Could I have that without the chips? Well, no, you can’t, actually.

A lengthy piece by Robert Peston on BBC News last night about the SocGen affair (rogue trader loses £3.7 billion on derivatives trades) illustrated by an extended visual analogy about roulette and gambling chips.

No FS client has ever bought an ad with a visual about gambling in it, no matter how neat the analogy, because at some instinctive level they know that it’s a PR disaster waiting to happen.  That being so, you might expect me to bemoan Peston’s approach.  But honestly, what do you expect?  If you run France’s second-biggest bank in a way that allows a 31-year-old with two years’ experience to bet 50 billion euros of your money on the options market, then an analogy about roulette is about the best you can hope for.  An analogy about the Keystone Cops, or a hospital for the criminally insane, or an old-fashioned Brian Rix farce, would be amply justified.

Incidentally, my mother, who knows about as much about derivatives trading as the Keystone Cops (or indeed the senior management of Soc Gen, ha ha) made a good point that I haven’t seen made elsewhere.  If SocGen are down £3.7 billion, presumably one or more other banks are up by the same amount.  If M. Kerviel was stepping far beyond his authority in making these trades, are they actually legal?  If a cashier in a High Street branch decided to give the money in the till to his or her customers, then legally the bank would be entitled to ask for it back.  (Getting it back might be another story, of course.)  Obviously the benefitting banks acted in good faith, but that’s not the point. If I buy a car that turns out to be stolen, then I have to give it back.  Doesn’t caveat emptor apply?

Just the thing to flush out “fair-weather advertisers”: bad weather.

The financial services industry has long been riddled with fair-weather advertisers.  Historically, they’ve fallen into two groups:

-  the very visible group of organisations, mostly direct insurers and fund managers, who are only interested in direct response and therefore cut back as soon as their response figures fall;

-  the much less apparent but bigger and more interesting group of organisations of all kinds who think of advertising, especially brand advertising, as a kind of mild and fairly harmless self-indulgence that can safely be undertaken when the year’s profits are already in the bag and everyone is sure to max out on their bonuses.

The first category was much reduced in numbers (though not so much in adspend) a few years ago. With no worthwhile direct response to be had in the direct investment market since the year 2000, this sector now consists overwhelmingly of the direct insurance mob.  The second category, though, has hung in there.  In a benign climate, it’s quite hard to spot because superficially it looks very similar to another category – namely, those who are genuinely committed to using advertising to build their businesses over the long term.  But when the climate changes, they quickly become conspicuous by their absence, leaving only the committed players standing.

I would guess, for example, that despite their very serious business difficulties New Star will keep spending as much as possible, whereas Jupiter will cut back significantly.  Most of the big High Street banks will cut back, but Halifax and Nationwide will keep going.   There’ll be much less brand advertising from life companies, but only small cutbacks among general insurers.  And I wouldn’t expect to see an awful lot of advertising, consumer or trade, brand or product, in the sub-prime mortgages sector any time soon.  Or not soon, for that matter.

I’m not particularly making any complaints or criticisms about all this, at least not as far as short-term behaviour is concerned.  If you were never quite sure why you were bothering to spend money on advertising in the first place, you can hardly be blamed for cutting back on it when budgets come under pressure.  It is an interesting demonstration, though, of the fact that financial services is still a long way from the “normal” behaviours of sectors of the consumer marketing economy. 


Radio advertising? I don’t like the sound of it.

The annual Money Marketing Financial Advertising awards-judging session on Tuesday, and although of course my lips are sealed I think I can say without giving too much away (or indeed without surprising anyone very much) that the radio category was a) thin and b) rubbish.

Frankly, with a few minor exceptions and one very major exception (Nationwide), it’s been thin and rubbish for years.

I can’t explain this.  Nationwide does stand there, after all, as an inspiration to us all – clients and agencies alike – shining away like a great shining beacon, or spotlight, or other shining thing, to show us what can be done.  Radio is good for verbal propositions, which are often what we have in financial services.  It’s pretty cheap to buy, and crucially – unlike TV – it’s not hard to write scripts that are quite cheap to produce.  Radio listeners are a much more diverse bunch than we sometimes imagine – even leaving aside Classic FM, it simply isn’t true that stations like Melody, TalkSport, Heart or even Virgin are the exclusive preserve of ghastly young hoodies whose only involvement with money is stealing other people’s.  And – of course I know this isn’t important – with anything half decent, you can hardly fail to win awards.

As I say, I can’t explain it – although in all honesty I probably do have to admit that we didn’t make a radio commercial in 2007.  Dunno why not, just didn’t.  But note to self:  nothing to do with the awards or anything, but I think we might recommend making a few this year.

