Direct marketing drives £200bn sales in UK

13 August 2010

LONDON: Direct marketing generates over £200bn (£312bn; €243bn) in sales for companies in the UK each year, according to a new report.

Estimates from the Direct Marketing Association (DMA), based on both in-house data and official government figures, suggested this channel delivers revenues of £205bn per annum.

By category, £102bn went to the retail sector, falling to £75bn for financial services, £14bn for utilities, more than £5bn for travel/leisure and charities, and £1.5bn for automakers.

In terms of expenditure, the industry produces £43.3bn in spending on communications, alongside £29.2bn on employment and similar costs.

"[This report] tells a story of how consumers interact with retail brands and it shows where the power lies in the balance of the relationship," said Chris Combemale, executive director of the DMA.

"Consumers do not court the attentions of prospective brands; it is the brands that play suitor. The sheer amount of money and effort spent on direct marketing by brands is really what the numbers tell us most clearly."

A survey of 412 businesses found 57% of participants committed under £1m a year to this area, 5% boasted an outlay in the £1m-£2.5m range, and a further 5% had a larger budget.

Over 30% of resources were allocated to the internet and email, with catalogues on 28% and mail shots on 26%, supported by an extremely wide variety of other tools.

Direct response approaches via mainstream media such as television, radio, outdoor and magazines all recorded scores of between 10% and 20%.

The take-up of SMS has been quickest among travel/leisure companies on 30%, followed by finance on 22%, retail on 14% and utilities on 10%.

Field marketing also played a diverse role, as in-store initiatives were mentioned by 14% of respondents, while 16% referenced experiential schemes and 17% citing customer sales and acquisition platforms.

Only 5% outsourced the bulk of consumer-facing DM activity to agencies, and 8% did so for their B2B output.

Regarding budgets, 30% of contributors expected spending levels to increase this year, 25% said that expenses would decline and the remainder anticipated little or no change.

A majority of enterprises in the retail, finance and automotive categories planned to boost investment in postal, online and email campaigns.

Nearly a third of direct marketing companies specialised in retail, 15% focused on finance, 8% emphasised either travel/leisure or charities, 6% preferred utilities and 3% generally targeted automotive brands.

Agencies with a strong presence in the financial space claimed the highest revenues, as 12% registered a turnover of at least £20m a year, and 46% pegged this total at a minimum of £5m.

"The fact that direct marketing is used in practically every retail sector and industry also tells us that consumers like to be spoken to directly as individuals," Combemale argued.

"They might share many similarities with their neighbours, but they certainly don't want to be mistaken for them."

Data sourced from DMA; additional content by Warc staff