Growth fears fuel DM wake-up call

The DM industry has been warned it will miss out on a predicted growth in adspend unless clients can be convinced to get traditional and digital marketing to work together, following the publication of two influential reports on future spend.
The concept of “better together” has been one that many working in the industry have been pushing for years, most notably Royal Mail.
Despite recent gains – direct mail spend went up 5% in its latest results – the postal giant is trying to arrest the long-term decline in mail volumes.
And the issue has become more pressing with the publication of the IPA Bellwether Report and the Advertising Association/Warc Expenditure Report this week.
While the IPA study does reveal direct marketing budgets have been revised up again – by 3.9% – it shows other media are growing at a much faster rate; a trend which it predicts will continue this year.
The highest upward revisions in Q4 were made to Internet spend, up 15.1%, while main media advertising also recorded growth, up 6.7%.
A net balance of +30.6% of companies are anticipating a rise in their marketing budgets, relative to 2014/15 levels. However, events, PR and main media are expected to benefit most from this uplift in total budgets.
Meanwhile, the AA/Warc study predicts direct mail spend will fall to £1.8bn this year, down from £2.1bn in 2013 and a change of heart since last year when it predicted the medium would grow 2% during 2014 and 2015. Although it will remain the third-largest medium for adspend – after online and TV – expenditure will have decreased some 26% from a peak of £2.4bn in 2004.
Chair of the IPA Customer Experience Group Josette James, who is also client services director at Wunderman, said: “Direct marketing remains significantly behind other media types in growth terms. This is possibly due to companies wrestling with the potential opportunities and challenges that a more connected landscape offers direct and how to evolve their customer experience offering. Many brands have yet to really understand and harness the potential.”
One industry source added: “It would be easy to dismiss Royal Mail’s calls for clients to embrace direct mail and digital as a company desperate to protect its business. But it is an issue for every direct marketing company.
“Agencies and data firms may have successfully embraced digital marketing but traditional techniques are still a major revenue stream – without them they will be stuffed. The whole industry should be pushing the ‘better together’ message or face death by a thousand cuts.”

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