Survey Shows Rise in DM Spending — But Lack of Understanding

A recent survey conducted on both sides of the Atlantic by international database solutions provider Alterian (Bristol, England), shows that while most respondents expect their direct marketing expenditures to increase over the next 12 months, there are real concerns about marketing service providers’ ability to understand a client’s business. The survey examined attitudes of almost 600 marketers and marketing service providers (MSPs) in both the UK and North American direct marketing industries.

Prospects for 2005 appeared good, with 60% of respondents expecting their DM expenditure to increase during the year while only 5% believe it will decrease. However, the survey revealed that the primary challenge for most marketers when using an MSP was lack of strategic understanding of a client’s business, with 40% of participants indicating this. MSPs also believed it to be the biggest challenge when working with them (42%). Concerns about cost remain high, with marketers stating this was the second most important concern.

The top business opportunity for MSPs was “database marketing and analytical expertise.” “Marketing strategy and planning” was the second most popular answer, with a quarter of votes, while “campaign planning and execution” was the second lowest choice, attracting only 8% of responses. This underlines the shift in marketers’ perceptions of MSPs, from execution houses to providers of more consultative/strategic services.

Marketers and MSPs were in agreement that the three main areas of focus over the first six months of 2005 should be:
— Improved tracking and measurability of campaigns (30%)
— Provision of the ability to explore customer/prospect data (32%)
— Analytical solutions (24%)

Alterian CEO David Eldridge noted that the optimism on both sides of the Atlantic is encouraging: “It reflects both the UK’s DMA 2003-2004 Census, which forecast a return to growth for the direct marketing industry, and recent findings from Forrester Research that reveal database marketing budgets and influence are rising in North America.” But, emphasizes Eldridge, this outlook means there is a growing need both for new database marketing initiatives and for new levels of skills and greater depth of customer insight, to satisfy marketers’ demands for higher value strategic services.

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