers to make ‘Finger Films’ and win trips to ‘Hulawood USA’.

A strong promotional call to action can use insight to support and build brand equity.

Another UB through the line campaign we worked on asks the nation which McVitie’s biscuits they love the most. Yes, there’s a chance to win cash daily, but the central insight – that we Brits are obsessively passionate about biscuits – drives the campaign, placing McVitie’s at the heart of that obsession and building the brand in the process.

Creativity can shine below the line; and so it should,

now that the public is inured to the ‘half price’ message.

Creativity cuts through

Creativity can shine below the line; and so it should, now that the public is inured to the ‘half price’ message and deals are a given.

And, as the recession rolls on, we should remember consumers have been bombarded with ‘money-off’ messaging, 24/7, online andoff, in the home and on the high street for a while now. There must come a time when they not only switch off, but actively ‘tune out’.

With this in mind, I would go as far as to say that creativity counts for even more in a recession. What else is there to engage customers when price no longer cuts it?

A good strategic and creative idea sometimes (but not always!) costs no more than a run of the mill one, and offers greater ROI.

Creativity also delivers more than sales volume spikes, if planned with the bigger picture in mind.

The promotional hit of early summer – the Walker’s ‘Do Us a Flavour’ campaign – is an example par excellence.

According to Walkers, the idea came out of a brainstorming session involving Walkers marketers, ad agency AMV:BBDO, PR consultancy Freud, below-the-line agency The Big Kick and Paul Weiland, the man who directs the brand’s TV ads.

The bold central idea was to tap into the ‘user-generated’ phenomenon. By letting the public take ‘control’ of the new flavour, like other brands riding the wave of customer interaction, Walker’s was able to ‘stand back’ and let the public do the edginess. But while the creativity came ‘from the street,’ the professional feel was maintained through the campaign’s slick execution, featuring wellcrafted multimedia content.

‘Do us a flavour’ was an innovative, engaging and strategic promotion and a world away from the tactical, template variety of discount SP.

Of course the two are not directly comparable, but if both are measured against their bottom line, which offers the best return?

It’s true the Walker’s campaign gave a pretty hefty incentive to enter; not just the chance of winning a £50,000 prize but also a 1% share of future royalties. But the results are sensational.

Walkers received more than 1.1m entries, four times as many as it had hoped, and at its peak in August, the website had 102,000 web sessions per day.

Walkers had the mettle to do something different – and with every success comes a wave of ‘me too’ promotions.

Among them is Dorito’s digitally-heavy ‘Guess Which Flavour’ campaign, which invites users to guess its mystery flavour.

All very well, but is copycat marketing, even if it does mirror a highly creative campaign, a good idea?

Brands may think so, if the number of times I am asked to create a hybrid campaign ‘a bit like promotion ‘X’ but with a bit of promotion ‘Y’ thrown in’ is anything to go by.

SP is one of the few marketing industry good news stories to come out of the economic down turn; the January Bellwether report showed sales promotion now accounts for 9.2% of overall spend, compared to Main Media (30.3%), Direct Marketing (24.9%) and ’all other’ (25.7%), a considerable rise on previous reports.

But SP is not just big news in a recession. With creativity and insight, it can be the marketing method of choice for all seasons.

Beyond the brief

Pushing the boundaries and delivering new creative spins, even if the brief appears to require an obvious solution or a re-hash of something that’s  already been done, will give SP a shelf life beyond the recession.

Consumers don’t settle for second best – why should we?

Wax has entered The Big Book Bank campaign for  Waterstone’s into the European IMC and Interbnational Globes awards.

The multi-award winning campaign was devised by Wax and recently picked up the Grand Priz at the ISP  Awards 2009.

We’ll update you on our pogress! And good luck to all the teams here and at Watertone’s involved in the campaign.

Sales Promotion accounts for at least 13 per cent of UK marketing budgets, according to research published by the Chartered Institute of Marketing – and the figure could be much higher.

According to the CIM’s Spring 2009 Marketing Trends Survey, when asked what proportion of their total marketing spend went on different areas, Sales Promotion came second, on 13.0 per cent, just after Public Relations on 13.2 per cent.

Third was Field Marketing, on 12.9 per cent, then CRM on 12.7 per cent, Advertising (excluding online) on 12.4 per cent and Direct Mail on 11.8 per cent.

Annie Swift, chief executive of the ISP, points out:

“It comes as no surprise that Sales Promotion gets so much of the UK marketing budget, particularly in the current economic situation. Sales Promotion is all about ‘do’ advertising, not ‘do nothing’ advertising – it is marketing content designed to change behaviour and, as such, can be delivered through almost any media channel.”

So although Sales Promotion alone accounts for 13 per cent of UK marketers’ spend, many of the other categories listed also include significant sales promotion elements, she states.

Swift says:

“Our members do not just do Sales Promotion: they are also active in Online, Field Marketing, CRM, Advertising, Direct Mail and Internal Marketing, to name just a few of the categories in the CIM survey.”

The survey of more than 1,000 marketers was carried out for CIM by Ipsos Mori

The ISP interviews Matt Tabb on the background, results and learnings of Waterstone’s ‘The Big Book Bank’, the Corporate Social Responsibility (CSR) campaign Wax created for the bookseller.

The interview is in four segments …