Direct budgets suffer worst quarter in Bellwether history

by Daniel Farey-Jones, Brand Republic 14-Apr-08, 12:30

LONDON - Direct marketing budgets have suffered their most widespread cuts in the Bellwether survey's eight-year history.

One in five companies reported they had revised down budgets in the first quarter, and with just 13% reporting they had increased budgets, the survey produced a negative reading of 6.3%.

It was also the third consecutive quarter that direct marketing budgets were revised down overall.

In addition, although the report showed a balance of 9.2% of companies set their annual budgets for 2008 higher than last year, this was by far the weakest increase in the survey's history.

The cuts were attributed to general cost reduction programmes and to a movement of spend towards the internet.

Direct marketing was hit the second hardest of all media by budget cuts, after the "all other" category, which includes a wide range of activity including PR, events and mobile. The separate sales promotion category also fared badly while the internet was the only medium to grow.

Anthony Wreford, president and CEO Europe of Omnicom's Diversified Agency Services division, said: "This is a 'no major surprises' report. The levels of pessimism reported in the media will inevitably have damaged confidence.

"Historically, sales promotion and direct marketing have done better in difficult times because of their potential for short-term sales returns. The issues within financial services (a big sector for DM) probably accounts for most of this decline. For the remainder of 2008, it will probably be a tactical market as companies keep a very close eye on their sales figures."

Robert Lerwill, chief executive of Aegis, said: "Let's not lose sight of the fact that, as today's report points out, marketing spend is still set to increase in 2008, with budgets ahead of 2007 levels."

The Bellwether Report classifies direct marketing as including direct mail, email, telemarketing, door-to-door and catalogues.

Comments

ANTHONY WILSON - 18/04/2008

The budget cuts outlined here make it even more important that marketers strive to get the most out of their marketing budgets and provide the most value to their businesses. Strategic, customer insight is key as is a multi-channel approach and clinical execution. This is all going to be covered in an upcoming webinar on ‘three steps to marketing relevance’ (www.experianim.com/marketingrelevancewebinar)