The Pearlfinders IndexQ1 - 2011Pearlfinders speaks to 5,000+ marketing decision-makers each year across all industries to uncoverareas of opportunity for every marketing services discipline. The Pearlfinders Index collects andanalyses data from these interviews, allowing us to monitor key characteristics of the marketing servicessector. The Index includes detailed commentary on trends and patterns across the complete spectrumof marketing services. To skip to analysis of a specific category, click on:PR;Digital;Advertising;Design/Branding.Sector HeatEach of the interviews we conduct is prompted by a corporate development likely to result in a review ofmarketing services. Below are the sectors that provided the most opportunities for agencies in Q1.Most Opportunities % Q1 2011 Q1 20101. FMCG 16.6 15.52. Retail 11.2 8.33. Leisure 8.1 9.84. Charity/Associations 7.7 8.65. Financial Services 7.0 8.3Opportunity numbers in the fought-over FMCG and Leisure sectors follow a similar trend to Q1 last year.FMCG is slightly stronger compared to last year (+1.1%) and leisure somewhat weaker (-1.7%), thoughrecent news from the leisure industry suggests further weakening ahead as consumers reign indiscretionary spending. So comparing the numbers with last year’s, we anticipate continuing strength inFMCG through Q2 2011, with leisure tailing off. When it comes to retail – opportunities returned to 2010levels of demand after a strong January. But with poor Q1 economic data and with bellwethers likeDixons and Mothercare announcing profit warnings we anticipate the next two quarters will offer feweropportunities here. Our advice for your new business planning is to stay invested in FMCG, but to alsolook at allocating resources on emerging/niche sectors for your offer. 25 FMCG 2011 20 % Planned Corporate Activity FMCG 2010 15 Retail 2011 Retail 2010 10 Leisure 2011 5 Leisure 2010 0 Jan Feb March April May Jun
Desirable DisciplineDuring Q1, we tracked the number of times marketing decision-makers said that they were consideringa particular service category. Pearlfinders clients span the marketing spectrum so this data is entirelydiscipline neutral and without bias during interviews.Most Likely To Engage Marketing Support % Q1 2011 Q1 20101. Digital 17.2 13.32. Consumer PR 12.6 13.33. Corporate PR 11.7 9.14. Advertising 8.8 6.65. Social Media 8.5 6.2Last year, digital agencies lost ground to advertising, integrated and even consumer PR shops as eachscaled up their own digital capabilities. Digital agencies have now reclaimed this ground in the minds ofmany marketers. Increasingly, budget-holders are prioritising projects with more rapid ROI such asecommerce, display, smartphone optimisation and search. During Q1 2011 we have seen a steadyincrease in opportunities making it the most popular discipline.Consumer and corporate PR activity throughout the first three months of 2011 has followed a broadlysimilar pattern to that experienced in 2010. We now expect consumer PR work to experience a gentleincrease in opportunities moving into Q2, with corporate PR tailing off somewhat now that the end ofmany companies financial years has been reached. 20 18 Digital 2011 16 Digital 2010 % Considering Category 14 12 Consumer PR 2011 10 Consumer PR 2010 8 6 Corporate PR 2011 4 Corporate PR 2010 2 0 Jan Feb March April May June
Trigger HappyThe triggers we monitor in the media are the starting point for our research. These represent indicatorsfor corporate developments and potential marketing challenges. Then by analysing the interviews wehave with marketing decision-makers at these organisations, we are able to track which of the triggersyield the highest number of qualified new business opportunities.Best Triggers For New Business Opportunities % Q1 2011 Q1 20101. Marketing Decision-Maker Moves 31.5 26.62. NPD / Innovation 22.1 14.13. Restructuring / Growth 21.4 17.04. Agency Reviews 13.6 18.55. M&A 7.0 4.4More and more agency opportunities are arising from innovation, new product launches anddevelopment, as the UK’s entrepreneurial spirit returns. Last year, this category of corporatedevelopment generated the greatest demand for marketing services in Q4 (29.3%), having grownthroughout the year. We anticipate NPD/innovation will continue to deliver one in five of all agencybriefs, and the tax breaks for small businesses in this years Budget could even boost this. 45 40 DMM 2011 35 DMM 2010 30 NPD/Innovation 2011 % Triggers 25 20 NPD/Innovation 2010 15 Restructuring/growth 2011 10 Restructuring/growth 2010 5 0 Jan Feb March April May June
