2004 round up: 2004 - The industry fights back

Cost versus value sums up the year, with many still reeling from the effects of one hour of TV By Bill Britt.

Despite the bedding down of several important new pieces of DM legislation, major acquisitions by DM suppliers and the development of new technologies and techniques, 2004 will always be remembered as the year of Brassed Off Britain.

In 2004, the DM industry had to cope with the first opt-outs from the Electoral Roll, wrangle with implementing the Privacy in Electronic Communications Directive, face the quick uptake of the Corporate Telephone Preference Service opt-out and decipher new DM rules on advertising mortgages and consumer credit. There were also changes in the competitive landscape, with Acxiom buying Consodata at the start of the year, and more recently Experian buying address management company QAS.

But while these were changes that had to be dealt with on the practical and intellectual level, Brassed Off Britain hit the industry's morale deeply. It reconfirmed that it's the industry that everyone loves to hate.

David Coupe, chairman of the DMA and managing director of Experian's marketing services division, says that Brassed Off Britain did one good thing in that it has acted as a catalyst for change within the industry.

Instead of being reactive, Coupe says the DMA is now committed to being proactive, having commissioned a political stakeholders' audit and planned a series of events to lobby politicians and government officials.

The DMA is also continuing its efforts with Planet Ark, the initiative to reduce direct mail wastage and to encourage recycling. Planet Ark founder Jon Dee says that in 2004 the focus was on promoting the use of suppression files amongst clients and suppliers.

Spotlight on suppression

"By focusing on the more distressing and badly targeted direct mail campaigns, this suppression effort has been greatly needed to help stem the consumer 'junk mail' backlash," Dee says.

Although Coupe says the industry "punched below its weight" in 2004 when trying to get its message across to the public and government, it has done a reasonable job in convincing business people to spend more with DM than other forms of marketing. But some sectors within the DM industry have benefited more than others in 2004.

Richard Marshall, business development director at independent agency Tullo Marshall Warren, says 2004 has been disappointing for many agencies.

"We haven't seen a major surge in spend and few high profile accounts have changed hands. Consolidation has been the main feature, with procurement departments placing pressure on agency margins," Marshall says.

But it may no longer be a numbers game. If suppression takes off, there will be smaller campaigns, with fewer mailings and less work for printers and other suppliers.

Alan Timothy, CEO of data engineering consultancy Rocket Science, says that 2004 saw significant growth in the area of analytics. "Two years ago Rocket Science and Dunnhumby were lone voices but there are now a number of other companies, such as Information Arts and Blue Sheep, that have entered this arena," he says.

"I predict a continued rise in DM analytics as client companies, in a backlash to Brassed Off Britain, tighten up their targeting. People are starting to understand that through analytics it may be possible to achieve the same with 500 mailpacks as they can with 500,000 mailpacks."

Whether it be through analytics, suppression or more careful segmentation, there's a belief that the industry will move further away from blanket DM.

"I think next year should be the year of being smart and more intelligent," says Coupe, a point supported by QAS managing director Harry Meikle. "We see the emergence in organisations of taking data quality and data integrity more seriously than they have in the past. Organisations are now realising the success or failure of their marketing spend depends on the quality of the data behind it," Meikle says.

Marshall agrees that it's crucial to invest in better management of data and analysis so that communications are timely and relevant. "It will pay back over time because we won't risk devaluing the brand and it will uplift response rates."

In addition to getting the basics right, Marshall believes the industry must embrace new skills in 2005. "We'll see continued growth of digital and online in DM. There are now few campaigns that don't integrate some form of new media and indeed many campaigns are standalone digital activities. It's quite possible that digital and online could reach at least 40 per cent of agency's billings within the next five years."

In the meantime, the industry faces having less data to harness for its traditional DM programmes, according to Irit Reed, director of the list group Caspian Partnership.

Market contraction

"Market contraction has also hit the world of data and for the first time we've seen a reduction in the volumes of new data from lifestyle companies as they struggle to maintain survey response rates," Reed says.

"On the upside many are actively using new data collection techniques in a bid to make up shortfalls, but if they'd got out of the starting blocks on this 18 months ago, clients wouldn't now be looking at significant shortfalls in their mailing plans for 2005."