Dreadful commercial for commercial property funds

Everyone knows that liquidity can be a problem with property funds, especially commercial property funds.  Actually, let me revise that statement:  absolutely no-one knows that liquidity can be a problem with property funds, whether commercial or otherwise.  No, let’s have a third attempt:  many people inside the industry know that liquidity can be a problem with any kind of property fund, but hardly anyone outside the industry has the faintest idea or, indeed, has a clue what “liquidity” means.

That’s why it’s so incredibly damaging when you get items on the main national news – as we did this morning – saying that another major fund manager has now stopped accepting instructions to sell units in its commercial property fund for the time being in order to tackle its liquidity problems – and there was speculation in the bulletin that other firms may be about to do the same thing.

I’m sure it’s the right thing to do in the interests of all unitholders – those who want to sell, and those who don’t.  And I’m certain that it’ll say in the funds’ KFDs that the managers have the authority to do this when necessary.  But all the same, as an advertisement for the commercial property sector, for funds generally and for financial services as a whole, it’s still another disaster.  Once again, it says we’re a bunch of crooks and shysters who can never be relied upon to keep our promises and do what we said we’d do.  Bad enough that investors in these funds are losing money hand over fist:  even worse that we’re now resorting to something no-one had ever noticed in the small print to prevent investors from getting their money out when they want it.

Yes, yes, I know it isn’t really like that, it just sounds like that on the news.  But as the saying goes, perception is reality, and the perception sucks.

Talking of which, I’m not sure if it’s perception or reality or both, but it seems to me that New Star were spending a ton of money on advertising their commercial property fund (“DIVERSIFY! into commercial property“) until awfully recently.  Were Mr Duffield and his colleagues a little slow to see the writing on the (office-block) wall?


Same old, not same old.

I’m not sure if this is yet entirely visible in the real world, but, my goodness, the life and pensions industry has fallen in love with older people recently. 

The astonishing success of Just Retirement has had a lot to do with it.  I can’t remember the exact figures, but when it was floated JR turned a private equity investment of something like £20 million into a market cap of something like £800 million in something like two and a half years, which even if I’ve got the figures completely wrong is the kind of achievement that tends to concentrate senior managers’ minds.

Arguably, it’s surprising that minds weren’t pretty concentrated already.  For firms in the savings, investment and protection game, the business case for focusing on older people has been obvious for ages:  in a nutshell, they’re the ones with all the money.  A few years ago we saw a bit of a false dawn, or possibly diversionary initiative, when in the light of the new Child Trust Fund legislation a couple of small players reinvented themselves as specialists in the children’s savings market (The Children’s Mutual, Family Investments), but the bigger money was moving in the opposite direction.  We’ve already seen GE Life focus on the retirement market, rebrand as Tomorrow and now sell the business on to LV.  And in the next year or two, we’re going to see several other small and medium sized life companies relaunch with positionings wholly or largely designed to appeal to what one firm I know of, specialists in the retirement seminar market, describes as the “sea of beige.”

What’s odd is that while this trend continues to gather pace in the life industry, I’m seeing little or no sign of it in the High Street.   In reality, the business model of the country’s remaining building soceties is to pull in savings from older, more affluent people through their branches, and lend the money on in the form of mortgages for younger, less affluent people through intermediaries.  But although some societies certainly offer very competitive “silver saver” products for the 50+ market, and one or two specialise in later-life products such as Equity Release, I haven’t seen any sign yet of any regional building societies reinventing themselves entirely as specialists in the pre- and post-retirement market.

In fact, on the contrary, in my own experience most of them are still struggling like flies in a spider’s web of lack of resource, lack of courage and lack of management capability to make themselves more “contemporary” and more “relevant” to younger customers.  They peer gloomily at data telling them that young Darren’s dad did indeed get his first mortgage from the Accrington Economic but young Darren went to a broker and finished up with the Halifax – and then wonder hopelessly what on earth they can do to appeal to young Darren when his promotional rate runs out. 

Actually, in absolute terms, it wouldn’t really be all that difficult to make the Accrington Economic relevant to young Darren, even if only because it’s quite a small organisation with a dozen branches within a ten-mile radius of Accrington and reinventing any small organisation is easier than reinventing any big one.  But the task is way beyond the Colins and Brians who run the society, and anyway – which is the point of this piece – it’s completely the wrong thing to do.

The right thing to do is, au contraire, to make the society even more relevant and comfortable for the Colins and Brians and Malcolms, as well as for the Janes and Margots and Audreys.  Ban all type sizes of less than 12-point.  Introduce a suite of autumnal corporate colours (including beige).  Offer special motor insurance discounts on Honda Accords.  Display leaflets on Savings for Grandchildren (not for children – they’re all over 30 now).  Become specialists in IHT planning.  Provide chairs where customers out shopping can have a rest.  I could go on with more or less patronising suggestions, but I think I’ve made my point.

