Stormy times ahead for marketing – but a glimmer of sun for direct
Thursday, October 18, 2018
The latest Bellwether report from the IPA has been released and there are very few surprises all round.
The headlines are that growth is sluggish, with the slowest pace recorded since mid-2015. Direct budgets have been revised down by 7 per cent, whilst digital marketing has experienced a 14 per cent increase. Atl advertising remained stable. It was an overall a pretty pessimistic study with highest level of negative sentiment recorded since 2011.
Brexit was seen as the major barrier to ad spend growth, with continued uncertainty about the UK’s future with Europe given as the primary reason for putting marketing spend on hold.
Interestingly, however, compliance took a back seat in this report. But it is worth mentioning that this will have had a significant impact on direct spend. With marketing databases depleted significantly since the introduction of GDPR in May, DM volumes have fallen and budgets have consequently decreased. However, this decrease is no bad thing. In fact it’s positive for consumers, for brands and for the channel. Firstly consumers will be receiving fewer and more targeted mailings, marketers are receiving improved ROI as volume has reduced but response rates have increased, and finally consumer perception of the channel will also be enhanced as a result of better targeting and reduced volume meaning that it will become more effective and potentially shrug off its negative reputation. With decreases in direct marketing budgets it’s unsurprising that digital budgets are on the rise. Clearly the savings are being pushed into alternative media. However, with ePrivacy on the horizon it is likely that digital will experience a reduction of spend when it becomes harder to use the Internet to target customers.
So due to the unfavourable conditions for marketing as a whole as a result of Brexit and tighter controls, the outlook for direct is not as negative as the report makes out.