Direct Marketing Top 75
The direct industry finally appears to be emerging from the fallout of the recession, writes Robert Epstein.
The direct fraternity has not had reason to feel this optimistic since the 2001 recession hit. After two years of sluggish business, which resulted in staff being shed, recruitment all but halted and new business at a premium, 2004 marked a gradual return to health.
After a tough first half to 2004, clients began to release budgets in the third quarter and, by the fourth, accounts that had been won earlier in the year were finally resulting in work. 'There were lots of briefs that did not materialise into concrete work at the time, and many agencies are only now beginning to see the fruits of their labour,' says Mike Spicer, managing director of Arc. '2005 is off to a promising start and it certainly looks as though the market is picking up.'
The most recent Bellwether Report from the Institute of Practitioners in Advertising reveals that more than 40% of clients have set aside greater budgets for direct activity in 2005 than they spent in 2004.
Further encouragement came last month in the form of research from the Direct Marketing Association, carried out by The Future Foundation. It showed that 70% of consumers are happy to receive direct communications, as long as they are targeted - a far cry from the doom-mongering of the BBC's Brassed Off Britain show last June. The programme rated direct mail - which still accounts for the majority of direct spend - as the British public's greatest irritant.
'Almost everyone can find pieces of mail they find annoying. Companies committing the worst excesses are those that ignore the regulations,' says Rapier chief executive Jonathan Stead.
'They have upset a lot of consumers, which has led to a negative halo around direct marketing in general. But consumers can differentiate between trash and relevant information as long as the industry concentrates on getting the targeting right.'
The past year has seen the inevitable round of consolidation - Tequila\London's merger with TBWA\GGT made it the biggest direct agency by gross profit, according to Companies House figures - and the demise of agencies Mr Smith, Mercier Gray and Cramm Francis Woolf. Other major industry trends have included: improvements in targeting and personalisation; the growth of digital media as an integral part of the mix; and the ascension of direct agencies to strategic roles.
Direct agencies' ability to target consumers with relevant communications has been augmented by a fresh approach to data. Amid fears that European legislation on consumer opt-in for email and telephone communications will be extended to mail within the next two years, boosting consumers' willingness to receive marketing material is a must.
To improve mailing lists, Archibald Ingall Stretton has been overlaying attitudinal research with customers' behavioural needs through customer insight agency tree.
For Skoda, AIS used surveys that showed the marque's drivers are thoroughly independent. It ran a campaign for its Octavia model that included mailings presenting the car as an alternative to the norm; items common to all drivers - a driving licence and tax disc - were sent out using lines that included 'You have to pay the same road tax as everyone else. But you don't have to drive the same car.' From 40,000 mailings, Skoda achieved a response rate of 3.95% - almost double the industry standard.
Tequila\London took personalisation to the mass market for Sainsbury's using digital printing. In one execution, the agency produced a mailing that rewarded loyal customers with a gift on their birthday. Using Nectar data to identify customers celebrating their birthdays, as well as the gift that would most suit their purchasing behaviour, the supermarket sent out more than 400,000 cards a month. Redemption rates increased from 28% on its previous campaign to 40%. …