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feature
story
Current efforts to create a national marketing campaign are the latest
in a long tradition of industry promotional activities.
by Amy Bauer
 In
addition to the efforts of businesses throughout the floral industry to
raise awareness of their own offerings and services, the industry
consistently has been searching for the formula to tap into those
elusive shoppers who aren’t choosing flowers, thereby increasing floral
consumption across the board. Different tactics have been used over the
years. Today, a group is closing in on determining whether another
attempt at a unified national promotion of fresh cut flowers and greens
is the answer to raising demand. To better understand their efforts, we
look at past and present promotional, advertising and public-relations
campaigns.
PAST
american floral marketing council
The American Floral Marketing Council was formed in 1969 as an
independent committee affiliated with the Society of American Florists (SAF)
to boost flower and plant sales between major holidays. This voluntary
effort included nationwide radio advertising, billboards, decals on
floral trucking company vehicles, and appearances by spokespeople on TV
news and in radio and print interviews. Local florists could employ
materials such as posters, fliers and radio scripts to engage their
local communities.
A voluntary collection system was set up where retail florists could
contribute 1 percent of outgoing wire orders; wholesalers 0.2 percent of
gross sales; suppliers 0.5 percent; and growers 0.25 percent of sales at
the farmgate. A committee of volunteers from a cross-section of the
industry oversaw the council’s work.
Jennifer Sparks, SAF vice president of marketing, says AFMC’s annual
budget was $5 million at its peak in the early 1990s. While direct
measurements of the effects of its advertising messages are difficult to
track, Ms. Sparks says, “The industry heard the commercials and reported
that their customers were reacting to them.”
Twenty-seven years after its founding, the council was merged into SAF
following the implementation of a mandatory national marketing program
called PromoFlor. With wholesalers and growers paying into this new
marketing pool, their contributions to AFMC waned. “While the AFMC name
went away, the function of the program did not,” Ms. Sparks emphasizes.
Where PromoFlor was creating a national advertising identity, SAF
continued AFMC’s lead with nationwide public-relations programs and
local marketing materials.
floraboard
One earlier effort at tapping into a mechanism for a mandatory
nationwide promotion was dubbed Floraboard. This campaign, in the early
1980s, encompassed not only cut flowers and foliages but also potted
plants. Using mechanisms available under the U.S. Department of
Agriculture (USDA), this effort proposed assessing domestic growers and
importers of all of these floriculture products 0.5 percent of their
sales to fund industrywide research and promotion, increasing that
amount in 0.25 percent increments annually up to a maximum of 1.5
percent. Producers or importers with sales less than $100,000 were to be
exempt. In order to be implemented, Floraboard required a “yes” vote
from two-thirds of the assessable companies, representing at least
two-thirds of the assessable companies’ volume. In a 1984 referendum,
the Floraboard proposal was rejected.
promoflor
Less than a decade later, a similar effort began. Dubbed PromoFlor, this
campaign was limited to cut flowers and foliages and identified
“handlers” as the collection point for its 0.5 percent assessment.
Handlers were defined as wholesalers, growers or importers who sold cut
flowers or foliages to retailers. Those with annual sales less than
$750,000 were exempt.
PromoFlor took advantage of the option under the USDA of a delayed
referendum, beginning its collections and implementing its advertising
program before an initial vote of the assessable companies. The hope was
that a successful program would spur a positive referendum vote, as
opposed to the Floraboard result. PromoFlor was set in motion with its
passage by Congress in 1993, and by the summer of 1995, a PromoFlor
Council was established. Annual revenues were projected at $10 million
to $15 million, according to a story in the September 1995 issue of
Florists’ Review.
In February 1996, PromoFlor unveiled its national advertising campaign
featuring “spokesbee” Buzz and his “Think Flowers” message, which played
in cable TV and radio ads during nonholiday periods. Though consumer
response to the promotion was positive, it didn’t enjoy the full faith
of the industry. In PromoFlor’s first industry referendum, in June 1997,
58 percent (or 422) of the assessable entities voted against continuing
the program.
Prior to the referendum, an analysis by economist Ronald Ward, of the
University of Florida’s Institute of Food and Agricultural Sciences,
estimated a $6.62 return for every dollar invested in the campaign and
called the public’s recall of Buzz “phenomenal.” In a Florists’ Review
story in August 1997, following PromoFlor’s defeat, industry members
pointed to the mandatory nature of the assessments and the fact that a
limited segment of the industry was responsible for those assessments as
part of its downfall.
