Tuesday, 29 July 2014

Tourism... Back on track?


The signs of an economic recovery are everywhere. Apparently we are back where we were before the long recession started.

Despite the need to keep borrowing, the Chancellor is in a buoyant mood. Even the International monetary fund has raised its estimate of UK growth from 2.8% to 3.2%.

Raised confidence generally leads to increased spending and travel is one area that should benefit.

According to our National statistics, UK residents took 58 million trips abroad in 2013 compared to 56 million the previous year.

There’s still a way to go before the pre-recession total of 69 million, but the signs are hopeful. Trips taken in the first quarter of 2014 were 8.7% higher than in the first quarter of 2013. And Heathrow coped with 6.6 million passengers in June, despite capacity problems. Ryan Air have just revealed bumper profits and Easy Jet have increased their capacity in Gatwick by 16%.

An area of concern is the tendency of people to book late and the promotion of late discounted deals by price comparison advertisers like Secret Escapes encourages this trend. Their ad spend in the last twelve months hit £3 million. Other discounters like Hotel.com were active too. Even conventional tour operators publicly advertise discounts where once they would be more discreet.

Over capacity is one problem. Stay vacations are another. The speed at which some countries switch from being deemed safe to dangerous is also a factor. Egypt’s tourism business is still suffering from the Arab spring revolution.

Perhaps tour operators should adopt the discounting habits of some airlines who offer better deals to early bookers.

Thursday, 12 June 2014

Inheritance tax: the opportunity for charities



Three recently published articles should interest charities specially those who depend on legacies for survival.

The first was an article in the London Standard of Tuesday June 10 and concerned Britain’s millionaires. According to Lucy Tobin, there are 513,000 households in the UK which have been identified as worth one million dollars or more. Of these 1044 are very wealthy with assets of over 100 million dollars.

In the same issue in another article, Lucy Tobin discussed the benefits of leaving money to Charities in your will. Apparently there is a significant tax advantage, in a reduction of inheritance tax, if you bequeath 10% or more of your assets to Charities. Money left to Charities is of course tax exempt but the tax paid after this and tax-free allowance by beneficiaries also drops from 40% to 36%.

An example highlights this advantage.

Assume you have assets of £1,325,000 in your estate when you die. Excluding The IHT allowance of £325,000, there is £1,000,000 for which tax is due.

If no money is left to a Charity, inheritance tax of £400,000 will have to be paid leaving £600,000 for the beneficiaries. Plus of course the tax-free allowance of £325,000.

If however 10% of the estate is provided for Charities, then in addition to them benefiting by £132,500, inheritance tax at 36% will be paid on £867,500, totaling £ 312,300, leaving £555,200 to the beneficiaries. Plus the tax-free allowance of £325,000.

In other words your generosity of awarding £132,500 to good causes is only costing your other heirs £44,800.

This surely is an opportunity that should be promoted by Charities?

Andrew Papworth publishes Harvest, a monthly newsletter and in the June issue writes about baby boomers. He states that the time to approach them about possible bequests is now, since they will begin the journey to the “unknown land” soon. People born between 1946 and 1966 will die between 2017 and 2046. Their wills probably drawn up between 1997 and 2026.

Only 37% of all adults have made a will and the numbers rise slowly as we get older. 36% of adults currently between the ages of 45 to 54 have, 58% of adults aged between 55 and 64 years have also made a will and the proportion rises to 79% for those over the age of 65.

And Andrew says: time is running out if you plan to approach the baby boomers for legacies.

Tuesday, 10 June 2014

The acquisition and retention of donors


One of the biggest challenges facing Charities today is the growing reluctance of new donors to provide contact details. They know that if you know where they live, you will undoubtedly send letters asking for more help.

Direct mail accounts for nearly three quarters of all advertising spend and is justified by its relative level of returns. Donors are gauged by the lifetime value because the return on above the line advertising investment is usually much less than the initial spend. One large charity averages an almost immediate return of 30% on its conventional advertising spend and without the possibility of further attributable donations has to find other justification for continuing the process. Awareness building is one. However since the overall aim is attracting more regular donors, list building remains a priority.

