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Getting the best from budgets in belt-tightening 2008

If 2007 was the year when the direct marketing industry recognised the need to reduce its carbon footprint and encourage recycling, 2008 could more than ever before be about ensuring every penny spent on campaigns is made to count, writes Antony Miller, head of media development at Royal Mail.

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The UK's fiscal hazard lights have been switched on in the form of the credit crunch and a faltering housing market. The rise in manufacturing costs is also being passed on to consumers via increased food and energy prices, which will ultimately reduce disposable income and outlay on non-essential items.

Against this backdrop, marketers are going to have to think smarter in the year ahead to maximise return on investment from their DM campaigns. Fortunately, innovative developments in direct media are offering new ways of targeting people and focus is finally moving to quality rather than just poor quantity.

Talk in the boardroom might once again veer towards tightening belts should the economic wobble continue. But if things do take a turn for the worse, it will be vital for marketers to convince the budget holders that direct methods are key to getting the best out of a brand.

Royal Mail statistics show people are becoming more likely to read and keep good direct mail -- the figure has now increased for the third year in a row according to our latest research. Meanwhile, internet usage continues to grow, and the boom in online social networking is fuelling sales on the web. This is highlighted by our recent study underlining the power of a newly identified group recommending brands to each other, which we are calling the Recommendation Generation.

These continuing internet surges are creating exciting opportunities for marketers and, in combination with more traditional tools such as the use of catalogues to drive people online, they promise to deliver excellent results for professionals willing to embrace multi-channel tactics.

There is plenty of evidence that integrated marketing delivers results. A Future Foundation report, commissioned by the Direct Marketing Association, recently put the total value of sales generated by direct mail at £17bn. Meanwhile, the IAB has registered recorded online advertising spend for the first half of 2007 at £1.3bn, year-on-year growth of 41%.

And it's clear that DM and online together make a powerful combination. Our research has found that integrating digital advertising with direct mail campaigns can increase consumer spend by almost a quarter.

While marketers embrace these new opportunities, they would also do well to follow another trend that has been developing: direct marketing is no longer just about eliciting a response from as many people as possible. The sector is trying harder than ever to establish DM in all its guises as a champion of brand-building.

At Royal Mail, we have launched several new direct marketing concepts to help marketers innovate. One of the most exciting is Sensory Mail. Developed in partnership with BRAND Sense, this mailing solution enables brand managers to engage customers with direct mail's ability to embrace all five senses. We discovered people make decisions based on the sensory signals they receive, so the more a mailing can connect and appeal to consumers the more likely they are to feel positive about the brand and respond to calls to action.

Another new format brought to the marketplace through Royal Mail's partnership with Sony DADC is Personalised Integrated Media, a concept that fuses traditional post and digital media to personalise information-rich and interactive CDs to a target's specific needs. This solution, delivered through the letterbox, enables brand owners to include information for a wide audience on a CD but ensure each one is tailored to individual recipients by inscribing it with a unique code.

The challenges facing the DM industry in 2008 are already apparent. But with continued innovation, expertise and drive, we should be able to ride out any economic trouble ahead.

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