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PRESENT AND FUTURE
saf fund for nationwide public relations
After PromoFlor’s defeat, promotional efforts for the industry as a
whole were more scarce. “SAF was still promoting flowers with a limited
budget out of member dues,” Ms. Sparks explains, “but with increasing
costs, our budget became more limited as time went on. Therefore, in
2000, some forward-thinking industry members put their heads together to
come up with the SAF PR Fund.”
The SAF Fund for Nationwide Public Relations was officially established
in 2001 and is a voluntary effort to build positive floral messages in
the context of news. Ms. Sparks says approximately $400,000 has been
raised each of the past five years through the support of nearly 2,000
retailers, wholesalers, suppliers, importers and growers. On a voluntary
basis, retailers contribute 10 cents from each outgoing wire order,
collected through FTD and Teleflora; wholesalers contribute 5 cents per
case of hard goods, collected by participating suppliers; hard-goods
suppliers match the wholesaler collections; and importers and growers
make annual or monthly contributions.
“So far, the effort has funded four consumer research studies and six
public-relations programs,” Ms. Sparks details. As of Feb. 23, 2007, the
fund had counted more than 744 million consumer impressions (seeing or
hearing the message), including 59 national magazine placements and TV,
radio, newspaper and online coverage in 160 local markets, which Ms.
Sparks says translates to an advertising value of more than $12 million.
Local marketing kits released annually to SAF members help florists
capitalize locally on the PR messages.
“Our key strategy is to use third-party experts as spokespeople to add
credibility to the floral message,” Ms. Sparks relates. “Having
world-renowned university researchers talking about scientific proof of
the benefits of flowers has been a key motivator for securing nationwide
coverage.”
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current steering committee |
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Established in spring 2006, the
Floral Marketing Funding Initiative Coalition consists of the
following organizations, which are represented on the steering
committee and have given financial support to the effort.
The Society of American Florists (SAF)
FTD Group, Inc.
Teleflora
Asocolflores, the Colombian Association of Flower Exporters
Association of Floral Importers of Florida (AFIF)
Flower Promotion Organization (FPO)
Produce Marketing Association (PMA)
American Floral Endowment (AFE), which is prohibited by tax
laws from contributing financially
American Institute of Floral Designers (AIFD)
California Cut Flower Commission (CCFC)
Officers are Chairman Harrison “Red” Kennicott, aaf, Kennicott
Brothers Company, Chicago, Ill.; President Charles F. Kremp 3rd,
aaf, Kremp Florist, Willow Grove, Pa.; Treasurer Clay Sieck,
Sieck Floral Group, Baltimore, Md.
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flower promotion organization
The Flower Promotion Org-anization (FPO) is an alliance launched in fall
2000 to take the proceeds from anti-dumping duties assessed on offshore
flower growers and use those to grow the U.S. market for cut flowers.
Illegal dumping, according to the U.S. Department of Commerce, is when a
foreign producer sells a product in the United States at a price below
its sales price in the country of origin or at a price lower than the
cost of production. A settlement spanning August 1999 to January 2002
put the duties imposed as a penalty into the creation of the FPO. With
an agreement by U.S. growers to add their own dollars to this pool and
Colombian growers agreeing to continue contributing after the penalty
duties had expired, the program was extended 21 months. In January 2004,
the parties agreed to another extension, through December 2007.
The FPO’s initial emphasis was campaigns comprising TV and radio ads in
Chicago, Ill.; Philadelphia, Pa.; San Diego, Calif.; Detroit, Mich.; and
Houston, Texas (with a sixth city, Minneapolis/St. Paul, Minn., added
later). A 2004 analysis by economist Mr. Ward noted, “The promotions
have impacted the demand for flowers through increasing buyer frequency
and, to some degree, attracting additional buyers.” Investments up to
that point in the advertising were $6.84 million, according to the
study, with 2.02 million added transactions directly attributed to FPO
promotions.
Lacking funds to duplicate these results nationwide, the FPO focused its
efforts in mid-2004 on public relations. “Although you don’t get the
immediate high response from the consumer to public relations that you
do from radio and TV, it’s more sustainable,” Executive Director Stan
Pohmer relates.
