Ad spend on the up, but DM activity slows

By Rhys Handley, Tuesday 07 August 2018

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New advertising industry research has reported that while direct mail activity is feeling the effects of a corrective slowdown following recent growth, spending on printed display ads for national news brands has risen for the first time in seven years.

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Direct mail spending declined by 4.5% from Q1 2017 to Q1 2018

The Advertising Association and Warc’s (AA/Warc) expenditure report for Q1 of 2018 showed that spending on display ads for popular titles had gone up by 2.8%, although total printed display spend was down by 0.3%. The figures were largely dragged down by a continued decline in display spend for regional titles (9.3%), which continue to struggle.

Display formats across all mediums saw a rise in spending by 6% – the strongest quarter since Q4 2015, though this figure was drawn back to 4.7% growth when including expenditure on direct mail. Expenditure solely on direct mail declined by 4.5% from Q1 2017 to Q1 2018.

Warc data editor James McDonald said: “I think there is a core group of advertisers for whom print works, and continues to do so, and this is partially reflected in the revenue figures, which have begun to show signs of stabilising.

“Direct mail is still the fourth largest advertising medium in the country – at £1.7bn in 2017 – so any slowdown here is likely to have a negative impact on the wider print market.

“Growth in the direct mail ad spend has tended to be cyclical over recent years, with a positive year followed by a corrective soft one – this is what we have seen over the first few months of 2018 and expect to play out over the course of the year.”

In its forecasts across the remainder of the year and into 2019, AA/Warc suggested that spending on direct mail could decline by a further 4.1% by the end of 2018 and by 3.8% in 2019.

However, rather than being a cyclical correction some have suggested that the dip in DM activity was the the result of the introduction of new data protection rules under GDPR.

High Wycombe-based First Move Direct Marketing has found itself combating a number of misconceptions and myths around the restrictions enforced on direct mail as marketers have become increasingly cautious of data-driven advertising.

Managing director Rachel Smith said: “I would say the first part of this year has been less predictable than in the past, and I would put that down to GDPR meaning people no longer know what they can and cannot do.

“It is not widely known that direct mail comes under legitimate interest and does not need the same consent as digital adverts. If you complete the right assessment forms, then you are fine to go ahead, but people assume you need the same caution as with email or phone.

“We have started contacting our customers and prospects through direct mail ourselves in order to show them this information and to bust the myths around the format and I anticipate a more optimistic future for direct mail than the AA/Warc figures suggest.”

Among non-print ad spend comparing Q1 2017 to Q1 2018, online adverts saw a 10.8% boost, radio went up by 12.5% and television saw a 5% jump. Forecasts for the rest of the year see internet spending grow at a rate of 9.8%, radio by 6.9% and television by 2.5%.

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