When advertising in conventional media like the press, usually the most cost efficient after Direct Mail, consider asking permission to stay in touch with donors. Thank the reader for the time spent and always say please. Promote your cause and stress the urgency behind your appeal. New donor acquisition will be difficult so the more attention paid to the copy and coupon the better. Enlisting the support of well-known people with a vested interest helps. And don’t waste money even in justifiable media if your appeal is placed where it will not be seen. Many charity ads are buried in advertising ghettoes, which encourage the turning of the page.

After acquisition of donors, retention is very important. You have already segmented your list to make your mailing programme more effective. Some donors will only want to be mailed once a year, others are happy to be approached more often.

The sort of residential neighbourhoods they live in can identify valuable donors and the Royal Mail will help you appeal to their neighbours.

Then have a direct response expert like Drayton Bird audit your mailing package. He is probably the best marketer equipped to make the improvements to retain donors and improve their responsiveness. 

Campaign Magazine named him one of the fifty most important individuals in UK advertising during the previous twenty-five years. 

David Ogilvy also rated him highly and he wasn’t one to scatter praise. 

Contact Drayton directly:
Drayton@draytonbird.com 

Wednesday, 2 April 2014

When stuff hits the fan



Your business is doing well and then the BBC drops a bombshell. It announces that you as a retailer sold unsafe mattresses and sofas that were not treated with fire retardant chemicals that are necessary by law. Your spokesman says:

"We take the safety of our customers very seriously".

Really?

A charity is exposed for paying £ 70,000 to its chief executive, as part of his renumeration package, for his children’s school fees. A spokesman for the charity justified the package worth over £ 200,000 per year as a reflection on "the complexity and responsibility of his role".

A financial service company’s wrongdoings are leaked to the press, resulting in a sharp drop in its share price. If it made an explanation or excuse, I missed it.

All these reactions were wrong and suggest they were not prepared for these events to occur.

Keynes once remarked on the need for preparedness because: "There is always enduring uncertainty"

Murphy’s law states that if something can go wrong, it probably will. Pray for it not happening but prepare for the worst.

Every organisation should have a crisis management programme in place. One that is carefully thought through, researched and rehearsed. It involves a continuous process of risk assessment and timely communication through the media channels. This means having a professional team in place prepared for if and when something goes wrong.

Then they will not make up crass statements to the press, but rather apologise, organise collection and possible remuneration, talk of the steps taken to help prevent a recurrence and seek to salvage damaged reputations.

Thursday, 13 March 2014

Don’t just tell me about the problem...



Most charities are good at describing problems they hope can be solved with your donation and support.

One describes the dangers faced by very young children and implies that these hazards can be stopped. Full stop. Another tells you of the third world children forced to drink contaminated water. A leading wildlife charity describes the plight of the snow leopard and implies that adopting one of these beautiful endangered creatures will somehow protect it.

Most will talk about their achievements on their website, but few do in the advertisements and advertisements are what potential donors see first.

It is however important to be realistic in your claims. Can children really be protected when a lot of abuse takes place in the home?

And what can be done about the number of cases in the UK of children used in sex trafficking?

Writing in the Sunday Times, Jonathan Leake and Ross Clark tell readers how to save the world’s most endangered animals. Their five point strategy involves fighting the poachers, blocking the trade at the borders, educating people, particularly the Chinese of the damage done when they buy these products, incentivising local villagers to look after their wildlife, encouraging tourism, and a captive breeding programme for wildlife parks.

Human encroachment and loss of habitat also speed the process of extinction for beautiful endangered species. Few of these basic problems can be solved by Charities.

So don't make unrealistic claims. All they do is make the case for the cynics.

Thursday, 5 December 2013

Is the Internet effective for Charity fundraising?



Can the Internet deliver donations to Charitable causes more effectively than conventional media routes such as direct mail and press advertisements?

Many fundraisers responsible for spending advertising budgets believe so.

Many experts have their doubts.

Andrew Papworth writes a regular newsletter called Harvest. His December issue has an article titled: Why you should not rely too much on the Internet.

“According to the Office for National Statistics, more than a third of women aged 65 to 74 and almost three-quarters of those over 75 have never used the Internet”.

