±±¾©Èü³µpk10

It has finally happened: concrete evidence is at hand that the direct mail industry has reached a tipping point. After years of complaints that companies carpet-bomb millions of homes with the same offer and letter, regardless of the circumstances of who lives there, there are signs of a movement by major players toward a more targeted approach.

According to research compiled exclusively for Marketing by Nielsen Media Research, the average size of direct mail campaigns has significantly decreased after peaking two years ago, when the number of bumper mailshots was pumped up by the saturation approach of financial services companies.

In the 12 months to June 2005, the average size of a direct mail campaign in which each personally addressed letter is identical fell 13%, to 97,377 mailings, while the overall volume of direct mail dropped only 5%, to 3.7bn letters. The trend toward smaller, more targeted campaigns has been accelerating this year, with the average size of a campaign between February and June plummeting to 92,315 mailings.

This fundamental shift is attributable to factors including a greater emphasis on customer retention, better data, more widespread use of data cleaning, more sophisticated targeting techniques, and the growth of data analysis specialists.

Reasons for the decrease in volumes include the onset of online marketing, reduced spends overall and, most worryingly for marketers, the rising number of consumers requesting that their names and addresses be removed from mailing lists.

Financial driver

Just under £2bn was spent on direct mail during the 12-month period researched by Nielsen Media Research, of which 51% was accounted for by the top 100.

Thirty eight of the 100 biggest direct mail spenders came from the financial services sector. Indeed, finance brands alone spent £604m - 30% of the total. However, their investment was down a dramatic 19%, while overall spend slipped only 5%. The top three spenders - Capital One, Lloyds TSB and MBNA - reduced their direct mail budgets by 9%, 27% and 47% respectively.

'The days of mass marketing have gone; the average number of mailings in recent years was inflated by a small number of credit-card players,' says Sean Larrangton-White, founder of Tank!, a forum for financial direct marketers.

Richard Roche, head of media markets at Royal Mail and a former head of marketing at Alliance & Leicester, says that until recently, credit-card companies used direct mail as other brands use TV - a way to get a single message to as many people as possible. But their strategy is changing. 'Historically, they have been incredibly successful with saturation mailings, but they are now taking an approach that better mirrors the strength of mail,' says Roche. 'They still pump out a lot of mail, but it is being used with more personalised messages.'

MBNA imported the blanket-mailing approach from the US in the 90s, grabbing significant market share from traditional UK credit-card companies such as Barclaycard by promoting offers such as 0% interest for six months on balance transfers. However, once the majority of its rivals began to offer similar deals, consumers soon learned to move their accounts each time the interest-free period ended, and MBNA's strategy was becoming economically disadvantageous.

According to a study released in April by Professor Merlin Stone of Bristol Business School, the industry cannot afford to continue to offer interest-free periods, because consumers switching their credit deficits to lenders is costing the industry £80m a month. To balance the books, companies have started to introduce charges, such as applying a balance transfer fee, annual fees or higher interest rates.

David Lamb, chairman of the DMA Data Council and group data delivery director at Wegener Direct Marketing, says that as mass-mailing offers bring customers in only temporarily, financial services firms are having to change their tactics. 'They have changed strategy because they are not getting the returns,' he says. 'They are looking at targeting more closely and that has significantly affected the overall volume for everyone.'

Instead of judging the success of a direct mail campaign based purely on the number of consumers who respond, companies are now looking at the 'lifetime value' of potential customers and cherry-picking longer-lasting relationships.

A quick scan of the top 100 direct mail spenders in the year to June shows significantly lower spends by nearly all the credit-card brands, and an examination of the figures over a longer period confirms this more targeted approach. In the first half of 2000, the average volume of a direct mail campaign was 269,000 identical letters to addressed homes.

In the same period five years later, the average monthly mailing size had slumped 63%.

The fall in figures for the biggest mailers is even more dramatic. In the first half of 2000, MBNA's monthly campaign volumes averaged 330,000; this year, the equivalent period accounted for just 72,000 letters. Capital One went from 259,000 to 150,000, and Barclaycard from 261,000 to 56,000.

MBNA is now placing greater emphasis on targeting techniques and has shifted budget online, where observers say it has had success. A major factor in MBNA's lower spend is that the bank now supports several hundred affinity cards, whose spends would not be reflected in Nielsen's measure of the parent. Industry observers say the customer bases of affinity partners provide MBNA with opportunities for greater targeting.

The company is also placing more focus on retaining customers, reflected in its recent appointment of loyalty pioneer Carlson Marketing to help it reduce churn.

Indeed, financial services firms in general are now placing greater emphasis on communicating with existing consumers. In the 12 months to June, financial marketers allocated 38% of their direct mail budgets to existing customers, rather than prospects, six percentage points above the average across all industries. (The Nielsen Media Research figures include only personally addressed letters through the post and do not normally count routine communications with customers, such as bank statements or bills.)

The financial services sector assigns the sixth-highest proportion of direct mail spend to customer retention, after utilities and retail (53%), clothing (51%), supermarkets (50%) and computers (41%). More recent entrants to the UK financial services market that lack a high-street presence tend to spend a greater percentage on prospects. These include Capital One (98%), Egg (84%), Morgan Stanley (96%), Citicard (98%), Esure (99%), Goldfish Bank (99%), Virgin Money (99%) and Mint (94%). Even MBNA, for so long notorious for its acquisition strategy, now spends 23% of its mail budget on retention.

Volume vs quality

Credit-card marketers are not the only ones to have used volume mailings as a quick fix. Traditionally, the first question a managing director desperate to hit monthly sales figures would ask the head of direct marketing was whether the company had increased the number of mailshots.