Top Sectors for Marketing Decision-Maker Job MovesAfter the annual peak in appointments and role changes that accompanies the New Year, marketingdecision-maker job moves have tailed off. We expect this to level out in Q2 as budgets for the newfinancial year are announced and allocated.Last year, the public sector was one of the top destinations for new marketing budget holders, but now itonly accounts for 3% of appointments. Government cuts have had the opposite impact on the thirdsector. It is now essential for charities to have the best fundraisers and marketers to plug the gap withcorporate funding, while associations representing the financial sector have also been bolstering theirmarketing and comms teams.Q1 2011 Q1 20101. Charity / Associations 1. Financial Services2. Financial Services 2. FMCG3. FMCG 3. Charity / Associations4. Retail 4. Public Sector5. Media 5. LeisureTarget AudienceFor brands looking to reach specific consumer audiences there were three dominant demographiccategories. Consumer audiences were the main focus within 78% of our interviews.Top 3 B2C Audiences % Q1 2011 Q1 20101. Male 24.3 16.82. ABC1 19.1 19.93. Female 16.5 11.2Of the marketers we spoke to, 21.8% were focusing on B2B marketing in Q1, with the three sectorsbelow providing the most B2B marketing opportunities.Top 3 Sectors Investing in B2B Marcoms % Q1 2011 Q1 20101. Industry / Manufacturing 20.5 16.32. Professional Services 20.5 10.23. Financial Services 13.6 9.2
Feeling PositiveWe asked senior decision-makers we spoke to in Q1 how positive they were feeling about the businessenvironment. In the past weve used this to give us a sense for which marketing teams are getting thegreen light for new projects and securing budgets. We used a score where 1 is most positive and 10the least.Most Positive Sectors Q1 20111. Apparel 2.52. eCommerce 2.63. Pharma / Healthcare 2.84.Telecoms 3.05. Retail 3.0 Month 2010 2011 March March June Sept April May July Nov Dec Aug Feb Jan Oct 1 2 Apparel Average Positivity eCommerce 3 Pharma/Healthcare 4 5
Customer ObjectiveWe gathered data on companies primary customer marketing objectives.Primary Objective Q1 2011 Q1 20101. Acquisition 65.3 68.42. Retention 16.8 11.33. Development 17.9 20.3 80 70 Acquisition 2011 60 Acquisition 2010 50 Retention 2011 40 % Retention 2010 30 Development 2011 Development 2010 20 10 0 Jan Feb March April May June July Aug Sept Oct Nov DecWith acquisition and development priorities appearing constant when compared to this time last year,the focus for marketers this quarter has been on retaining customers. Whats apparent in times ofuncertain budgets is that repeat custom proves the most cost-effective way of driving revenues.National Or RegionalWhere marketing decision-makers specified a need for agencies of a particular size or geographicalreach, we tracked the trend.Agency Size / Geographical Reach Q1 2011 Q1 20101. National 60.6 50.82. Regional / Niche 39.4 49.2While there has been a noticeable shift towards agencies with national capabilities since last year, thiscan be attributed to the increase in larger brands conducting agency reviews.These brands are not seeking the services of pitch or search and selection consultants however. In Q12010 8.1% of reviews we researched involved search and selection consultants, but so far this year just3% have taken this approach. One of the lessons larger brands appear to have taken from the recessionis to aim to achieve as much as possible through internal resources, particularly for areas whereexternal advice isnt absolutely necessary. Agency reviews are evidently falling into this category.
