KN74065

KEY NOTE Plus : Direct Marketing : June 2005

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TABLE OF CONTENTS

Executive Summary

1. Market Definition

REPORT COVERAGE

MARKET SECTORS

Market Trends

Spending Increases in the Advertising Industry

Mobile Phone Marketing

E-mail Marketing

ECONOMIC TRENDS

Population

Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 2000-2004

Gross Domestic Product

Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 2000-2004

Inflation

Table 3: UK Rate of Inflation (%), 2000-2004

Unemployment

Table 4: Actual Number of Unemployed Persons in the UK (million), 2000-2004

Household Disposable Income

Table 5: Household Disposable Income Per Capita (£), 1999-2003

Summary of Economic Trends

MARKET POSITION

The UK

Overseas

2. Market Size

THE TOTAL MARKET

Table 6: The Total UK Market for Direct Marketing by Sector by Value at Current Prices (£m), 2000-2004

Sector Shares

Table 7: The Total UK Market for Direct Marketing by Sector Share (%), 2002-2004

BY MARKET SECTOR

Telemarketing

Table 8: The UK Telemarketing Sector by Value at Current Prices (£m), 2000-2004

Direct Mail

Table 9: The UK Direct Mail Sector by Value at Current Prices (£m), 2000-2004

Table 10: UK Direct Mail Volumes (million items), 2000-2004

Direct-Response Television

Table 11: The UK Direct-Response Television Sector by Value at Current Prices (£m), 2000-2004

Table 12: UK Household Penetration of Multi-Channels (number of households), Q3-Q4 2004

Direct-Response Press/Magazines/Radio

Table 13: The UK Direct-Response Press, Magazine and Radio Sectors by Value at Current Prices (£m), 2000-2004

Inserts

Table 14: The UK Inserts Sector by Value at Current Prices (£m), 2000-2004

Database

Table 15: The UK Database Sector by Value at Current Prices (£m), 2000-2004

Door-to-Door

Table 16: The UK Door-to-Door Sector by Value at Current Prices (£m), 2000-2004

New Media

Table 17: The UK New Media Sector by Value at Current Prices (£m), 2000-2004

Table 18: Breakdown of Electronic Media Expenditure (£m and %), 2003

Table 19: Number of Subscribers by Mobile Telephone Operator (000), Q1-Q3 2004

Customer Magazines

Table 20: The UK Customer Magazine Sector by Value at Current Prices (£m), 2000-2004

Table 21: Top Ten Consumer Magazines by Circulation, Audit Period 1st July 2004-31st December 2004

3. Industry Background

RECENT HISTORY

Number of Companies

Regional Variations in the Marketplace

Distribution

Table 22: Call Centre Employees by Region (number, 000 and %), 2003

How Robust is the Market?

Legislation

Consumer Credit Act

Privacy and Electronic Communications (EC Directive) Regulations 2003

The Consumer Protection (Distance Selling)(Amendment) Regulations 2005

Doorstep Selling and Cold Calling

KEY TRADE ASSOCIATIONS

The Advertising Association

Advertising Standards Authority

The Chartered Institute of Marketing

Direct Mail Information Service

Direct Marketing Association and Direct Mail Accreditation and Recognition Centre

Federation of European Direct Marketing

Incorporated Society in British Advertisers

The Institute of Direct Marketing

Institute of Practitioners in Advertising

Institute of Sales Promotion

Interactive Advertising Bureau

InterDirect Network

Marketing Communications Consultants Association

The Mobile Marketing Association

The Marketing Society

Independent Committee for the Supervision of Standards of Telephone Information Services

Information Commissioner

Ofcom

4. Competitor Analysis

THE MARKETPLACE

Agencies

Bureaux

Data Suppliers/Brokers/Cleaners

Other Suppliers

Market Leaders

Agencies' Holding Companies

Havas SA

Company Structure

Recent Developments

Financial Results

Table 23: Financial Results for Havas SA (em), 2003 and 2004

The Interpublic Group of Companies Inc

Company Structure

Recent Developments

Financial Results

Table 24: Financial Results for Interpublic Group of Companies Inc ($m), Third Quarter 2003 and 2004

Omnicom Group Inc

Company Structure

Recent Developments

Financial Results

Table 25: Financial Results for Omnicom Group Inc ($m), Years Ending 31st December 2003 and 2004

Publicis Groupe SA

Company Structure

Recent Developments

Financial Results

Table 26: Financial Results for Publicis Groupe SA (?bn and ?m) Years Ending 31st December 2003 and 2004

WPP Group PLC

Company Structure

Recent Developments

Financial Results

Table 27: WPP Group PLC's Revenue and Operating Profit by Communications Services Sector (as % of total group), Year Ending 31st December 2004

Table 28: Financial Results for WPP Group PLC (£m), Year Ending 31st December 2003 and 2004

Agencies

Table 29: Top Ten UK Direct Marketing Agencies (£m), 2004 (Based on Agency Gross Profit 2002 and 2003)

Arc Integrated Marketing Ltd

Company Structure

Current and Future Developments

Financial Results

Carlson Marketing Group (UK) Ltd

Company Structure

Current and Future Developments

Financial Results

Claydon Heeley Jones Mason Ltd

Company Structure

Current and Future Developments

Financial Results

EHS Brann Ltd

Company Structure

Current and Future Developments

Financial Results

Haygarth Group Ltd

Company Structure

Current and Future Developments

Financial Results

Joshua Agency PLC

Company Structure

Current and Future Developments

Financial Results

Proximity London Ltd

Company Structure

Current and Future Developments

Financial Results

TBWA\GGT

Company Structure

Current and Future Developments

Financial Results

The Triangle Group Ltd

Company Structure

Current and Future Developments

Financial Results

WWAV Rapp Collins (Ltd)

