MC Direct comes of age – spurred by success in the U.S.

Susan Carr can't understand why more Canadian direct shops aren't wending their way south of the Canadian border.
The president of Toronto-based MC Group of companies, which includes MC Direct (launched in 1995) and MC Healthcare (launched in 1997), has managed to double her space, double her staff to 24 and grow revenues by over 100% in the last year.

Susan Carr can’t understand why more Canadian direct shops aren’t wending their way south of the Canadian border.

The president of Toronto-based MC Group of companies, which includes MC Direct (launched in 1995) and MC Healthcare (launched in 1997), has managed to double her space, double her staff to 24 and grow revenues by over 100% in the last year. And a good chunk of that expansion, she says, can be attributed directly to the agency’s success in the U.S. market.

January 2002 ushered in a new era for the direct shop, which counts Royal Bank, 3M, Nortel and CenturyTel among its clients. The evolution, as Carr calls it, began about 18 months ago when MC Direct began gradually winning all the direct response acquisition business for the Royal Bank’s personal card side – a relationship, she adds, that started two and a half years ago with a simple bill insert. At the same time, the agency picked up all of CenturyTel’s long distance business – worth about $8 million US – and was awarded work with 3M Pharmaceuticals in the U.S. as a result of its work with 3M Canada.

She has since moved into new digs and added two key senior level creative people, as well as two others at the studio level, to enhance the creative product and provide a greater level of strategic thinking.

‘The impetus behind the new hires was that our mandate at the Royal Bank (card side) had grown and it became clear that, in order to service the volume of business, we needed more senior strategic thinking power,’ says Carr, adding that the bank, for one, has been involved in the agency’s recent developments, including participation in choosing the new hires.

‘I’m adapting and growing with them in their business, so why not build a team that my clients want? It’s tailored to their need as opposed to one-size-fits-all. It may be a different way of doing business, but it creates true partnerships.’

Being independently owned hasn’t hurt either, she says – offering freedom and flexibility in relationship building and in the pursuit of new markets. MC Direct’s current U.S. versus Canadian business is split 50/50, she adds.

‘In the States, our philosophy is not to go in and ask for the entire candy store, but rather take a ‘Let us show you what we can do’ approach,’ Carr says. MC Direct began its relationship with CenturyTel, for example, in September 2000 on a project basis – last fall the agency was given all of the company’s long distance business, and in the last three months it also picked up its DSL and dial-up Internet business, she says.

Though stoked from recent successes, Carr says she will take a somewhat cautious approach moving forward. ‘I’m hypersensitive about taking care of the bird in the hand, instead of chasing after something that may or may not materialize. So the priority is making sure we don’t become complacent in terms of the business we have – and not lose any business out the back door.’

‘Having said that,’ she adds, ‘we do have an elaborate new business strategy and the majority of it is U.S.-focused.’

Carr says she’s consistently amazed at how few Canadian direct shops are making a go of it in the U.S. She cites inferiority complexes, fear of the competition and territorial conflicts as possible factors, but adds that Canadian agencies are bound to clash with their U.S. counterparts and sister companies if they insist on looking only at high-profile accounts.

‘Canadian companies look at the high-profile stuff and think they’ll never get the business because of the competition,’ she says. ‘But you’ve got to remember that there are an awful lot of middle-tier client companies that on a relative scale are small, but by Canadian standards are large – Canadian agencies don’t look at that middle ground.’

While there hasn’t been wholesale hoopla to announce the cross-border DM infiltration, several Canadian direct marketing shops have serious U.S. expansion plans – many, in fact, have quietly done so already.

Toronto-based Lowe RMP did some work for CitiFinancial and early last year. OgilvyOne picked up the American Express Travel Services Network international assignment last year, beating out two U.S. agencies, as well as nabbing the direct marketing assignment for German software manufacturer SAP. VBDI currently services Harris Bank in the U.S. (through its relationship with Bank of Montreal), and Service Experts – Lennox’s retail arm in the U.S. GoDirect Marketing is also pursuing U.S. dreams.

‘It is definitely a major priority,’ says Yuhani Eistrat, president of VBDI. ‘For me, it’s a growth opportunity because we’ve run out of big direct marketers in Canada. ‘Many agencies have been faced with network conflicts, and secondly it becomes a credibility thing about whether a Canadian agency can make it in the U.S. I think you’ll find they can.’

Eistrat suggests employing the same mechanism when looking for new business in Canada: proactively seeking work that draws on the agency’s prior experience or niche, and going through various consultants, of which there are plenty more in the U.S. The only major hurdle may be attitude, he says. ‘U.S. folk that think they’re dealing with second-rate Canadians. Having worked in New York, Canada is not that big on the radar screen.’

The other advantage is obvious – the ruble. And while no one should ever select an agency on the basis of price, the low Canadian dollar makes a compelling argument, says Peter Coish, president of Toronto-based Lowe RMP.

Most agencies, he says, dream of doing business in the U.S. but either can’t get the blessing of the New York office, and/or are not accustomed to doing business at a distance. ‘We’re still an industry that deals face-to-face. We can’t even do business at a distance with each other inside this country. So we need to overcome our own psychological hurdles about doing business at distances with clients in the States.’

For his part, Coish will continue to do all the creative and production for U.S. clients in Toronto. ‘That’s the economic advantage,’ he says. Lowe RMP, he adds, is currently focusing its efforts on the Great Lakes area, rather than New York City.

‘We’ve done project work in the U.S. and the one thing we’ve never encountered working with U.S. clients is a hang-up about getting on a plane and going to visit the agency – or vice versa,’ he says.