Q1 2011 Index: PR Highlights • PR was consistently the most popular discipline throughout the last 12 months, featuring in 40% of all conversations in Q1 2011. • Of the 337 PR-specific opportunities we profiled, only 29 arose from press-reported scheduled PR reviews. • For the first time in 12 months, consumer PR is no longer the most planned-for marketing discipline in the mix, second to digital. • Corporate and B2B comms activity is picking up: this quarter, 26% of PR opportunities were targeting a B2B audience, where the figure was 23% last year.Sector activityThe largest incidence of PR opportunities was in the FMCG industry (56), followed by Retail (40) thenCharity/Associations (38). While FMCG remains the most fertile sector, all three are levelling after thefirst half of 2010, when uncertainty over market conditions fuelled both consumer and corporate PRefforts, while charities and associations cut their spend. Looking forward, we have found decision-makers are predicting comms projects that had been on hold will restart. 18 16 14 FMCG % PR Opportunities 12 10 Retail 8 6 4 Charity/Associations 2 0 Q1 Q2 Q3 Q4 Q1For Leisure and Retail industries, meanwhile, a lift is expected from the upcoming bank holiday season.Brands ranging from Marstons and Dominos Pizza to Stanley Gibbons and ITN spoke about leveragingthe royal wedding for a fresh marketing push. Looking more closely at both sectors compared to thefirst quarter of 2010, as an indication of activity in the market, an initial dip after the New Year willreverse as investment in PR returns during the summer months. We predict the retail sector will see anincreased demand for corporate PR as the stronger players look to reassure investors they can continueto deliver dividends as others in the sector deliver profit warnings. 14 12 Leisure 2011 10 % PR Opportunities Leisure 2010 8 6 Retail 2011 4 Retail 2010 2 0 Jan Feb March April May June
Online PR now central to restructuring and mergersThe return of more mergers, acquisitions and corporate restructuring activity to the corporate landscapegenerated a surge in PR opportunities this quarter. Its most notable impact was on online PR and socialmedia, which had 30 opportunities for agency involvement as a result of M&A or corporate restructuringin Q1, compared to just 11 in the same period last year.While the role of online PR in B2C marcoms and even corporate business development and sales hasbeen well documented, its central role in supporting M&A and corporate restructuring is now evident.When BSM was acquired by the AA, it was the AA’s social media expert that led the brand strategy. BritInsurance is planning to use inbound investment from its new owners to drive recruitment, again viasocial media. Morrisons strategy to build an online offering through acquisitions has naturally beenaccompanied by a greater focus on its broader perception online, again via social media channels.Products in place of propsA fresh debate this quarter was the role of PR agencies in product placement. While media planning andcreative agencies have been responsible for brokering the initial deals we’ve seen, we think there isscope for the PR industry to win work here. Broadcast PR and even prop placement specialists havelong been cultivating relationships with TV channels and production companies to secure placement, butgoing forward, we see an opportunity for PR experts to feed into strategy. We anticipate openings withcompanies looking to craft specific narratives around their brands across multiple media outlets.Listening, not broadcastingWhile the last two years saw a social media bandwagon that compelled brands to build a presence tokeep up with competitors, in 2011 many consumer brands stopped to take stock. The response hasbeen to reinstate a more traditional perspective – shifting priorities from branded portals andbroadcasting messages, to media monitoring, data mining and customer service. In conversations aboutsocial media, more than twice as many decision-makers this quarter mentioned a broader traditionalapproach, compared to Q1 2010.What this will mean for the coming year is a greater proportion of integrated briefs incorporating socialmedia, while for PR departments the remit is to be more responsive – the emphasis online has movedfrom being proactive to reactive. At video game publisher Ubisoft, for example, we were told "customerunderstanding" is at the heart of a new overarching strategy.