Company Structure

Current and Future Developments

Financial Results

Data Companies

Acxiom

CACI

Equifax Direct Marketing Services

Experian

QAS

Clickstream

DoubleClick

Dynmark

Emailcenter UK Ltd

Enpocket

Hitwise

Reach2Mobile

Silverpop

Vodafone Target

Weboptimiser

MARKETING ACTIVITY

Awards

DMA Awards (in Association with Royal Mail)

Marketing Society Awards for Excellence (in Association with Marketing)

The Marketing Direct Intelligence Awards

Marketing Week Effectiveness Awards

Precision Marketing Response Awards

Direct Response SMART Awards

Institute of Sales Promotion Awards

The Won Report

Table 30: The UK Top Award Winning Direct Marketing Agencies, 2004

Trade Shows

Table 31: The Leading UK Marketing Magazines' Net Circulation Per Issue, 2004

5. Strengths, Weaknesses, Opportunities and Threats

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

6. Buying Behaviour

Consumer Views of Mobile Phone Marketing

Table 32: Types of Companies from Which Consumers Prefer Offers (% of respondents), 2004

Table 33: Consumer Preference for Timing of Messages (% of respondents), 2004

Table 34: Consumer Preference for Types of Promotions (% of respondents), 2004

Table 35: UK Mobile Phone Users' Interest in Content Services by Age Band (% of respondents), 2005

Consumer Response to Direct Marketing

Table 36: Overall Responses to Direct Marketing Communications (% of respondents), 2004

Table 37: Relationship Between Sectors of Interest and Communications Received (% of respondents), 2005

Response Rates of Mailings by Sector

Table 38: Consumer Response Rates to Direct Mail by Sector (%), 2004

Table 39: Business-to-Business Response Rates to Direct Mail by Sector (%), 2004

7. Current Issues

PRE-RECORDED PROMOTIONAL CALLS

Corporate TPS

Change of London Telephone Numbers

Pricing in Proportion

8. The Global Market

Leading Markets

Table 40: Global Marketing Budget Allocations (%), 2003

The Asian Market

Table 41: Top Ten Asia-Pacific Marketing Agency Networks, 2004

Marketing Channels worldwide

e-mail Marketing

Consumer Preference Schemes

Table 42: Preference-Scheme Subscribers by Country (number of subscribers), 2004

The Future

9. Forecasts

INTRODUCTION

The Economy

Population

Table 43: Forecast UK Resident Population by Sex (000), Mid-Years 2005-2009

Gross Domestic Product

Table 44: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2005-2009

Inflation

Table 45: Forecast UK Rate of Inflation (%), 2005-2009

Unemployment

Table 46: Forecast Actual Number of Unemployed Persons in the UK (million), 2005-2009

Forecasts 2005 to 2009

Table 47: The Forecast UK Direct Marketing Market by Sector by Value at Current Prices (£m), 2005-2009

FUTURE TRENDS

Marketing on the Move

Competitor Forecasts

10. Company Profiles

Arc Integrated Marketing Ltd

Carlson Marketing Group (uk) Ltd

Claydon Heeley Jones Mason Ltd

EHS Brann Ltd

Proximity London Ltd

WPP Group PLC

WWAV Rapp Collins Ltd

12. Further Sources

Associations

Publications

General Sources

Government Publications

Other Sources

Bonnier Information Sources

EXECUTIVE SUMMARY

In 2004 and early 2005, the direct marketing industry was looking positive, having seen the end of the dip in the UK economy of 2001 to 2003. Seeing the effectiveness of direct marketing, advertisers revised their budgets upwards — at the expense, perhaps, of more traditional media marketing. In 2004, the direct marketing industry was worth an estimated £14.99bn at current prices, a rise of 10.1% from 2003.

The economic dip taught advertisers that they need to justify their marketing spends in terms of the returns they obtained on their investments. The challenge has already been issued to other marketing investments — the public relations (PR) industry, for example, is already working hard to find ways of measuring investments in PR. However, measurement has always been one of the strengths of direct marketing: companies print a number of customer telephone numbers to call, count how many calls are received or mail out thousands of coupons, and count how many are redeemed. For this reason, budgets will always be diverted into direct marketing if savings have to be made.

There is more of a challenge to prove effectiveness in new media marketing. E-mail marketing can be demonstrated to be immediate and effective, but as it is a relatively new media, there is not the same depth of analysis available as there is in more traditional database or door-drop marketing methods. Nevertheless, the market leaders profiled in this report are making much headway in this respect.

In addition, there is a new avenue to explore: mobile marketing. The short messaging service (SMS or texting) phenomenon has been well recorded, but even before third-generation (3G) mobile phones have reached the same kind of coverage as second-generation (2G) mobile phones, media messaging service (MMS) is becoming increasingly available to consumers. Marketers are keen to explore how it is best to exploit this medium, especially in reaching the 16 to 35 year-olds, who are the most likely users.

Unsurprisingly, of the sectors covered in this report, new media is the one that showed the most growth in 2004, but telemarketing is also strong, despite criticisms that offshore outsourcing would adversely affect it. In contrast, direct-response radio and direct-response cinema are beginning to slip beneath the direct marketing radar.

Also, direct mail — for so long the mainstay of direct marketing — is beginning to slow in terms of the number of items mailed. However, this report will show that, in database marketing especially, marketers are using the resources available to them to more carefully target their campaigns.

Direct marketing has always proved itself to be reasonably recession-proof. As this report shows, it is practically future-proof too. Although direct marketing is a broad industry — there are many disciplines within it — practitioners have all of these resources available to them. In addition, as the larger media and communications corporations concentrate on networking the services within their groups, direct marketers can network their offerings to provide integrated solutions to their clients.

Text © 2005Key Note

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