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AD AGE DATAPLACE;MARKETING SERVICES;WITH GROWTH IN HIGH TEENS, DIRECT RESPONSE & PROMOTION PROVE CROSS-FERTILIZATION A HIT

By Published on .

Marketing is no board game, but more and more U.S. advertisers are choosing to go straight to the customer for the sale without stopping anywhere.

Evidence is in the names and numbers.

The names are promotion and direct. The numbers spell growth for the top 100 agencies in each advertising specialty: U.S. sales promotion, up 19.4% to $850.7 million gross income in 1995; U.S. direct response, up 18% to $1.13 billion.

By comparison, the U.S. gross income returns from general ad agencies rose 9.2% last year, according to Advertising Age's Agency Report (AA, April 15).

Sales promotion's growth represents its best year-to-year advance since 1988, the second year of this report, and direct response's growth, its best since gross income became Ad Age's barometer for agency returns in that specialty. Gross income is agency parlance for revenue.

MARKETING SERVICES MIX

Among growth factors include the cross-fertilization of marketing services between traditional and non-traditional industry users, the demand for marketing services by brands confronting changes in their life cycle (business to consumer, for example), greater sophistication in marketing services techniques for targeting narrow consumer bands, and strong foreign currencies which largely play to the direct response side of the ledger (see story on Page S-6).

The agency names and numbers beg a more general view of these shops as anything but pure sales promotion or direct response entities. Bearing witness to this "blurring" of the lines are agencies that have dropped "sales promotion" or "direct" from their names in favor of a generic title.

A shuffling of the two rankings into a combined ranking shows many trading in both specialties. The top 25 of the resulting "marketing services" ranking (see chart on Page S-1) account for about 60% of the combined U.S. revenues of the two Top 100 specialty charts.

A classic example of the fluidity between the two is Columbian Advertising's regenerated mix in gross income: For the first time, its direct response side overtook returns from its sales promotion activities. "Our clients, in fact, are less into whether we are sales promotion or direct response than whether we're a marketing agency," says President Bernard Miller III.

CAN'T BREAK APART EASILY

Gage Marketing Group, the top sales promotion agency, generates about 20% of its activity in direct marketing.

"Direct response and sales promotion don't dichotomize easily," says Tom Bell, Gage exec VP. "They don't break apart as clearly separate services anymore."

Feeding the conjugal relationship between the two is the fact that both increasingly focus on changing consumer behavior-the decision to buy-complementing traditional advertising's role to change or reinforce attitudes.

Growth is directly proportionate to an expanding client base, and the specialty shops themselves are linking non-users to their traditional clientele.

"We're seeing a tremendous emphasis in promotion, particularly in industries that have not used promotion recently like computer makers, telecommunications, finance," says Matthew Alcone, chairman-CEO of Alcone Marketing Group.

Impact's strong 41.7% revenue gain is traced to core clients Coca-Cola Co., Nestle USA and Wendy's International and new clients Motorola and Allstate Insurance. Motorola sought help from the sales promotion shop to expand its cellular phones from business to consumer end-users; Allstate turned to promotion as a vehicle to educate its employees.

METEORIC RISE FOR FRANKEL

The Summer Olympics in Atlanta is partly credi

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