Q1 2011 Index: Digital Highlights • A third (32.7%) of marketing budget holders we spoke to were evaluating digital or social media support in Q1. • Figures indicate a steady rise – throughout 2010, the average figure was 27%. • Among digital opportunities, 35% of decision-makers also spoke about mobile. A year ago, the figure was just 23%. • 12% of decision-makers mentioned social commerce as a priority. Last quarter, the figure was 8%. • In new product launches, 55% of marketers planned to invest specifically in digital channels.Active sectorsThe top three industries investing in digital this quarter were FMCG (43), followed by Retail (41), thenCharities / Associations (25). Mapping the incidence of digital opportunities this year against the first halfof 2010, its clear theres steady investment from brands over the same period. 25 20 FMCG % Digital Opportunities 15 Retail 10 5 Charity/Associations 0 Q1 Q2 Q3 Q4 Q1Disciplines within DigitalAs tablets and smartphones become the primary consumer touchpoints and the number of hoursconsumers spend on them rises, brands have increasingly turned to social media and mobile strategiesto reach them - the appetite for agencies with mobile expertise has never been stronger. 25 Social media 20 Mobile % Digital Opportunities 15 e-commerce 10 Search 5 Web builds 0 Q1 Q2 Q3 Q4 Q1The popularity of smartphones among older consumers has also been the catalyst for an increasingnumber of digital briefs targeting this group – four times as many in Q1 this year than last.However, many budget holders are unsure where to focus their resources, citing the importance of"getting it right first time". Meaningful user behaviour and platform optimisation insights remain scarce
for tablets and are in great demand among budget holders grappling with translating both content andrevenue structures to best effect on new platforms. The digital editor of The Telegraph, for one, told uscommercial decisions have yet to be made on a tablet version, and the next few months will be aresearch phase.Across all industries, the number of decision-makers planning to invest in app development hasincreased steadily – but we found the terminology has changed. There were no mentions of "tablets"early last year, as decision-makers waited to gauge public response to the iPad. Mentions ofaugmented reality and QR codes more than doubled in Q1 2011 compared to the same period in 2010,again driven by the potential smartphones and tablets offer.Geolocal Marketplace Set to ExplodeWhile one of the big talking points last year was geo-location, and how marketers could establish aninitiative thats relevant to their brand, this year we are already seeing the topic shoot up the priority list.It seems inevitable that this will accelerate through the year following major announcements this monthon Facebook Places, Google Latitude and Twitters new dashboard functionality. Facebook clearlyexpects to change the marketing landscape with the launch of Places Deals and brands anticipating thismove contributed to the spike in conversations about Facebook this quarter. It has also, in the UK atleast, taken the wind out of Foursquare’s sails and marginalised the platform in marketers minds. 60 50 Facebook Twitter % Social Media Conversation 40 Linkedin YouTube 30 Foursquare Myspace 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2010 2011Twitter is taking a different approach by rolling out a dashboard that lets marketers access data abouttheir followers. The available metrics include whether more male or female followers are retweeting abrand’s messages and what percentage of followers are in different countries and states. It will be sometime before advertisers commit serious marketing resources to either platform, but the desire is there.Truly indispensible digital agencies will be those getting involved at the research and development stagerather than simply implementation.
Q1 2011 Index: Advertising Highlights • There were over twice as many advertising briefs in Q1 2011 than Q1 2010. • 14% of marketing budget holders we interviewed were evaluating advertising support. • 25.9% of opportunities came from scheduled reviews (+4.8% on Q4 2010 but half the level of Q1 2010). • New marketing decision-makers still generate 14.7% of advertising opportunities, but this is 10% less than in 2010. • The most popular target demographic was men. 31.5% of advertising briefs were tailored to this group. • While other marketing disciplines have seen a drop in briefs targeting ABC1 audiences, advertising saw a boost +7.8% on the previous quarter and is +8.3% on Q1 2010. • Advertising budgets are once again being siphoned off for digital projects. Advertising is now the fourth most sought after marketing discipline while digital is seeing sustained growth.Active SectorsThe top three industries investing in advertising this quarter were FMCG (26), followed by Retail (12),then Leisure (11). While FMCG and retail have steadily contributed more advertising opportunities overthe last 15 months, the leisure sector has been providing fewer opportunities for the last two consecutivequarters. 30 FMCG 25 % Advertising Opportunities 20 Retail 15 10 Leisure 5 0 Q1 Q2 Q3 Q4 Q1Digital predictionsMobile display ad spend was predicted to rise five-fold in Europe in 2011, and in its first quarter wefound 16% of conversations about advertising also brought mobile into the equation. We found that fourtimes as many agency reviews in Q1 2011 touched on both advertising and digital (43) than in the sameperiod in 2010, when only 10 decision-makers were evaluating the two disciplines together. It remains tobe seen whether this steep rise will continue, but for ad agencies, an understanding of both fields willensure youre more likely to be included in planning mobile campaigns rather than simply providingcreative for digital shops to adapt.Getting to grips with placementThe single biggest event in terms of advertising legislation this quarter was the legalisation of UKproduct placement. Hailed as a solution to the TV viewers tendency to fast-forward ads, marketers arenow reading up on regulations to understand whats possible, and what could benefit the brand.Analysts predicted that brand owners would fear a consumer backlash – but brands we spoke to saidthis fear stems not from the public but from within the marketing industry itself.