And 

“Elderly women are often a key market for fundraisers and they are particularly likely to be missed by online communications”.

Drayton Bird says that Social networks can lose fundraisers a lot of money. He quotes using a statistic from the 'causes' application from Facebook:

“Over the last 12 months for which figures are available just $2.5 million has been solicited in the US by 19,445 charitable organisations. That’s an average of just $126 per organisation. They would have done infinitely better using Direct mail, but that isn’t fashionable”.

The problem is the sad fact that Internet advertising is peopled by practitioners who have made jargon an art form and who use it to make the practice very opaque. Transparency is absent for many campaigns.

The initial start point was search, a digital equivalent to Yellow pages where people looking for something specific are nudged into choosing a brand or service using adwords. This market is for people who are 'engaged'.

The digital version of mainstream offline advertising such as Press or TV are leader boards, banners, skyscrapers and MPU’s. When all this started they were priced in Cost per thousand impressions or Cpm’s in the American vernacular. And initially they were expensive, as high a £25 per thousand impressions. This was clearly unsustainable because it made the cost of buying online impressions more expensive than on established offline media. Digital publishers began to offer more flexibility in terms of geographic selection, behavioural and contextual targeting but prices had to fall. Advertisers were now more interested in the number of people who clicked on to their landing page or website. The average click through rate was 0.06% or 60 clicks per 100,000 impressions, so if you were foolish enough to buy impressions at £25 per thousand you would pay £42 per click. Horrendous.

The first to offer a low cost option were the blind networks or exchanges, who took over the unsold inventory of publishers and offered these for very little but at the expense of information about exactly where the ads appeared.

More recent is re-targeting where using cookies implanted in your computer, advertisers can provide messages to people who have previously shown an interest. Furthermore these messages can be transmitted across all the devices such as mobile phones, tablets, laptops and smart TV’s. This is known as householding.

Now the accent is on trading desks, real time buying using algorithms and programmatic platforms. Some of the more informed advertisers query the excessive jargon, are concerned about the lack of transparency and are considering having their own trading desk.

The jury is still out about whether these developments will make digital medium more effective.  

Thursday, 21 November 2013

Gaining a better share of tourisms largesse



Tourism is leading the drive out of the recession. Its importance to the world’s economy is suggested by the work produced by the World Travel & tourism Council who estimated that in 2012, tourism generated 6.6 trillion dollars worldwide. This represents 9% of total GDP and a similar share of jobs. Tourism grew faster than the other economic powerhouses such as the financial, manufacturing or retail sectors.

Most of the gains are due to the belief that the bad days are over and because a resurgent airline business is making access easier by laying on more flights. Six months ago, a spokesman for IATA talked about European airlines being on a knife-edge. Now Lufthansa, Easy Jet and IAG, the owners of British Airways and Iberia have announced large profit gains for the most recent accounting periods. Tony Tyler, IATA’s Director general said:

“The strong growth of recent months, coupled with the continuing improvements in air travel demand in September, suggests that there could be a further acceleration in air travel growth before the end of the year”.

Not all of the smaller undifferentiated airlines will benefit from this trend.

People make their independent holiday destination shortlist first and easier access helps the decision process. For countries with limited advertising budgets, it helps if the national airline also promotes their country. A surprisingly high proportion do not. Sell the destination and then your differentiated, easy access service. Why else would you fly with Air Argentina if not to visit that country?  

It doesn’t have to be an airline though. Eurostar is giving people a reason to travel on its trains by promoting the hidden treasures of Paris in a charming typically gallic film commercial. See it here.

It makes you want to be impulsive and visit. And Eurostar is so convenient. 

Sometimes the favoured destination is served by a number of airlines. Price may be the major factor in the decision, but if this advantage is marginal, then flight convenience, departure airport, and perceived image matters. Skytrax rates airlines on the basis of product and service criteria. The top airline is Emirates because of the age of its fleet, quality of the website, airport service, cabin staff efficiency and friendliness and the on board product. The other podium places were taken by Qatar and Singapore Airlines.  

Airlines that don’t pay attention to all the service ideals risk being marginalised and prey for the major operators.

To see the Eurostar video in full: 
http://www.youtube.com/watch?v=NCyQo6rVrOI