UK Royal Mail slashes adspend by 40percent in profits drive

Royal Mail is cutting its advertising budget by more than 40percent to GBP12m and has postponed marketing activity as part of a major cost-cutting exercise.

The drastic reduction in spend is part of Royal Mail’s bid to reach profitability and follows the culling of up to half of its 360-strong marketing department at the end of last year.

The cut in adspend by the beleaguered postal operator affects the budget for its core brand as well as a further GBP5m originally assigned to promoting its Parcelforce brand this year.

In March Royal Mail launched a GBP20m ad campaign. However, that activity was paid for out of last year’s budget, having been postponed from October 2003 as a result of strikes within Royal Mail.

The news of the spending cuts comes as industry watchdog Postwatch revealed this week that more than 14m items of post are lost each year.

Earlier this year, Royal Mail awarded its Parcelforce business to Abbott Mead Vickers BBDO and Craik Jones Watson Mitchell Voelkel. However, TV ads have now been put on hold because of the budget cuts.

The Royal Mail group has progressively cut its adspend over the past few years. According to Nielsen Media Research, it spent GBP21,556,826 on advertising in 2002, a decrease of 30.8percent on the previous year.

The cuts are affecting Royal Mail’s entire roster of agencies. A source said: ‘It’s been hard enough making ends meet on the account anyway, but with all of this happening it feels like a hopeless situation.’

Royal Mail was unavailable for comment as Marketing went to press.