I really, really worry about the prospects for the remaining regional building societies.  Only a tiny handful seem to have the vim and vigour to execute a survival strategy – the large majority look like brain-dead organisations that will come to the end of their natural lives at approximately the same rate as their existing customers will.  Part of the reason for this is that they are horribly resource-constrained.  But in truth, that’s a very small part.  The much bigger issue is that most are still looking for a survival strategy – if indeed they’re looking at all – in completely the wrong place.  Forget younger and funkier.  Be glad to be grey – or beige.

Looks like Egg’s had its chips

Sorry, actually I really hate headlines like that with mandatory puns in them.  (If you Google “British Airways” and “turbulence,” you’ll get about 11,000 results, of which 10,999 are from newspapers’ business pages reporting falls in profits or problems with the pension fund.)

Anyway, after Citibank bought Egg from Prudential, we watched and waited – more perhaps in hope than expectation – to see what they’d do with the brand.  And now we know:  they’ve decided to emasculate it.

The new Egg Card commercial is one of those glum pieces of faux creativity from exactly the same stable as MBNA and Capital One’s ghastly What’s in your wallet?  If you haven’t seen it, a dophin jumps through a supered figure 0 to highlight Egg 0% balance transfer promotion (3% handling fee applies).

It’s difficult to say quite what’s wrong with it, but I guess the two obvious points are a) it’s such a feeble and sanitised remake of the wonderful commercials where the Richard Widmark-like CEO has gerbils fired from a cannon through the “O” of Outpost to help us remember their name, and b) although not hugely surprising, it’s still depressing to see an Egg commercial with every milligram of irreverence and originality and silliness hoovered up and replaced by hard-faced financial calculation (3% handling fee applies).

Of course I know that in bleating on about this I’m just being a sad old hippy.  For ten years or more Egg was attitude-rich, profit-poor.  I expect Citibank Egg will make more money out of their dolphin and 3% handling fee than Prudential Egg ever made out of Zoe Ball, Talk To The Glove, What’s In It For Me and Tested On Guinea Pigs. 

Oh well.  Looks like First Direct will be carrying the financial services corporate-maverick flag all by itself from now on.

Just what’s so wrong with matching luggage, anyway?

Last night I belatedly got round to reading one of those special supplements published with Campaign.  This one was about a month old, and like most of them it was all about Integration. 

The format was much the same as ever – a dozen or so rather baffled and confused-sounding pieces by luminaries from very large and very un-integrated creative agencies, media agencies and media owners.  Contributions about integration from people who have so little understanding or experience of it always make for an unsatisfactory, if at times accidentally amusing, reading experience – a bit like wine guides written by teetotallers, or those 16th century drawings of elephants by people who knew nothing at all about them except the name and the fact that they were large and grey – and whenever I read these things I always wonder why they don’t include at least, say, one or two contributions from people who are entirely at home with integration and have been practising it for many years (23 years, in my own case).  Too obvious, I suppose.

There are various concepts and expressions that always turn up in these publications, and one of the pleasures of reading them is ticking them off as they make their inevitable appearances.  Perhaps the most inevitable of all is a tirade of disparaging remarks directed towards what all the writers agree is the principal snare and delusion in the integration game, the one universally known as “Matching Luggage.”

This disastrous error, as I understand it, consists of thinking that a brand’s interactions with its market can be integrated by making them all look the same as each other.  It is almost always raised – and disparaged – by people from big TV-based advertising agencies, who want the freedom to come up with ideas for commercials without having to worry about whether there is any way that they can be noticeably connected to press ads, or posters, or online advertising, or direct mail campaigns, or in-store activity, or all the other miserable and depressing forms of communications activity that the big TV agencies can’t be arsed to think about.

Such was indeed the case in this Campaign supplement, where the task of disparaging matching luggage fell to Lucy Jameson, who has a very impressive job title on the planning and strategy side of the big TV agency DDB.

I was pleased, but not hugely surprised, by this.  Even by the standards of big TV advertising agencies, DDB is in my experience quite spectacularly uninterested in any form of communications activity other than TV commercials. On three or four occasions in recent years, we’ve been able to pick up quite sizeable press, print, brand development or direct marketing accounts  simply because DDB, as the TV advertising agency of the clients in question, simply hadn’t noticed that these other activities existed and so hadn’t thought to mention or introduce them to the other parts of their own group that specialised in them.

But what I did find myself wondering as I read this self-serving nonsense was just why “matching luggage” has obtained such universal currency as the shorthand for ineffective integration.  What exactly is wrong with having matching luggage, anyway?  If we accept the (extremely dubious) analogy that a person is to their luggage what a brand is to its communications, surely a person who has a set of matching luggage – be it elegant Louis Vuitton, or practical Samsonite, or nobby Mulberry, or trendy Mandarina Duck, or whatever – is giving clearer and more integrated messages about who they are and what they stand for than a person who travels with, say, one of each of the above.