While the B2C side of the industry got quite a public battering, B2B gained more status within DM as illustrated in the holding of the first one-day conference on B2B alongside the IDMF and the formation in March of the B2B Council by the Institute of Direct Marketing.

"There's more self-confidence within the B2B DM sector," says Richard Lloyd, director of B2B marketing at Experian. He also pointed out that in Q2 2004, B2B volumes increased 2.2 per cent. This helped to offset a 1.3 per cent decline on the B2C side, meaning that the combined drop was only 0. 4 per cent, according to figures from the Direct Mail Information Service.

DM on the B2B side is also becoming more sophisticated. "Many of our customers are looking at more intensive use of segmentation techniques. There's a lot more confidence within businesses to deepen relationships with existing customers and DM is a good way of doing that," says Lloyd.

Jon Cano-Lopez, European services group leader at Acxiom, says Brassed Off Britain stopped people in their tracks, and made them re-think their approach to targeting. "I think Brassed Off Britain was really a symptom of something bigger. Last year people were talking about the 'commoditisation' of data, which ultimately meant that they didn't put enough value into the data element of their campaigns, and as a result there seemed to be a return to the mass mailing approach to market. And this swing to commoditisation essentially went too far, with Brassed Off Britain being the last straw," says Cano-Lopez.

But with recent speculation about a mandatory opt-in for direct mail arriving in the next couple of years, patterned after opt-in laws for email marketing, there is an incentive to use data correctly, or lose access altogether, he adds. "So whereas we started the year with the view on data being cost-based, we are ending with it being value-based."

Whether or not the industry places value before volume will take longer than the next 12 months to reveal.

2004 AT A GLANCE

FEBRUARY

- Information commissioner Richard Thomas announces a shift from introducing new data protection legislation to enforcing existing laws.

- The percentage of people ticking the opt-out box on the Electoral Roll hits 27 per cent, up seven per cent, or 2.4 million more electors, from the year before.

- Royal Mail agrees to allow Business Post's UK Mail arm to access its local sorting and final delivery network for business deliveries.

- Unilever's Birds Eye frozen foods division launches first relationship marketing campaign.

MARCH

- Acxiom announces £20m deal to buy Consodata's operations in the UK, France, Spain and Germany, hot on the heels of Acxiom's purchase of Claritas.

- Equifax forms link with Acxiom.

- A consortium of data owners led by travel group Saga launches the bereavement suppression product called Stop Dead.

- Experian buys CheetahMail

APRIL

- Businesses allowed to register to opt out of receiving unsolicited telemarketing calls, although the Corporate TPS doesn't go live until 25 June.

MAY

- Marketing Communications Consultants Association launches scheme for agencies to copyright their ideas presented in agency pitches.

- Retailer GUS announces a two-year strategic review of the group's activities, which could include a demerger of Experian.

- SR Teleperformance, the world's second largest contact centre services provider, buys a majority stake in MM Group.

- The Live Brand Experience Association launches.

JUNE

- BBC One airs Brassed Off Britain in which direct mail was voted by viewers as their most disliked industry, with call centres in third place.

- Simon Hall, former chief executive of Proximity London, along with former Proximity creative Director Warren Moore, form DM agency Hall Moore CHI, as part of hotshop ad agency Clemmow Hornby Inge.

JULY

- New Logic offers call centre and mailing fulfilment services based on "risk and reward" payment system.

AUGUST

- Indian call centre company Valdel Xten buys UK marketing services company Anipoint.

SEPTEMBER

- Royal Mail announces search for new marketing director.

- CACI launches eAppend email address service that enables companies to match addresses to their existing customer data.

- Acxiom launches behavioural product Personicx to help companies segment households and postcodes by lifestyle, demographics and behaviour.

- Institute of Practitioners in Advertising launches first direct marketing charter.

- Some councils accused of pre-ticking opt-out box on Electoral Roll.

OCTOBER

- Experian announces purchase of address validation company QAS.

- Wegener launches customer segmentation product REALmotivations, which it says explains what motivates consumer buying decisions.

- Experian launches behavioural tool Prime Performance Modelling.

November

- New legislation on marketing mortgages comes into affect

- Abacus launches data pooling service for B2B marketers.

- Corporate TPS hits 60,000 registrations in one month.

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