Dramatic fall in direct mail spend
Judging by the latest research there’s no room for industry complacency about the rest!ience of direct marketing in the face of a recession. New figures from media spend monitor AC Nielsen NlIS reveal there has been a fall in spend by the top 10 companies year on year to May 2001 of £50 million
Despite direct mail spend last year show inga healthy rise of 1 per cent on 1998/1999, figures from June 2000 to May 2001 show a year on year fall ofjust under 10 per cent in spend. from £1.4 billion to £1.27 billion.
TV and radio spend also fell in this period, while outdoor,cinema and press rose slightly. Overall, combined media spend for the last 12 months dropped by 0.7 per cent.
Treadingcarefully
much of this fall is undoubtedly due to trepidation in the face of the much-hyped reccssion, but the drop is also due to new strategies adopted by the major spenders. Integration is the word of the moment — in many cases it offers marketing departments freedom to ex-periment. If a campaign gets bad results it is balanced by results from money spent in another area. Also, in the digital arena there are many clientcompanies who have been slow to find their feet and are playing it safe and continuing with an existing strategy.
AC:Nielsen IMS product manager Paul Dunn says: “Up to now there have been only year on year increases in direct mail spend. It will he interesting to see the impact of (inline spending on these volumes when we launch the service in September.”
The most significant organisation to have fallen down the spend rankings is Procter & Gamble. The company offered its standard “no comment” response in relation to its drop in spend on mail overall from
£28.5 million to £13.85 million in the last 12 months, adding:
“Direct mail is one of a number of media we use in the mix, and the company operates on a global basis.” Vithout doubt. FMCGs favour TV and press, spending £990 million on the former and £206 million on the latter in the last 12 months, against a mere £56 million on direct mail,
MBNA Capital One and BCA continue to top the spend table. Lloyds TSB has upped its I)1 spend and moved from tenth position last year to fifth this year. Spokesperson Kirsty Clay explains this is due to the launch of its loansdirect service. “The benefit of direct marketing, not included in response rates, is
building brand awareness, and this has been a contributing factor to the success of loansdirect.” she says.
Consolidation in the financial marketplace is a cause of the subtle shifts in much of this tal)le. Halifax launched Intelligent Finance last year and has entered the spend table at seven and 24 as a result. Royal Bank of Scotland’s acquisition of NatWest resulted in belt tightening at all levels. Barclaycard announced its sponsorship of the Premier League and as a result has conserved budgets for a big push in the second half of the year — hence its fall from fifth biggest spender to 18th. “Ihe company has not changed its stratev much in the last few
ears and has seen record recruitment savsaspokesperson.
Analysis of mail volumes by DMIS reveals that an increase between April and June year on year of 4.5 percent was largely driven by a rise in financial services mailings. Volume in the ‘banks/building societies/other financial’ category rose from 209 million items to 228 million — a nine percent increase. Mailings from insurance companies increased by just over four percent.
Decline in volume
Some sectors showed a year on year decline in mailing volumes, notably the retail sector where there was a near seven per cent drop to 80.9 million items. D ITS also reveals an interesting contrast in volumes by socio—demo— graphic sector. The affluent ABs actually received considerably fewer mailings year on year — volume was down nearly 15 per cent — while DEs saw a significant increase, with volume up 25.8 percent in the same AprilJune period.
Richard Earshall, director of agency TMW, says: “I)ireet mail volumes have stood tip well. but we have noticed changes in terms of targeting: there has been a shift from L)lanket direct mail to smarter targeting, with clients moving towards behind-the-scenes segmentation and ins estment in new data systems,"
Commenting on the DMIS results, managing director Jo Howard—Brown, savs “The fig— ores are encouraging in that they show continued growth, although it comes as no surprise to see that the growth rate is slowing given the signs of a slowdown in the industry as a whole. The third and fourth quarter statistics will no doubt show us whether the predicted continuing economic downturn in the Euro-zone will adversely affect the U K direct mail medium.”
Company Spend in £miilions
MBNA 40.17
BCA 28.21
Reader’s Digest 20.69
Capital One 20.05
Lloyds TSB 19.27
Ltttlewoods 17.44
Halifax Card ServIces 16.38
Morgan Stanley Dean Witter 16.32
GUS 13.93
Lever Bros 13.85
Procter & Gamble 13.75
Damart 13.56
Britannia Music Co 11.98
Telegraph Group 11.52
Goldshleld Healthcare 10.82
SAGA 10.78
Direct WInes 10.68
Barclaycard 10.38
Egg 10.31
Redcats (Brands) 10.02
Bank of Scotland 9.85
Consumers Association 9.77
Cornhill Direct
Halifax 9.33
Norwich Union
Bradford Exchange 9.12
HFC Bank 9.10
DFS Northern Upholstery 8.62
M&S Financial Services 8.53
Hospital Plan Insurance 8.26
