Thursday, November 15, 2007

Dizzy in a Tizzy: Marketing Firm Wins a Few Contracts

Dizzy is in a tizzy with something of a dog bites man of a story. It's about a company called Geronimo, part of the Tribal Group as it goes, billing £9.5M from government over the last nine years. The firm apparently employs a Labour insider and by Dizzy's implication this has something to do with their getting this work.

Tribal and Geronimo seem to be extremely effective full service advertising and communications agencies specialising in public sector recruitment and public sector marketing. The majority of whose billings are - assuming they follow the usual industry model - to pay for media and other costs on behalf of their various clients. Not for their own costs, never mind profits.

So, over nine years they've billed over nine million pounds. One million a year. A tiny drop in the public sector advertising and PR ocean. But of which say, and I'm guessing fairly wildly, 80% is cost of media? Say 16% overheads? And 4% or approximately £45,000 per year is profit? Is that the story?

Meanwhile Saatchis and others with links to the Tory Party have similarly received a large volume of public sector contracts. Haven't they? Where's the beef?

Various clients for the Tribal group include, you'll be pleased to know, loads of Tory-run authorities round the place. They are a highly effective advertising agency and this is as much of a non-story as the one Dizzy is not running about Saatchi and other Tory-linked organisations also getting loads of contracts.

What is the total volume of public sector recruitment and marketing contracts? What proportion does £9.5M over nine years represent? Which other agencies are winning public sector contracts? Are other parties also represented among the non execs and execs in the advertising and marketing industries? Where is the story here?

UPDATE 17:37: I've added an extra sentence at the end of paragraph one to make this comment self sufficient without a burdensome trip to Dizzy's.


Evan Price said...

The 'beef' is in the considerable expansion of 'communications' budgets and expenditure, both in real terms and as a proportion of Government expenditure.

Why did the Met Police have an advert on London television this week, I wonder? Was it a good use of public money? Could that money have been better used elsewhere?

Chris Paul said...

Thanks Evan

That may be more intersting and is a quite different story than the one Dizzy is presenting.

Expanding as a proportion is of course more relevant than in real terms.

Didn't see the Met advert so I cannot comment on the timing or VFM of the particular campaign.

Police forces do have to advertise to recruit and retain staff if nothing else - even if the content is nominally other things it is often aimed at R and R.

If there is a drop in aplications over recent adverse publicity it would make sense to deal with that with some form of advertising to halt and reverse that and also to reassure the customers.

The Dizzy story seems to be pants.

best w

Chris P

Evan Price said...

The interesting thing about the Met advert was that it was an advert to the users of the Police service and the community ... not a recruitment drive!

There is an additional interesting thing that seems to be more common with some campaigns and those who create them for the whole apparatus of Government in the UK ... there appear to be stronger links today between the people who benefit from the finances made available from these Government campaigns and the governing party. In addition, there appears to be a political imperative that is being met by much campaigning - see the evidence about increasing expenditure in the run up to elections (local and national) by Government departments.

This 'corruption' is also apparent from the use made by individual MPs (probably of all parties) of the new 'communications' allowance. I put 'corruption' is quotes because it stinks, rather than because I think that there is a proven case.

This all goes to the heart of a number of my critcisms of this Government - firstly, the legislation without real consideration, debate and thought and secondly, without thinking through the consequences of legislative action (what I may have described as 'unintended consequences' elsewhere). The ultimate blame lies, in my view, with the Labour Government's use of the guillotine as a matter of course - something that previous Governments used sparingly and only where they felt that there was a 'urgent' need for legislation.

Chris Paul said...

Is it not a fact that many organisations and individuals connected to other parties in some way - perhaps as small as having a so called labour insider in the team, or a Tory or whatever - are also benefitting from the increasing use of communications? Which you can call advertising and marketing and welcome, or term spin or more subtley "impression management" and moan about.

