DMA Census 2005

The Direct Marketing Association's (DMA) annual census of the direct marketing industry 2005, launched in July 2006, reveals that the industry is now worth £17 billion. Increasing 13% on 2004, the figure marks another year of growth for the industry since the census began 11 years ago. The market remains largely dominated by the three main media of direct mail, telemarketing and TV, which make up nearly half of the total expenditure. However, new media’s growth of 80% on 2004 – the fastest growing area - means that it now accounts for an estimated £1.5 billion, underlining new media as a central element in direct marketing campaigns.

Email marketing: In 2005 the value of email marketing is estimated to stand at £128 million. Using figures collected by the DMA Email Marketing Council for their quarterly National Email Benchmarking Report, overall email volumes continue to rise with the latest figures for 2005 showing particularly strong growth during the second and final quarters of the year. Email marketing’s growing popularity is supported by the rise in people with access to the internet.

Mobile marketing: Similarly, the dramatic rise of mobile phone ownership in the UK over the past few years has seen an increase in mobile marketing. The latest figures released by the Mobile Data Association show that the volume of text messages sent continues to grow, rising by 33% in 2004 and by 16% in 2005 to stand at 3.1 billion. The census estimates that expenditure on mobile marketing in 2005 stands at £26 million.

New media: New media’s impact is also seen in the increased proportion of adverts classified as direct response. A heightened use of web addresses alongside telephone numbers on press (both national and regional) and magazine adverts has resulted in this sector growing by two thirds over the last two years. The research has also shown that those display advertisements featuring telephone and email / internet as response mechanisms are most likely to be from the financial, mail order, travel / transport and communications sectors. Retail and other consumables tended to be the least likely advertisements to show all three, and more likely to have coupons or ‘see in-store’ mechanisms.

Magazine advertising: The census also shows an increase in the number of direct response magazine adverts with an increase from 34% to 53%, again largely as a result of increased adverts showing an email or website address. The proportion of magazine display advertisements showing a website address has increased to 73% whilst those showing a telephone number have dropped from 64% to 58%. Almost all adverts for government, charity and education, household appliances and equipment showed a telephone number and email or internet address, and almost 80% of mail order and entertainment / media adverts. Overall, magazine display advertising has grown consistently by 3% over the past two years and now stands at £1,284 million. The estimate for 2005 is that direct response expenditure on magazine display advertising has risen to £681 million.

TV & Radio: Direct response TV’s role in driving web traffic increased over the past year, recording dramatic growth of 18%. The number of direct response radio adverts also rose, with an estimated 50% of all radio adverts containing a direct response mechanism.

Customer magazines: The census also underlines the continued growth of customer magazines (increasing 15% on 2004 to £395 million), highlighting their popularity with consumers, which is also shown in the DMA Participation Media 2005 consumer report where they were judged the most relevant and most positively treated of all the media studied. Participation Media researched, via a face to face questionnaire, consumer perceptions of all direct marketing channels, including customer magazines. They were then asked to record their actual behaviour in a communications diary, which recorded communications received, their relevance to the individual and their subsequent actions.

Questionnaire responses showed customer magazines in a very positive light; consumers said they took more positive actions after receiving a customer magazine (such as making a purchase, asking for more information or passing on to a friend or family member) than any other form of direct marketing. Diary results back up the positive consumer perceptions given in the questionnaire. Consumers passed customer magazines on to friends more than any other media type, and the medium ranked highly for generating a direct purchase too.

Direct mail: Direct mail faired less well in 2005 in terms of growth in expenditure. Following a sustained period of growth and record volumes in 2003, direct mail volumes have fallen slightly over the past two years. Both business and consumer mailings declined by 5%. This has been attributed to a significant decrease in credit related mailings by financial services organizations and also a significant focus on environmental issues by government and the DMA has seen an improvement in suppression files and the targeting of direct mail. It can be argued that although volumes are decreasing, there is less wastage and the right people are reaching the right consumers. Also important to an optimistic view of the medium’s future potential is the fact that it rated very highly with consumers receiving direct mail in the Participation Media research exercise – 26% found it convenient and 27% informative.

Telemarketing: Telemarketing, including both inbound (from customer to company) and outbound (from company to customer), remains the largest single channel in the industry with an estimated expenditure of £3,919 million, accounting for 23% of the total DM expenditure. This is supported by a recent report from the DTI which shows that contact centres increased by 3% in 2004 and agent positions rose by 8%.

Inserts: As the fifth largest area – accounting for 9% of the total direct marketing industry, insert volumes remained buoyant despite falls in both national and regional newspaper advertising. Estimated expenditure rose by over 14% in 2005 to £1,472 million. The greatest increase in insert volumes between 2004 and 2005 was for dailies, up by 20%. According to the Participation Media survey, inserts are good for generating retail traffic and are as likely as direct mail to drive people into stores or showrooms. Additional positive actions are: passing inserts on to friends and family, requesting more information, filing for future reference or buying something. This results in inserts being a popular advertising medium across a wide range of sectors: retail, finance, telecommunications, charities, travel, utilities, automotive and government. Response to inserts is correlated with magazine and newspaper readership. On the whole, most people find inserts to be informative, helpful and interesting.

Field marketing: Field marketing continued to enjoy steady growth with expenditure increasing by 10% in 2004 and 5% in 2005 to £770 million. Slower growth in 2005 was attributed to tough marketing conditions. The census also revealed that expenditure in the field marketing industry is evenly split between UK and overseas operations. According to Participation Media, due its interactive nature, field marketing is very different from many other forms of direct marketing communication. Of over 1,800 people who filled in a questionnaire revealing their opinions of direct marketing and their perceptions of how they used it, more said they asked for information after viewing people marketing or demonstrations than after receiving any other media type last time they experienced it.

Significant shifts and changes within the direct marketing industry in 2005 come from a combination of factors. Linked to the phenomenal growth and use of new media, the widespread use of web addresses alongside telephone numbers on press and magazine adverts means that there has been an increase in the proportion of adverts classified as direct response. Even against a backdrop of declining value of newspaper advertising overall, this has resulted in an increase in two thirds of expenditure attributed to this area over the past two years. Similarly both magazine and regional press expenditure estimates have jumped quite dramatically in this period.

The overall picture for 2004 and 2005 has been one of very strong growth, bringing the total estimated direct marketing expenditure figure to £17 billion. Direct marketing expenditure in the UK is rapidly approaching the total amount estimated for advertising by the Advertising Association in its annual reports, making it a significant player in the marketing communications mix offering a plethora of options in terms of cost and execution.