Understanding business audiences
Geoff Copps, Senior Research Manager, reports from the Telegraph Festival of Business.
Where should you look to find the real ‘muscle’ in our economy? What do advertisers need to consider when targeting business audiences?
It was fine and bright in Manchester. In the Central Convention Complex, delegates gathered in a packed conference hall for the Telegraph Festival of Business 2012, our second annual conference for mid-sized businesses (MSBs).
Recent industry data from NRS PADD confirmed that such readers represent a Telegraph audience heartland: the Telegraph reaches more senior business people per day than any other quality publisher in the UK.
The Telegraph head of business Damian Reece opened proceedings by introducing Sir Terry Leahy, the former supermarket boss. In the pause that followed, Sir Terry scanned the audience with warmth and appreciation.
In that look there was also, I think, a touch of the old-fashioned hard-headedness for which ‘the man who turned round Tesco’ is justly renowned. Now a keen investor in British enterprise, Sir Terry may well have been thinking: What have we here? What potential? What opportunity…
I invite any agency planners and advertisers out there to follow in the footsteps of our distinguished keynote speaker by considering the same question.
Reporting from the frontline of British business, below I share five key take-outs from the festival – issues really engaging mid-sized businesses in the UK today. I follow this with five key points on why MSBs represent an opportunity that advertisers cannot afford to overlook.
Five key take-outs from the Telegraph Festival of Business:
1. Embracing recession-proof consumer trends
Sir Terry Leahy was first to get delegates murmuring in agreement when he declared that “if you look beneath the economic cycle you will see trends, faster currents, there to be capitalised on.”
Trends he identified as drivers for growth included health and beauty (“everyone wants to look good and live forever”), anything that saves consumers time and businesses that can offer customers simplicity. “People want their problem solved in a satisfactory way; they don’t just want more choice, that can mean more problems,” he said.
2. Embracing digital
Martha Lane Fox expanded on another defining trend of our age: the opportunity of digital. With a twinkle in her eye, Ms Lane Fox urged companies to “steal from Google”, with its web-first philosophy. “If you’re considering a new aspect of your business or changing an existing process, think internet first,” she said.
Yet she spoke of a skills gap in some firms, preventing them from fully taking advantage. Advertisers have a role in bringing their products and services to bear on this issue.
3. The importance of exports
Jim O’Neill, chairman of Goldman Sachs Asset Management urged those in the hall to “reach out for export opportunities around the world.” He argued that the UK’s economic potential depends to a great extent on how businesses ride the growth coming from the BRICs and the ‘Next 11’ economies.
In 2011 China’s growing economy created the equivalent of a new Greece every three months, he said. Many MSBs are already ahead of the curve: from the floor we heard from the CEO of a home furnishings company, active in 18 markets and eager to expand.
Grant Thornton/CEBR research released earlier this month reports a rise in MSB exports of 4.1% to Q3 alone. That’s a value increase of £1.5 billion already this year.
4. Learning from the Germans
Herwig Vennekens, the UK MD of German sweet maker Haribo, discussed the lessons UK business can learn from the famous Mittelstand – MSBs that are the backbone of the German economy.
Mittelstand companies often focus on niche areas in which they become world leaders (the reason why Haribo doesn’t make chocolate). They tend to be innovation-focused (patent applications are high), committed to long-term profitability (rather than beholden to quarterly pressure) and supportive of Germany’s vocational training programme (83% of trainees are in Mittelstand companies).
5. Getting the right business services and support
This one from the conference floor. I spoke to a manufacturer of automotive components with a thriving factory in the Midlands. I spoke to an entrepreneur in Lancaster preparing to launch an e-marketplace for the sale of healthcare products. I spoke to the Commercial Directors of a tool-making firm, a children’s clothing manufacturer and an educational services supplier. All were in need of business services and advice to facilitate growth, from banking to logistics.
These are hard-working businesses (MSB turnover per employee is reported to be 18% higher than the UK average) and they need their suppliers to work hard for them too.
Five key points on mid-sized businesses (MSBs):
1. A powerful audience for advertisers to tap into
Without first-hand experience, it can be hard to get your head round who an MSB executive really is. But it’s too large a part of the economy to gloss over. MSBs cover a whole host of industrial activity, from food packaging to precision engineering to software sales.
According to latest figures, there are over 33,000 MSBs in the UK, employing 4.1 million people and contributing £285 billion to the UK economy. As Michael Fallon MP argued at Friday’s festival, if small businesses are the ‘lifeblood’ of our economy, MSBs are the ‘muscle’.
2. Must not be overlooked
The Telegraph has made it a mission to engage MSBs through our message of ‘backing business and enterprise’. The festival was an eye-opener, a riot of creativity, industry and ambition. Opportunity was the watchword of the day and it should be for agency planners and advertisers too.
It was clear that this audience can feel under-served and are crying out to be spoken to – by banking, logistics, database, IT, office equipment, accountancy, insurance services as well as other relevant brands.
3. Can be effectively targeted
When it comes to investing in goods and services, 73% of those in MSBs say that decision-making responsibility lies with just one or two people. With smart planning and using the right media brands, these people can be reached effectively.
By contrast, just 15% of those in large firms say that sign-off lies only with one or two people. For such firms, decision-making is more often a complex process involving multiple stakeholders. As a result, advertising may need to reach multiple targets in order truly to effect the purchase decision. This remains a challenge for agency planners.
4. Are agile when it comes to spending and switching
The concentration of business decision-making in the hands of one or two people makes these individuals more sensitive when it comes to purchase decisions. More than half in MSBs say they are ‘always open to switching’ if they or a colleague spot a better deal or opportunity. Advertising has an essential role to play in fostering brand renown and loyalty.
5. Are agents of change
Thread-bare stereotypes of ‘old school’ owners committed to tried-and-tested methods fail. Nothing could be further from the truth. Amongst the busiest workshop sessions at Friday’s festival were those that focused on digital and the export market – key areas for growth and innovation where business services are so often essential, whether that be software or insurance.
Questions from the floor tested the limits of speakers’ expertise. The modern MSB is more reactive and adaptive than ever and acutely receptive to new propositions from advertisers.
Conclusion
When targeting business audiences, advertisers need to think carefully about how to get the most out of their marketing investment. And that means looking across the business landscape.
Doing so will bring home important truths: that MSBs really are the ‘muscle’ in our economy, are primed to seize opportunities, are nimble decision-makers and can be targeted effectively. At the Telegraph these are all truths we embrace.
Statistics taken from Grant Thornton’s ‘Agents of Growth’ report (2012) and YouGov’s Business Survey (2012). When defining MSBs, for simplicity this article takes 500 employees as its upper limit – although acknowledges, as the Department for Business, Skills and Innovation notes, “there is no single agreed market definition”.