I entirely accept that a person could give a clear brand message with un-matching luggage.  I imagine, say, a crusty old colonel’s collection of miscellaneous old leather suitcases and holdalls displaying torn and faded stickers from long-vanished hotels in remote corners of the Empire. Nothing confusing about that.  But why exactly do Ms Jameson and her fellow-disparagers think that the matching variety of luggage is so clearly not the way to build clear and single-minded perceptions?

I can’t answer this question.  But I can end with a serious word of warning to travellers Googling “matching luggage” in search of new suitcases:  about half the entries in the Top Ten link to big-agency planners spouting their usual rubbish about integration.  is good for suitcases.

Damn. I find myself confused by the facts once again.

When it comes to undermining your favourite preconceptions and prejudices, there’s nothing to beat facts.  Facts can disprove more or less any pet theory you may have about life – like, for example, how everything is getting more dangerous.  This is obviously and indisputably true until you have to take into account the facts which show that there’s no more knife crime than there ever was, no increase in “stranger danger” for children, no increase in robbery and mugging, the number of people killed and injured in car, train and plane crashes at an all-time low, etc etc etc.

But if there’s one preconception that you would have thought would have been safe from statistical torpedoes like these, it’s the idea that People Generally Have Gone Off Pensions In Recent Years.

PGHGOPIRY is more than an idea, it’s a self-evident truth.  There’s been Equitable Life, and pensions mis-selling, and the problems with the company schemes of bankrupt companies like ASW, and there’s been the stockmarket crash, and the corresponding buy-to-let boom, and there’s been Gordon Brown’s tax grab on income earned within pensions schemes, and the Stakeholder fiasco, and the closing-down of final salary schemes, and the rise and rise of the vulture funds, and, well, absolutely everywhere you turn  you find nails being knocked into the pensions coffin.

Except that in the Observer’s desperately boring interview with Gordon Brown over the weekend, one figure jumped out at me:  over the last ten years, according to GB, the total amount invested in pension schemes has doubled.  (I would say from what and to what, but unfortunately I’ve forgotten.)  Stock market growth can account for some of it, and inflation for some more, but I’m pretty sure that most of it must be down to something else.  Like, for example, millions of people putting more money into pension schemes.  Which, I have to say, isn’t what I thought had been happening.

Bloody facts.  There’s nothing quite like them for bursting your favourite bubbles. 


Blog thwarted by spam – retirement plans by ignorance

Sorry it’s taken a while to resume normal blog service, but it’s taken a couple of days to find a way past a daunting obstacle.  In the time since my last entry, the endless torrent of spam flooding in had overwhelmed the capacity of this software, so that, frustratingly, it wouldn’t let me scroll down to the bottom of the incoming-spam lake, where the “delete spam” control is to be found.  The only solution I could find was to use a control called “delete this message only” on just over 130 individual messages, until the bottom came back into range, and I could use “delete spam” to get rid of the other 250.

This was very boring, and also I must say very unpleasant.  After the best part of an hour going through this grubby stuff and deleting it message by message, you feel that at the very least you need to go and wash your hands, and ideally go for a shower.  I love the Internet and think it is a huge privilege to be living and working during the era of its development, but the worst thing about it is the way that it forces you to recognise some of the most depressing aspects of human behaviour.

Anyway, the spam blockage is now cleared and I’m now left only with the trifling task of finding something new-year-related to write about.

From my point of view, one significant thing about 2008 is that my birthday this coming October will be what’s known in the trade as my SRD, or Selected Retirement Date.   This doesn’t, of course, mean that I’ll be retiring.  It means that many, many years ago, when I was young and optimistic and still had hair, I had to fill in a pensions application form specifying when I’d ideally like to retire:  and at that time, I imagined that I would have made more than enough money to pack it in at 55 and spend the subsequent years following England cricket and football teams around the world to witness their triumphs in international tournaments at first hand, retiring in the evening to my luxurious hotel to wash and blow-dry my bouffant hairstyle.

Of course a huge amount of reality has gatecrashed these daydreams, and in the event I’m not sure which is in the more dispiriting state – my finances, English cricket and football, or my hairstyle.  But apart from making me feel old, the fact that I could start drawing my pension later this year does concentrate my mind on just how astoundingly little I know or understand about my pension arrangements.

I think that rather than go on about this now, I’ll return to it later – for one thing it’s lunchtime, and for another several people have told me that these blog entries look unappealingly long when they get much beyond this length.  But there is a theme here, not just a self-critical whinge:  if someone as closely involved with financial services marketing as me understands so pitifully little about his own arrangements, then a) what kind of state must other people be in, and b), assuming the general situation isn’t good, whose fault is it?

I’ll return to this soon, unless of course I get spamblocked again.