UK DM Spending Up Sharply

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British companies plan to spend more money on direct marketing this year than on any other marketing activities. Sales promotion spending is also on the rise, but amounts set aside for the Internet are declining sharply.


These findings were published last month in the Bellwether Report, which NTC Research, a British firm located in Henley-on-Thames, prepares regularly for the Institute of Practitioners in Advertising.


The report did not break down spending in individual marketing sectors but estimated that total UK marketing outlays last year were roughly 33 billion sterling ($48 billion), or 41 billion pounds, including production costs.


"Companies setting new marketing budgets reported that spending allocated to direct marketing had increased by a proportionally greater extent than for all other main marketing activities," the report, prepared by NTC researcher Chris Williamson, said.


"Some 40 percent of companies reported that their new budgets for direct marketing in 2001 were higher than estimated outcomes for 2000, while just 13 percent reported a decline. The overall net rise signaled was slightly lower, however, than that seen in the third quarter.


"Advertisers reported that more funds had been made available due to strong sales but also that direct marketing was set to take a larger slice of the total marketing pie as it was considered particularly cost effective and successful," the report said.


"Although only modest, the overall upward revision contrasted with an overall downward revision of total current marketing budgets and supports the finding that direct marketing is set to account for a rising share of total marketing spend."


Sales promotion budgets have also been on the rise in the United Kingdom but nowhere near as strongly as in direct marketing. A quarter of the companies surveyed (no figure was given for the number of firms studied) reported more spending, while 16 percent reported a decline.


The report said that increased spending "reflected buoyant business confidence and rising sales in most cases rather than a specific preference for sales promotion activities relative to other marketing activities."


Spending on the Internet, however, showed a markedly declining trend, with advertisers allocating 1.8 percent "of their total current financial year budgets to the Internet in the fourth quarter compared to 2.5 percent in the third."


The share of companies allocating less than 1 percent to Web spending rose from 69 percent in the third quarter last year to 83 percent in the fourth quarter, and one in four companies spent nothing at all on the Internet.


Fewer companies are revising Web budgets upward. Those allocating 5 percent or more to online spending dropped from 14 percent to 9 percent. Overall, downward revisions of Internet budgets were up sharply.
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