The FPO has teamed with SAF in recent years, contributing $312,500 in
2006 to research the power of flowers. The SAF/FPO Alliance conducted
the “Home Ecology Study” and the “Flowers in the Workplace Study,” both
led by Dr. Nancy Etcoff, of Harvard Medical School and Massachusetts
General Hospital. In 2007, the alliance (with an additional $263,000 in
funding, according to SAF’s Ms. Sparks) will be sharing the results of
the workplace study with national media and will continue to tout the
results of its “Home Ecology Study.”
On April 21, 2006, the FPO board was notified that the California Cut
Flower Commission (CCFC), the main vehicle through which U.S. growers
were directing funds to the FPO, would suspend its financial support
“due to CCFC’s internal budget considerations and changes in its
strategic direction and focus,” according to a news release from the FPO.
Colombian growers followed suit. Mr. Pohmer says the FPO is operating
from its reserves, which he says can support its efforts for a number of
years.
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statewide marketing |
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The California Cut Flower
Commission (CCFC) is a program that has been in existence
since 1990 at the state level to promote the sale of
California-grown cut flowers. The commission operates on a
budget created by a 0.5 percent assessment on California cut
flower growers whose sales exceed $500,000. In 2006, that
represented about 70 qualified growers.
The CCFC, which is overseen by the California Department of Food
and Agriculture, was granted another five years in operation
after a majority of assessed growers (about 57 percent) voted in
November 2005 to continue the program. Regular referendums are
conducted to keep the program in place.
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current mandatory effort
For the past year, organizers have been gauging consensus for another
attempt at a nationwide floral marketing plan to increase demand for cut
flowers and foliages. Formed in March 2006, the Floral Marketing Funding
Initiative Coalition has settled on a basic outline, tapped a
development committee, drafted a suggested promotion order under the
USDA framework and is collecting feedback.
Under the coalition’s draft of the order, domestic growers and importers
of cut flowers and foliages would be assessed 2 percent of gross sales.
Those with sales less than $100,000 would be exempt. An initial vote of
the assessable companies is proposed, where “yes” votes representing a
majority of the assessable companies’ dollar volume would be required
for the promotion order to take effect. A Cut Flowers and Cut Greens
Promotion Council—six importers and six domestic producers nominated by
the industry and appointed by the agriculture secretary—would oversee
the promotional activities. Coalition president Charles F. Kremp 3rd,
aaf, owner of Kremp Florist in Willow Grove, Pa., emphasizes that the
details aren’t set in stone.
Organizers estimate $20 million would be raised annually at the 2
percent assessment level, based on $1 billion in industry volume—$650
million in imports and $350 million in domestic production, according to
Mike Mellano Sr., part owner of California-based grower and wholesaler
Mellano & Company and a co-chairman of the coalition’s development
committee.
Mr. Mellano and Gustavo Moreno, president of Miami, Fla., grower and
importer Vistaflor International and co-chairman of the development
committee, have been meeting with growers, importers and other
interested parties in open forums in California and on the East Coast.
“What we’re hearing from the growers and the importers is that they’re
very concerned that they will not be able to pass on the cost of this
program in their pricing,” Mr. Mellano related in late February. Mr.
Kremp at the time said that growers and importers were asking for a
line-item charge that could be passed on to buyers, while buyers were
refusing such a line item, saying instead that growers and importers
should build the increase into the price of the product. Another issue
that organizers found in their meetings was a high level of support from
traditional retail florists, who don’t have a means to participate
directly in the promotion order.
Expoflores, the Ecuadorian Flower Growers and Exporters Association,
expressed its displeasure with the proposed order in a statement on its
Web site, www.expoflores.com. “If this cut flower order is enforced, the
Ecuadorian growers will believe, rightly or wrongly, that they will
receive lower prices for their flowers,” the organization wrote, going
on to say that should growers have to absorb the cost of the assessment,
some likely would be forced to close. “Moreover, as neither Ecuadorian,
Colombian nor other offshore growers have a vote regarding this cut
flower order, Expoflores believes that this order amounts to taxation
without representation,” the association wrote.
Mr. Kremp, in a news release answering Expoflores’ points, writes that
Expoflores was among those associations invited to join the steering
committee but declined. He says Expoflores’ concerns, that the cost of
such an assessment would be passed on to consumers, mirror those he is
hearing from others. “Their perspective has been well represented by
Asocolflores [the Colombian Association of Flower Exporters], AFIF
[Association of Floral Importers of Florida] and FPO. Since the issues
are not solely felt by offshore growers, CCFC also has made many of the
points raised by Expoflores,” Mr. Kremp writes. He also notes that the
assessment would be applied equally to all cut flowers and foliages sold
in the United States and only to those sold in the United States.
