Clients continue to divert money into direct budgets

by Daniel Farey-Jones, Brand Republic 20-Apr-05, 07:00

LONDON - Continued growth in budgets, especially in the computing, car and finance sectors, has taken direct marketing to a 23% share of all marketing spend, according to the latest IPA Bellwether Report.

In the first quarter of 2005, no sectors revised down their current direct budgets. Direct and digital marketing captured more spend from traditional media advertising and sales promotion, which both saw budget declines. Digital marketing now has an approximately 4% share.

A net 17% of companies revised their budgets upwards during the quarter -- 28% reported an increase and 11% reported a decline. This is the highest upward revision since 2000.

Of the companies setting new budgets during the quarter, a net 10% budgeted more than their spend a year ago. That compares with a net 33% which did the same during the final quarter of 2004.

This fits the wider picture of all marketing spend painted by the report, which shows growth in budgets slowing during the first quarter.

David Payne, the IPA's head of direct marketing, said: "There seems to be some caution in total budget setting this period and therefore I think what we are seeing the continuing trend towards greater short-term accountability of expenditure."

Sir Martin Sorrell, chief executive of WPP, said: "Clearly, clients are looking for new media and technology alternatives [to traditional media]."

The report also showed that during 2004, direct marketing enjoyed the largest rise in spend of all marketing categories.

The report's author, Chris Williamson of NTC Research, said: "Total spend for 2005 remains set to exceed that of 2004. However, we may yet see companies revise down their marketing spend for the year, particularly for higher-cost media activities, if oil prices remain high and economic growth in key markets such as the euro area remains lacklustre."

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