B.C. enjoys long-awaited growth in direct

Vancouver-based advertising agencies haven't had it easy.
Over the last 10 years, clients have slashed budgets and, in some cases, all but abandoned the market. And of course, there has been no reprieve in the last 12 months. In December, Vancouver-based BC Hydro announced it expects to cut its ad budget by about 40% - due in large part to the failure of hydro deregulation to take off. And, there is still some fallout from the dot-bomb.

Vancouver-based advertising agencies haven’t had it easy.

Over the last 10 years, clients have slashed budgets and, in some cases, all but abandoned the market. And of course, there has been no reprieve in the last 12 months. In December, Vancouver-based BC Hydro announced it expects to cut its ad budget by about 40% – due in large part to the failure of hydro deregulation to take off. And, there is still some fallout from the dot-bomb.

However, no one’s pushing the panic button just yet. In fact, many of the province’s direct marketers echo the widespread sentiment that of all the marketing disciplines, direct marketing tends to hold its budgets in difficult times, as companies take a closer look at ROI.

‘I haven’t seen the resulting job loss in the direct marketing business from cut ad budgets and a slumping economy,’ says Murray Pratt, president of the Vancouver-based British Columbia Direct Marketing Association (BCDMA), and corporate VP for MarketLink, also of Vancouver.

In fact, there’s a great deal more direct marketing going on in the West than there was five or 10 years ago, mostly because of a diversification of the economy, he says. Commodity markets like forestry and mining have been rounded out by a lot of activity in the tourism sector, as well as a growth in high tech; and retailers and clients who may never have considered direct marketing before, have begun to do so in an effort to connect with the consumer – spurring new business for many shops. Agency structures and ownership have also changed considerably, broadening the scope for many direct agencies.

‘There is more activity in the direct marketing industry in the West,’ says Carole Wilson, president of in.house Recruiting, a Vancouver-based employment agency that specializes in placing marketing and sales professionals. Based on recent requests and placements, her specialty, database marketing, as well as direct marketing, are finally catching on, she says, after nearly 12 years.

Meanwhile, in the last two years, many agencies have merged or partnered with advertising congloms – GoDirect, for one, is part of the J. Walter Thompson network, while Taylor Tarpay hooked up with Saatchi & Saatchi. More recently, Proximity Canada, with offices in Vancouver, joined forces with GeneratorIdeaWorks to become a member of the BBDO family. As a result, Pratt says, a lot of the Vancouver direct shops will do more work on a national, sometimes North American, basis.

‘Since we sold ourselves to JWT, we’ve been working in a number of other markets. So from our perspective, we’ve done well because we’ve diversified and expanded,’ says Virginia Greene, president of Vancouver-based Go Direct. ‘But we also have a strong client roster here in B.C.’

In the past, it’s been difficult for competitors to gain a toe-hold in the market, says Greene, citing OgilvyOne’s entry, and subsequent retreat, from the market two years ago, as well as Palmer Jarvis’ decision to abandon its direct marketing practice. The challenge, she says, is that the West is a ‘branch-plant economy’ – major Canadian company headquarters, where marketing and sales decisions are made and executed, are in the East, primarily in Toronto.

GoDirect’s roster includes Burnaby-based Telus, VanCity Credit Union, and several not-for-profits. More recently however, they’ve looked south of the border for new business, while maintaining its headquarters and servicing (data analytics, creative and production) out of the Vancouver office, allowing it to see what’s happening in U.S. markets at fairly low risk, she says.

Increasing numbers of B.C. shops are seeking revenue from outside the province – usually in either Alberta or the U.S., says Pratt. This is not surprising, given that roughly 60% of head offices are found in Toronto, compared to about 20% in Calgary, and only 9% in Vancouver. In fact, the fourth largest trading partner of B.C. is the rest of Canada – U.S. leads the pack, followed by Europe, and then Asia, he adds.

‘The Toronto market is the framework of national business so companies look East to West. Other cities are integrating more North-South in that it’s lucrative from a dollar standpoint, and it’s easy to find a niche down [south] – it’s such a large market,’ he says.

For its size, Vancouver has always had proportionately less direct marketing than traditional, says Bob Knight, president of Vancouver-based Knight & Associates. ‘It’s a lack of understanding,’ he says. ‘It’s just hasn’t struck through yet, just how effective it can be.’

In.house Recruiting’s Wilson says the more the industry can educate client companies about the value of database of direct marketing, the more the industry will continue to grow.

‘There really is a lot of opportunity out here – not huge opportunities, but certainly many for medium-sized businesses to get into and start to use database marketing. The industry has to take more of a role in educating companies on its benefits,’ she says. ‘We simply haven’t had the expertise out here, and we haven’t had the opportunity to develop it as they have in the East.’

But that may be changing too, says Greene. As many of the leaders in the Vancouver direct marketing field move to new companies, they take their direct knowledge and passion with them.

‘Future Shop’s Jeff Schulz [VP marketing & business development], for example, who was at Van City, now has Future Shop in the direct marketing business. Raquel Hirsch [formerly with Rogers Video, currently head of Proximity's Vancouver office] has worked at a number of companies and every move she makes she turns them into direct marketers. Each time that happens, it expands the industry. It’s growing organically out here,’ she says.

Vida Morkunas, president of e-business consultancy Vida Morkunas and Associates of Vancouver, says non-traditional marketers/companies are also getting into the game. She recently helped B.C. Forest products company Lignum initiate a series of projects to enhance their customer relationships.

Direct mail postcards were sent to targeted forestry buffs, government and environmental types to drive them to the Web site (www.lignum.com) to register for the company’s e-newsletter. If people subscribed, they had the chance to win a Palm VX. ‘The subscriptions were in the hundreds – and we’re talking about a forestry site. This is not a commercial site, it’s an informational site,’ says Morkunas.

‘B.C. is definitely a resource-based economy, and here is a resource-based company that is doing innovative things. It’s not something that is expected, so I think this places them in a leadership position. And it’s an excellent example of the opportunities that exist.’