FTD Nurtures Plans for Healthy Growth

AT&T Seen As Model for New Marketing Focus

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The AT&T of the floral industry.

That's Richard Perry's vision for Florists' Trans-world Delivery Association. And Mr. Perry has tapped Jerry Siano, former chairman of N W Ayer, New York, as a marketing consultant to help realize his vision.

In July, FTD's board recommended accepting the merger offer from Mr. Perry's banking firm, Perry Capital Corp. The board and Mr. Perry are banking that the alliance would give the organization more capital and the marketing focus needed to compete in the changing $12.4 billion floral industry.

Now, the FTD member florists must vote in October whether to accept the merger, which would convert the non-profit floral delivery cooperative into two units, a for-profit company and separate association.

Mr. Siano, known for Ayer's work with AT&T and the "Reach out and touch someone" campaign, appears on a 15-minute videotape that Perry Capital sent to all 23,000 FTD members this month.

In the video, Mr. Siano said he sees a parallel between AT&T and FTD. When the long-distance marketer went through a critical period, AT&T remained a great brand but needed to change consumer's attitudes about it.

AT&T went on to sell relationships, not phone calls, said Mr. Siano, who retired from Ayer in May. In the same way, FTD needs to sell relationships, not just flowers.

FTD flower-by-wire sales have dropped 13.2% since 1990 to $611 million because of the growing presence of supermarkets, discounters and other competitors. Non-florists account for 45% of the sales in the floral industry, an increase of 3 percentage points since 1991 according to the Floral Index, a Chicago marketing company.

Also, new technology is playing an increasing role in flower marketing and providing stiff new competition. Online services, 800 numbers, catalogs and improved wire-delivery systems have affected FTD.

"Because of today's market pressures and our inability to react quickly to them, we continue to lose market share," said Mark Knox, FTD chairman.

The U.S. Department of Commerce estimates the number of florists has decreased by 11% since 1987 to about 44,000 in 1994. In the same period, FTD membership has decreased 8% to 23,000 florists.

Since 1990, the board has been evaluating how FTD can be structured to operate more like a business without eliminating its association status. Currently, the association uses a cumbersome and somewhat ineffective decision-making process, which involves a complicated committee structure. This arrangement sometimes delays business decisions that need to be made quickly to combat rivals.

For example, FTD's 800 service, handled by J. Walter Thompson USA, Detroit, took years to develop. That gave competitors like Flowers Direct, Boca Raton, Fla., and FTD member 800-Flowers, Dallas, time to dominate the market.

"We really felt we could bring a tremendous amount of value and capital to an industry that has been underdeveloped," Mr. Perry said.

He said he hopes to increase the market value and better develop the FTD brand.

"Richard Perry has a very strong commitment to marketing. He really believes that FTD is and should become even more of a marketing company," said Roger Gullickson, group director-marketing for FTD.

Over the years, FTD has been hurt by a lack of sufficient marketing support. Currently the association has an estimated $40 million marketing budget.

"We haven't been able to spend as much as we would like to spend. FTD would like to increase its spending in advertising and I know the Perry folks would like to find cost-effective ways to do that as well," Mr. Gullickson said.

Mr. Perry is committed to spending at least as much as FTD is spending now, but he is waiting until a CEO is in place before making any final decisions about the marketing budget.

Mr. Perry, with the help of Mr. Siano, is looking for a CEO with marketing experience to take over FTD's business operations.

The search has been narrowed to four undisclosed candidates. Mr. Siano will remain a consultant and has no plans to take an FTD management position.

If the merger goes though, John Borden, exec VP of FTD and head of business operations, will retire.

Until the merger is accepted or rejected, FTD will continue to run its current marketing initiatives. A new $20 million campaign, created by D'Arcy Masius, Benton & Bowles, Bloomfield Hills, Mich., will break in October and use the new theme line, "Our hands move hearts."

"The campaign visually depicts the feeling a person has when they receive flowers," Mr. Gullickson said. "The craftsmanship of the florists represents `our hands,' and `move hearts' is the reaction of the person who sends and receives the gift," he said.

Also, this year's campaign will introduce nationally FTD's new 800 number, which automatically connects the consumer to an FTD florist in the caller's area. The new number will be different from 1-800-SEND-FTD, which places wire orders through a national operator.

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