Both Mr. Kremp and Mr. Mellano said in late February that if the vote
had to be taken at that time, the promotion order as written wouldn’t
pass. But both said the coalition wasn’t giving up and still was
assessing options to address the industry’s concerns. Mr. Kremp said at
that time, with more meetings scheduled throughout March, that he
anticipated knowing by mid-April whether an acceptable course could be
achieved. “By June, we’re going to know if we were successful in
convincing the industry they should get behind this or if the industry
just says, ‘We’re not going to do it,’” he says. “There’s no rush. If we
see that there’s a dramatic change that would work, then we start over
again.”
Wilja Happé, owner of Brand Flowers Inc. in Carpinteria, Calif., and new
chairman of the CCFC, noted one of her goals “is to see if I can find
the support within the California industry” for the initiative. She says
grower sentiment expressed at the California town hall meetings has
shown “that we are all 100 percent in agreement that there has to be
more funds available for promotion of cut-flower consumption in the
nation ... but we are not all in agreement yet on who should foot the
bill.”
Mr. Mellano stressed that consensus is key before moving to a vote. “If
it appears that there is no chance for it to pass, we do not want to go
to the USDA and ask for an election,” he says. The USDA estimates that
the cost for a new marketing program, including both administrative fees
for the startup process and for conducting the actual election, can
range from $75,000 to $200,000. While those costs will be reimbursed
from the assessments if the election is successful, a bond is required
to cover such costs if the election should fail.
Mr. Kremp pointed to the declining number of U.S. floral buyers, pegged
at 28.3 percent of buying households in 2005 according to the
“IPSOS/American Floral Endowment Consumer Tracking Study.” That was a
decline of 1.1 million households from 2003. “If any other industry
would see that 72 percent of the population do not buy their product,
they would be out there spending $100 million or so, and they’d see a
great result,” Mr. Kremp says. “We just sit back and beat each other up,
and it’s a shame.”
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ONLINE EXTRA |
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commodity study
Efforts like those of the Floral Marketing Funding Initiative
Coalition fall under the Commodity Promotion, Research and
Information Act of 1996, a federal law that provides a vehicle
for industry collections to support commodity marketing efforts.
Such well-known campaigns as those of the beef industry (“It’s
What’s for Dinner”) and pork industry (“the Other White Meat”)
as well as the American Egg Board (“The Incredible, Edible Egg”)
and state efforts like the California Milk Processor Board (“Got
Milk?”), which later expanded nationwide, are similar examples.
A September 2006 study, the Floral Industry National Marketing
Campaign Feasibility Report, was commissioned from researchers
at The Wharton School at the University of Pennsylvania by the
floral coalition to assess such programs and the potential for
the floral industry.
The study notes returns per dollar spent for other national
mandated marketing programs, including $5.80 for the beef
industry, $15.50 for the pork industry, $4.30 for the egg
industry and $6.26 for the dairy industry. The study also
assessed potential net returns to the floral industry over a
five-year period based on potential advertising levels from $15
million to $55 million. Potential net returns ranged from $122
million industrywide to $255 million industrywide, but the
authors noted “actual returns will depend significantly on
execution and may vary dramatically.”
The study’s authors noted in their summary, “All of our analyses
suggest that an integrated national marketing campaign for the
floral industry would effectively expand revenue and yield a
positive benefit-to-cost ratio. While we believe the industry
should execute a national marketing campaign, it is critical to
conduct further research addressing proper execution,
measurement and evaluation of such a program.”
For more about commodity promotions, resources include:
Agriculture Marketing Service, U.S. Department of Agriculture,
www.ams.usda.gov
American Beef Council,
www.beefitswhatsfordinner.com
The American Egg Board, www.aeb.org
California Avocado Commission,
www.avocado.org
California Milk Processor Board,
www.gotmilk.com
California Raisin Marketing Board,
www.calraisins.org
Cornell Commodity Promotion Research Program,
http://commodity.aem.cornell.edu/
National Pork Board,
www.otherwhitemeat.com
The Popcorn Board,
www.popcorn.org
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You may contact Amy Bauer by e-mail at
abauer@floristsreview.com
or by phone
at (800) 367-4708.
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