Promo’s 1998 Annual Report of the Promotion Industry shows impressive growth – up seven billion dollars, or 10 percent, from last year. This windfall of promotion spending, bulging in just about every pocket of promotion’s trousers, naturally has made the promotion agency business a happy one to be in right now.
How much of this growth should be credited to the “heat” of the economy versus the “cool” of promotion per se is open to debate. Obviously, much of the good news for agencies is a result of the long drum roll of promotion department divestitures by corporate America. The majority of companies have decided that their promotion needs are best handled by outside resources. Not that there’s anything new about that – it’s been happening for years.
But why?
One explanation is that corporations have downsized or demolished their promotion departments as part of an overall drive to reduce overhead. You know, the Al Dunlapschool of buzz-cut management. It’s somewhat ironic that promotion, arguably the most accountable of all the marketing disciplines, was not spared by the green-eyeshade crowd. For all the inherent measurability of promotion, we apparently still haven’t done enough to prove our value.
Another possible reason could be the growth of promotional activity among non-traditional categories, such as hi-tech, health care, and automotive. It could be that these companies are more comfortable experimenting with the lower-level, temporary commitment of engaging an agency before they invite promotion to move in. In a similar vein, the growth of promotions on the Web is still so new that companies may prefer to develop them at arm’s length before going for a full in-house embrace.
Then there’s the talent thing. On balance, the agency environment is better positioned to attract what little promotion talent is available because agencies offer a wider variety of opportunities, including the opportunity to make titanic sums of money. So it could be that corporations are inclined to hire promotion agencies – as opposed to hiring their own internal people – because that’s where the talent is. That’s certainly a pleasant, ego-lifting thought for our many friends in the promotion agency business.
We really don’t want you to get so comfortable, though. That’s not a healthy thing.
Good news or bad news? We submit the corporate tendency toward promotion outsourcing is holding back the advancement of promotion as a strategic discipline. Think about it. If there’s no promotion department, there likely is no promotion champion within the organization – no one who really understands that promotion is, not just a short-range sales trigger but a long-range brand and consumer relationship builder.
In promo’s July ’98 issue, publisher Kerry J. Smith decries “the gulf that still exists between those with expertise in promotion marketing and those with overall marketing responsibility.” This functional gap between agencies and their clients truly is a pivotal issue. As we see it, absent a promotion department – or at least a senior-level marketing executive steeped in the promotion discipline – it is difficult indeed for promotion to take its place at the strategic marketing table.
For corporate marketing departments genuinely interested in getting the most out of promotion marketing’s potential, it makes sense to ramp up an in-house promotion group. That way, promotion will be given a better chance to grow and prosper as a member of the marketing family, as opposed to the wayward, black-sheep outcast it so often becomes.
The challenge of home-growing a corporate marketing department is, of course, more than some companies want to undertake. Alternatively, they might think about acquiring one of the many smaller, high-quality agencies and installing it in-house. That would be a quick-and-easy way to introduce a high-level quality of promotion marketing prowess to their marketing mix. Whether an agency would want to be sold off for such a purpose is another matter.
Ultimately, it falls to the promotion agencies to demonstrate some leadership and sell their clients on the idea that until they commit to developing an in-house promotion capability of some kind, they will be vulnerable to competitors who do. No doubt about it: Promotion, done right and strategically, gives brands a powerful marketplace advantage. At the same time, there’s just no way promotion can realize its strategic potential when the folks who know how to do promotion right are always on the outside looking in.
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