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Continued: Deluxe will rely on multimillion-dollar advertising campaign

  • Article by: DEE DEPASS , Star Tribune
  • Last update: December 30, 2012 - 1:54 PM

Deluxe Corp. is so set on revamping its stodgy image as a checkmaker that it's launching a major ad blitz to show all small businesses that it is ready to serve them.

The exhaustive campaign started Sunday  with two ads during the Vikings-Green Bay football game. A third TV spot appeared later that night during "The Office."

"You get more bang for the buck that way," said Lee Schram, CEO of the media-shy, Shoreview-based check and small-business services company. "With the Super Bowl [ads], you get one and you're done. We wanted more than that."

Much more, in fact.

Deluxe will be prominently featured on HGTV, ESPN, Discovery, the Travel Channel, the History Channel and Minnesota Public Radio. In January, a flurry of magazine ads will hit Sports Illustrated, Entrepreneur, Fast Company and Outside. Commercials then strike the Time.com, Google and Bloomberg websites.

The goal is to replace Deluxe's stale image as the purveyor of paper checks with the fresh impression that it's a solution genie for small businesses needing forms, logo and graphic designs, digital printing, software or Web and marketing services.

The company is relaunching its interactive website and retraining an army of call-center reps to respond to inquiries generated by the advertising blitz. It's all part of a carefully crafted plan by Minneapolis-based ad agency Fallon. "These guys have done a marvelous job helping us think through all the places we should be," Schram said.

Fallon, known for creating ads that provoke laughter, tears or lumps in throats, created three 30-second TV spots for Deluxe. They portray Deluxe as a friend of the dedicated business owner who shouldn't have to waste time on printing or other administrative duties that have little to do with the entrepreneur's real passions.

One TV spot features a veterinarian who works on elephants, rhinos, tigers and other large animals. Another has a father-daughter cooking duo who make Chinese dumplings. The last shows a bike tour operator. All feature music, voice-overs and cater to the sentimental, thought-provoking or quirky.

If all goes as planned, Deluxe will see sales pick up. The company only had a 1 percent bump in 2011 as sinking check revenue hurt the bottom line.

Check revenue sank 3 percent last year, while revenue from its smaller business services unit rose 6 percent. Company officials hope the ads will help change the mix.

Chris Lawrence, Fallon's director of account management, said the ad blitz may be a wild idea for Deluxe, but "will put them on a national stage in a very high-profile environment. And it will let people know that this is not the Deluxe they know from their past."

That's no small feat.

Despite a transition plan that is more than six years old, Deluxe is still synonymous with the paper check. Never mind that credit and debit cards, Automated Clearing House payments and automatic billing have grown more popular. Still, checks make up 61 percent of the $1.4 billion that Deluxe makes annually by catering to banks, consumers and businesses.

Schram wants to see checks shrink to 45 percent of sales and for small-business revenue to absorb the gap. The omnipresent and offbeat ads that target football fans, outdoor enthusiasts and passionate business risk-takers should appeal to the gung-ho and finally broaden Deluxe's image beyond checks, he insists.

"I understand the logic of that," said Michael Porter, director of the University of St. Thomas Master of Business Communications Program. "If everyone expects you to be in the rut, and you are not in the rut anymore, then you may have to give people a slap in the face to show them, 'Hey, we are over here now!'"

Porter said Deluxe "has been actively evolving for years. But the essence of that evolution has still not been captured by the marketplace."

John Kraft, an equity research analyst with D.A. Davidson & Co, followed Deluxe for eight years and never heard of it taking to the airwaves beyond an occasional sponsorship plug on the radio.

"From an investor perspective, I am kind of excited about this advertising. This may help change their image in the investment community too. I mean, [at $30 a share] this is an inexpensive stock because people believe that checks are going away and this is a dying company," Kraft said.

While Deluxe spent the last seven years shutting printing plants and morphing from check printing to broader business services, "there are certainly investors who don't know that," Kraft said. "Lee [Schram] has been talking about this for years until he is blue in the face. But it takes a long time to get a legacy image changed."

Others are skeptical. Kraft said investors will want to know, "How much is this going to cost?"

Schram will say only that the campaign is in the "multimillions." He insists it's worth it.

"I'm excited. Thrilled. I think we all are," he said, noting that the campaign will energize workers and enhance their pride in a once-staid firm.

Standing on a landing overlooking Deluxe's corporate lobby, Schram recently pointed to a giant display case below. Trophies of a different era gleamed under fluorescent lights: old check printing plates, ink, boxes of checks, financial ledgers and other decades-old remnants belonging to the founders.

Strolling down the stairs and into the glass-encased and glossy public face of the lobby, Schram showed off giant portraits of Two Fat Guys barbecue sauce makers, the owners of Great River Running stores and other small businesses for whom Deluxe has built websites, designed logos and coached into being better companies.

"This is what we call the new Deluxe," he said. "And it's a big thing."

Shareholders may be the ultimate judge. Deluxe's stock has returned to the nearly $30 price it had in 2008.

After a decade of printing plant closures, thousands of layoffs and several business spinoffs, sales are slowly climbing and the company is hiring again. Sales hit $1.4 billion in 2011. That's up from $1.3 billion in 2009, but still off from the $1.7 billion reported in 2006, before some business spinoffs and strategic acquisitions.

Last year was pivotal. It was the second year of profitable revenue growth since Deluxe bought New England Business Service in 2006. This year is poised to become year No. 3.

"Our transformation is well underway," Schram said.

Dee DePass • 612-673-7725

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