Feature: Have a good downturn

Colin Lloyd, chairman of Motivcom – the marketing services group that includes P&MM, Fotorama and Protravel – explains why an economic downturn could be a fantastic opportunity for sales promotion in the UK

The world seems to be talking itself into a downturn/recession. Assuming we are in some sort of correcting situation, this will be my seventh downturn and hopefully the last for my SP career.

In each recession there is always a supposed unique factor. In the early 70s it was the oil crisis followed by the three-day week. More recently we had the Lawson handling of the European Monetary Union fiasco and now we have the credit crisis. Without making a political point, excesses in the banking system are always at the root of these recessions, and the real economy of you and I have to tighten belts and pay the price. The International Monetary Fund needs to sort this out once and for all.

To give you some light at the end of the approaching tunnel, after four decades in the business, my memory is somewhat stretched, however what is reassuring in these unreassuring times is that all the downturns follow a similar pattern. Like El Niño, they occur every five to seven years and there are two sorts of downturn. A shallow one and a deep one.

The early 90s was the deep one and was very painful for those of us that were around at the time. The last shallow one was 2001 to 2002. If my pattern repeats itself, we are in for a deep one, although it feels like a shallow one at the moment.

The other light at the end of the tunnel is that, on average, these changes take about 20 months to work their way through the system. It’s worth therefore working out when this one started. We will all have our own views, but my stab is last August. We should therefore start coming out in late spring 2009.

I would however counter this. My own prediction was this would start after the 2008 Olympics and US presidential election: the Bush administration will make sure that the US economy is in as good a shape as possible in the election run-up. However none of us reckoned on the credit crisis so maybe the deep downturn hasn’t even started yet.

For those of us in the SP business, these times have mixed blessings. The downturn will create an opportunity to clear out the corporate cupboard and get the cost base of the business at the right level and get in good shape for the future. There are also some interesting dynamics that could see the business benefit substantially in this climate. If again history repeats itself, promotional marketing should do better as budgets are switched to more accountable channels.

I repeat my prognosis that 95 per cent of all DM carries a promotional position and the same will apply to the digital space in years to come. Our sector should therefore be in the right place at the right time.

Other strange statistics are that charitable giving goes up in these times – charity promotions will succeed. And magazine and holiday sales go up. Price and value promotions and indeed coupons will also increase redemptions in these times. The Brits are storage people in adverse times. Expect the unexpected.

In the early 90s recession, the heads of the top seven promotional marketing agencies at the time got together and drafted 20 commandments of how to run a service agency in our business. I have dusted down this document and – would you believe it? – the commandments are just as relevant today as they were then.

The commandments will feature in the book that Ken Spedding and I are writing which will be published shortly – a £15 investment in our book could save your company.

I would urge all in our sector to treat this climate as a fantastic opportunity and a platform for the future for SP. In the land of the blind the one-eyed man is king. We can be the one-eyed man of marketing and demonstrate the true power of our craft and professionalism.

Colin Lloyd founded KLP in 1970, one of the first promotional marketing companies to operate in the UK. He was chief executive when the company listed on the stock exchange in 1983. By 1989, KLP Group operated 35 subsidiaries in 12 countries, and in 1990 it was acquired by French advertising group RSCG SA (now Havas) where Lloyd joined the board as president of global marketing services. He became chief executive of the Direct Marketing Association in 1993 and in 2002 became its first president. He is a board member of a number of companies, including chairman of Motivcom. He has also been president of the ISP since 2003 and, with Ken Spedding, is author of a book on the history of sales promotion, due to be published later this year.