I used to manage a substantial public sector recruitment advertising budget - in house - and believe me recruitment advertising has long been used as part of general outreach, and general outreach advertising and marketing is often the soft end of some recruitment and retention effort.

Part of the expansion in visible volume may be through more out sourcing of advertising and marketing functions with e.g. Tribal/Geronimo and Veredus and Capita and also the recruitment divisions of the big five consultancies increasingly dealing with senior level recruitment.

Evan Price said...

The increase in the budget spend means that in 2005, the Government was the largest purchaser of adverstising space - spending even more than the Unilever etc.

As to the connections: the link between the owners of one of the companies that I am interested in and the Labour Party is particularly interesting. Here we have a company that grows exponentially on the back of Government contracts in the last 10 years and whose owners were significant Labour donors - but only over the last 12 or 14 years or so. Odd ...

Chris Paul said...


A few thoughts. On the first point:

1. Some of this is driven by legal requirements. The more roads, schemes, projects you are running the more advertising space you will be required by law to take. Highways notices and locally planning notices, election notices, electoral commission notices, health trust formations etc etc

2. It is possible that paid for advertising space may be judged more effective than other methods e.g. direct mail, leaflets, roadshows that would not appear in these budget headings

3. The increasing trend started before NL took power as far as I am aware and has parallels AFAIK in other comparable countries

4. Government communications have been professionalised and right or wrong professionals like to big up their part

5. I suspect Unilever etc have been reducing advertising spend to retail but that their retail partners have been increasing theirs and also seeing more merchandising and other approaches

6. More levels of government have been out sourcing some of these provisions making them more visible (though there are still quite a lot of directly employed scribblers and marketeers)

On the second point:

A. Firms in this industry do grow in this way. Classic ogive, and if they know what they're doing followed up by further waves and products.

B. What do we want? All those connected with any political party to never work again?

C. There is a danger of being anecdotal and missing patterns. Other firms with Tory and other involvements and donations may also be growing. The Labour linked one may be doing more or less the same as the flock but gets picked out for obvious party political reasons.

OR: Anecdotal evidence is not ... evidence. Dizzy quotes it a lot.

D. Again - do all donors have to become non working monks and nuns? What practical steps can be taken to "blind" giving to avoid even appearance of influence?

E. "Tory" agencies are used as well and I've seen no evidence of malfeasance in placing orders. There are plenty of Tory donors doing well out of the stability, the PFIs, the persistent growth, and yes, even the marketing/advertising work

Interesting stuff

Chris Paul said...

A little PS:

Someone from ICI once said "We know that only half our advertising and marketing spend works"

"Trouble is we don't know which half"

Government advertising is harder to monitor and evaluate than anything for products. And there is this thing of the apparent message versus the real purpose. As in service adverts in fact supporting recruitment and retention efforts.

Evan Price said...

I agree that it is mostly anecdotal ... but that does not mean that something fishy isn't happening.

As to Government expenditure on advertising, I would be interested in see comparisons; but essentially, they would not resolve one problem. In the run up to the 2005 election, the Government and its agencies became the largest spender on advertising space. In the run up to the 2001 election, the Government and it agencies rose not quite to the top of the spenders on advertising space. The problem is that the Government is not the Labour Party ... and the use of Government advertising to 'sell' a message in the run up to an election is something that ought to be considered carefully.

As to the connections between the Labour Party and companies, yes there are political considerations, but when one looks at the Powderject affair, the manner in which the former MD of Capita conducted himseld, even the Northern Rock affair, it does begin to look fishy ... no evidence of actual misdeeds. But opposition parties don't have power and for all the legislation - from memory, almost all of which dates back to the 80's and early 90's - dealing with contracting out services, there will always be an element of subjective judgment that needs to be exercised and it will be very difficult to establish wrong doing. That is why, when things do look fishy, covering things up with claims to 'commercial confidentiality' makes it look even more fishy ... viz the Northern Rock and Blakcbird papers.