A matter of principle

David Abbott was a brilliant copywriter. He was also a man of principle when it meant something. Bill Bernbach said: "A principle is not a principle till it costs you money". David refused advertising briefs from Cigarette accounts worth a great deal of money. On principle.

Today the new Advertising chieftains have a wide range of advertising accounts to be principled about.

Take payday loans for instance. Friendly actors try to persuade disadvantaged people that borrowing money at interest rates so bizarrely high that make it look like a typing mistake. And then add arrangement fees and penalties to load the profit pot.

A soft drinks company is to launch a "premiumised" (their word) milk brand with higher protein content and all the lactose removed. Their spokesman adds they will take the sugar down by 30%.  Critics are mystified. Natural milk has no other sugar type than lactose. The implication is this brand will have added sweeteners. If this is their usual additive high fructose corn syrup then the implications are more serious because HFCS has been described as addictive and accused of causing obesity.  

Obesity is now recognised as a greater health risk than smoking ever was. It is a worldwide problem associated with a western style diet of fast and processed meals

loaded with dangerous hydrogenated trans fats, excess sugar, high fructose corn syrup, and salt.

Obesity is linked with the greater incidence of Type 2 diabetes, heart disease and many types of cancer. Wiser folk watch what they eat and exercise but since obesity is also associated with poverty, many people find that processed food is cheaper and therefore affordable.

These are established truths so why are the food brands not doing something about their ingredients and methods of manufacturing ?

Eventually cost pressures on the NHS will force the Government to do something as they have with payday loans. However politicians act too slowly and the problem will only get worse.

We need more David Abbotts to take a stand against amoral advertisers.

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.

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.

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 

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.

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.