SYDNEY: Australian marketers are shifting an increasing proportion of their budgets into loyalty schemes and CRM activities, a leading industry figure has said, despite the high-profile failure of a leading program.

Speaking at a forum organised by the International Advertising Association, Mark Mulder, executive general manager for marketing and product at comms agency Salmat Digital, thought the movement was significant.

"I think we're seeing an absolute avalanche in shifts in budgets from above the line to below the line," he said, in remarks reported by Ad News. "We're not playing with budget shifts in increments of just one or two per cent, we're looking at a tectonic shift in where budgets are going."

His remarks came in the wake of the announcement by Australian telecoms giant Telstra that it was to transfer a further 20% of its marketing budget into CRM, bringing the total to around 40%, as it focused more on one-to-one relationships.

Nick Adams, director of one-to-one marketing and digital at Telstra, told Ad News that "our CRM capability had become a little impaired" and his jobs was "to breathe life into it".

He added that the firm's Thanks loyalty programme, launched in March, had been used by more than 800,000 customers to redeem tickets for music, movies or sports events, while simple awareness of the scheme meant that customers were 9% more likely to be an advocate for the brand and 9% less likely to be a detractor.

Elsewhere, a new rewards program from iMobileMedia aims to get the nation's small businesses on board with FuelCents, a scheme that will challenge the dominance of fuel offers operated by the likes of Woolworths and Coles which are reported to drive more than A$1bn in trade.

Not everyone was as convinced about loyalty programs, however, as Luke Dunkerley, general manager of corporate marketing at Woolworths, observed they did not always encourage the right kind of loyalty.

"Things that start out as a privilege, such as petrol discounts, quickly turn into a customer right," he cautioned.

Loyalty schemes have also had some bad publicity recently, as the Sydney Morning Herald reported that  the Lifestyle Rewards program, one of Australia's largest, is on the verge of collapse following the failure of the company and its founder to pay tax debts.

Data sourced from Ad News, Sydney Morning Herald, Marketing; additional content by Warc staff