Clients divert spend into promotions

The ‘bogof’ crew will no doubt be chuffed to buggery this morning after the latest IPA Bellwether report showed brand owners are increasingly turning to sales promotion to bring in customers, rather than TV, direct mail or even SEO.
It is not all bad news for direct marketing, however, with spend continuing to inch up, and overall marketing budgets rising to a three-quarter high in Q2 2015, marking 11 quarters of successive expansion.
Then again, marketers themselves are not quite so bullish about getting the cash in at both company and industry level – with confidence plummeting to a nine-quarter low of +25.3%, from +37.8% in the previous survey.
Much to adland’s disgust, events was the strongest performing category in Q2 2015, with a net balance of +7.4% of companies recording growth, which was a three-quarter high.
Perhaps less surprising was the fact that Internet budgets were also revised higher, although the net balance of +6.8% was a two-and-a-half year low. Within Internet, spend related to search/SEO followed a similar trend, slipping to +6.5% from +8.5%, its lowest level for 18 months.
Sales promotion, which includes buy-one-get-one-free offers, recorded the best quarterly net balance for the category since Q1 2004 of +6.0%. All other categories with recorded marginal growth, with even the much-lauded main media advertising, in other words TV ads, only going up 1.7%.
The direct marketing category, which is ostensibly direct mail in the IPA’s eyes, inched up 0.5%, although Royal Mail will no doubt still be pleased. When you have a spend of £1.167bn, 0.5% or £838,000, is still a tidy sum.
However, Wunderman client services director Josette James, who is chair of the IPA Customer Experience Group, branded the findings “disappointing”.
She added: “[The findings] reflect the pressure that companies are feeling to find new and innovative ways to engage consumers and sell their product via this channel. Meeting sales targets often, understandably, turns the focus to promotions.
“Direct marketing needs to look at the opportunity to inspire brands with inventive methods of targeting and engaging customers. Only then will it warrant a more healthy slice of the marketing budget.”