As product placement strategy is integrated more broadly into creative campaigns, we think there is anopportunity for advertising agencies to get involved earlier with new products. While products developedfor specific shows might be a step too far for many, we expect brands to turn increasingly to theirincumbent to ensure NPD and even pack design is working in harmony with placement strategy.Kelloggs Marketing Services Director’s objection to product placement is the absence of introduction orexplanation – the best agencies will address this by broadening involvement with all the marcomschannels being utilised.
Q1 2011 Index: Design and Branding Highlights • 12.4% of marketing budget holders we interviewed were reviewing design / branding support. • As a proportion of all briefs profiled this was down 4.2% on the previous quarter, but up 2.6% on Q1 last year (9.8%). • The most popular target demographic was men – 25% of design / branding briefs were tailored towards this group. • Design and branding for B2B brands has seen a solid increase on the previous quarter (+6.9%). • Briefs targeting ABC1 audiences (14.6%) are becoming increasingly scarce, contributing a smaller portion of opportunities each quarter for the last four (-11.7% on Q1 2010). Active Sectors Of the 109 design and branding specific briefs we profiled in Q1, the largest incidence was for the FMCG sector (25), followed by Retail and then Charity / Associations. Charities and associations saw the biggest increase on Q4 for design and branding opportunities (+6.6%). 35 30 % Design & Branding Opportunities FMCG 25 20 Retail 15 10 5 Charity/Associations 0 Q1 Q2 Q3 Q4 Q1 Pack design There were nearly twice as many packaging design opportunities in Q1 2011 (43) compared with 2010 (27) as brands seek to address current consumer, retailer and internal expectations. Greener packaging is expected as standard, although further redesigns have been required following health risks from mineral oils in recycled card. Supermarkets are increasingly prescriptive on pack format, driving demand for greater creativity to achieve standout. Cost cutting has also led to opportunities for pack design as brands look to use less packaging and cheaper materials. 29.7% of opportunities came from NPD and innovation, more than doubling over the last 12 months from 12.3% Q1 2010. Looking to the future, we expect each of these trends to remain on budget-holders’ priority lists.
Online budget allocationHaving tracked opportunities for all marketing disciplines over the last 15 months we can plot thefollowing graph to compare demand for digital vs. design and branding expertise. 20 18 Digital 16 Design/Branding 14 % Considering Category 12 Linear 10 (Design/Branding) 8 Linear (Digital) 6 4 2 0 Jan Feb March April May June July Aug Sept Oct Nov Dec Jan Feb March 2010 Month 2011The two disciplines followed a similar trajectory in the first quarter of 2010, but have since settledinto a pattern of competition. A peak in opportunities for design shops corresponds very closely withthe months where digital is less dominant and vice versa. Looking at the trend lines it is clear thatthere is confusion among budget holders when it comes to allocating resources to online projects.While it is rare to come up against a digital agency when pitching for a major design brief, it is theongoing development and creation of content and branded material online where the lines areblurred. As brands’ demand for dynamic, rich content steadily rises, costs need to be managed, andthere is often a temptation to opt for a commoditised solution from the retained digital agency. Wethink design shops are missing out on this longer-term source of repeat business, and can make astrong case for greater involvement in content creation.Smaller design shops also need to be assertive about their digital capabilities and successes fromthe outset, reassuring marketers of your ability to provide a solution that fully addresses thechallenges attached to multiplatform brand activity. In other words, making the business case fordesign leading the way rather than technical expertise.