Executive Summary
Despite the much publicised global slowdown in advertising expenditure, the UK direct marketing sector is continuing to show signs of strong growth. The market grew by more than 80% between 1995 and 2000, to £10bn.
This growth has been due partly to the fact that the market is expanding away from the traditional sectors of direct mail and telemarketing, as well as press advertising, into new technologies, such as the Internet, database and field marketing. Additionally, sectors such as door-to-door and radio and cinema advertising are all seeing resurgence, while TV advertising remains a core component of the market. Telemarketing, however, retains its traditional popularity, and led the market in 1999/2000, closely followed by direct mail.
The market is growing as direct marketing techniques become increasingly sophisticated and niche-centred. However, the slowing UK and international advertising market is starting to impact on annual growth rates. A poor public perception of direct marketing in the UK still predominates. The proliferation of junk mail, unwanted telephone calls and, latterly, spam e-mail has not helped the image of direct marketing and this is detrimental to the industry's success. In addition, there is a high incidence of data wastage as direct marketing fails to reach the intended consumer. This also tends to damage the effect of direct marketing.
A growing number of advertisements in the UK are classified as direct marketing, rather than traditional above-the-line advertisements, as they incorporate aspects of telemarketing, response and the Internet as integral parts of the campaign. This general convergence of media in the industry is beneficial to the growth of direct marketing.
The future of the sector is in some doubt given the global slowdown of the market. This is indicated by the poor performance of the US market. Additionally, the UK economy is forecast to slow down and advertising budgets are often the first to be affected. Growth rates may start to slow from 2003/2004 but losses are not expected.
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