Top 100 Mailers: Mail must prove it is the chosen channel
This year’s top 100 mailers results may be disappointing but there is room for optimism.
What a difference a year makes in direct marketing. Last year we introduced the industry’s first league table of the top 100 spenders in direct mail in a slightly bullish mood. “Can news like this get any better?” we asked, as a prelude to a table of figures that would make any direct marketer sit up straight. How things have changed.
If last year’s table was all about increase in spend, the big news for spend between January and December 2003 is the number of companies who have decreased their budget on mail. In 2003 the number of companies that spent less in the direct mail channel has leapt to 33 – up from 15 in 2002. Worse still is the overall picture. This year 26 companies – more than a quarter of the table – spent less in all of our channels measured (mail, door drop, insert, press and internet) overall. Of these, 21 reduced their mail spend as well. Of the five that spent more in mail while reducing overall spend, for two of these, the increase in mail spend was less than 150,000.
WORRYING TRENDS
If this wasn’t worrying enough, another trend is also emerging – that of the company which reduces its mail spend despite increasing its total direct marketing spend. This year’s table has 11 of these companies compared to only three the year before, and some of these figures show startling disparities. Take Direct Line, down in mail spend by £1.5m but up in overall spend from £28m to £42m. AOL also jumps out. Its mail spend is down by 11 per cent while spend in other channels has nearly doubled from £18m to £33m.
The resilience that seemed to characterise 2002 appears to have evaporated. As we discuss later on in this report, the bottom has dropped out of the catalogue market as consumers switch to the internet, and financial services are under strain despite being well represented in the top 100 table. The news is not at all heart-warming.
OVERALL SPEND UP
So why the sense of gloom? On the face of it, 2003 seems to be anything but disappointing. Spend on direct mail by this year’s top 100 was up again, teasingly shy of the magic £1bn mark (£969,931,713). This is still astounding given the entire size of the market is no more than 12 times this. While spend was up by only 9.2 per cent among the top 100, this is small only in comparison to 2002 (where it was a whopping 28 per cent), and it is still double the industry average. Furthermore, the minimum requirement needed to enter the table also creeps quietly up. It was £2.8m in 2002, it’s nearly £3m now.
Yet 2002, it seems, was an extraordinary year. Back then, 85 of the top 100 increased their spend in mail, with just a dozen spending less. Mail as a proportion of all direct spend rose by five per cent. 2003 is far from repeating this, and maybe after such revelry in the first top 100 report, it was inevitable that it was to be followed by a sharp dose of realism. In 2002 the industry was bucking commentator’s predictions of a tough year. This year it seems (for spend between January-December 2003), the predictions were spot on.
WHAT THE FIGURES MEAN
As with all statistics, the devil is in the detail, and 2003’s figures are no exception. This year’s top 100 is a multifaceted read. Some good, some bad, but the majority, it seems, definitely not great. The number of new entrants was 24, two less than last year. Most of these are in the lower half – something which seems to characterise this table – with lots of jostling around where an increase or decrease of spend by only a few £100,000 will see companies enter or vanish from the table (14 of the bottom 20 were new, all within £800,000 of each other).
But these figures do make troubled reading, and if it wasn’t for the breakaway performance of the top 10, the rest of the table would read substantially worse. This year’s top 10 have really bolstered some of the rot. They spent more than one third of the tota