'You often had client companies saying "We need to mail as many people as possible." That has been the brief coming through, instead of "mail the best people". These days it is less of a volume numbers game, and there is more focus on ROI,' says Wegener's Lamb.

Dawn Orr, who has led a number of UK lifestyle data companies and is now data group leader at data giant Acxiom, believes the industry still has a volume mindset that needs to be overcome. 'Everything revolves around volume,' she says. 'Everyone in the direct mail industry has been conditioned to launch big campaigns so they can get volume rate discounts for buying data, paper, envelopes, printing and postage.'

However, Lamb believes some marketers are starting to wean themselves off junk mailings. 'Companies are realising they should target more and not mass-mail. That is why we are seeing a reduction in average volumes in campaigns,' he says.

Tracy Weir, vice-president of CACI Marketing Solutions, which uses lifestyle and location data to provide customer insights, says another major reason for greater targeting is that clients are starting to understand what is available to them.

She explains that data and tools for targeting have been available for several years, but it is only now that greater numbers of clients are picking them up. 'There is a greater degree of sophistication in client awareness of direct marketing techniques than there was 10 years ago. They are gradually learning what is possible and cutting out the bottom end of those never likely to respond.'

At the same time, although campaigns are smaller, their frequency is increasing, according to Chris Archer-Brown, managing partner of Clarity Blue, one of a clutch of new strategic customer analytics companies that advise marketers on the data they buy from third parties and how to link different data sources with internal databases to paint a picture of customer behaviour.

Consumer insights

One of the five biggest spenders on direct mail from the financial services industry outsourced its customer database hosting to Clarity Blue. Previously, the client would have bought in lists, combined them and mailed a single message to a huge number of potential credit-card customers four times year, but now it employs a frequent, tailored approach.

'We built it a prospect pool for credit-card mailings. We consolidated its third-party data such as Electoral Roll, specialist lists and geodemographic information. This dedicated prospect pool allowed for micro campaigns tailored specifically to different types of consumers,' says Archer-Brown.

'It enabled us to identify trends within the existing customer base, build up a portrait of that consumer, then transfer those traits to the rest of the prospect pool so the company could spot potential customers.'

Such bespoke databases allow a speedier turnaround time to react more quickly to emerging consumer trends. 'Our experience with clients is that while the volume of campaigns has gone down, the frequency of campaigns has gone up. We do up to 50 campaigns in a month versus four campaigns in a year,' says Archer-Brown. 'The ability to deliver more specific messages to small groups has allowed a fundamental reorganisation of clients' marketing process.'

According to the Nielsen research, the number of individual campaigns being run has jumped by 29% since 2003, even though the overall volume of mail has remained static.

The introduction of more sophisticated data products has helped companies time campaigns to better effect. Customers are most susceptible to direct mail offers at certain life stages, according to Acxiom's Orr, and there is an increasing number of data products to help marketers identify 'triggers' which other media such as TV and print cannot exploit.

'Timing is a huge issue in financial services,' says Orr. 'Triggers are very important, so everyone is making use of change data, such as people having a baby, receiving a windfall when a parent dies, or purchasing a house. Even with customers such as Sky, data on moving house, adding an extension or having a baby can be an important trigger.'

In addition to buying in lists to identify triggers, companies are becoming more sophisticated at monitoring their in-house customer databases to spot emerging trends. With credit cards, the trigger for cross-selling a personal loan, for example, could be a change in spending behaviour or the customer's use of cards in an unusual manner.

David Coupe, managing director of data and services company Experian Marketing Services and previous chairman of the DMA Direct Council, says that companies are taking more care with their data. 'There is definitely an increased use of suppression using Mail Preference Service (MPS) and gone-away files compared with five years ago,' he says. Where once companies might use one or two rudimentary suppression files, Coupe explains that there is now a whole 'sub-industry' of companies offering a variety of them. 'We have seen a phenomenal rise in that area.'

Indeed, when buying lists of names and addresses, clients are increasingly practising 'data hygiene', checking names against records of people who have died, moved or do not want to receive direct mail, because they are one of the 2.4m people who have signed up to the MPS.

Larrangton-White of Tank! says good use of data is key to driving down costs and driving up acquisition and retention. 'Data is the most important element in any prospecting campaign; if it improves marginally, it will have a disproportionate effect on the final results of a campaign,' he says.

Pre-screening efforts

Another filter being used by companies to cut back on mailings, especially those within financial services, is pre-screening prospects for their creditworthiness before sending the offer. 'It costs a lot of money to acquire people and it should be considered whether it is worth the effort,' says Lamb.

According to Coupe, pre-screening prospects benefits both sender and recipient. 'Pre-screening is all part of a change in behaviour. Why should a client mail somebody if they know they will refuse the person if they respond? There has been an increase in the sophistication and competition for pre-screen. It is something that has always been done, but now it is done better and more responsibly.'

In addition to so-called 'real' data - how customers have acted in the past or what they have revealed about themselves by filling out a lifestyle questionnaire - companies are also modelling information. This involves the client providing a data specialist with a profile of its best customers, which is then compared with anonymous, aggregated data. Once matches are found, the client can send out mailshots to similar types.

'Modelling has become more sophisticated,' says Larrangton-White. 'Now we are introducing more propensity models - not only what people purchased in the past, but what they are likely to need to buy in the future.'

Clients have used real and modelled data for years, but there has been a rise in marrying the two, according to Coupe.

'Another factor in the lower volumes of letters being mailed is the continual evolution of targeting techniques,' he says. 'In the past, a company would either use actual lifestyle information on an individual, based on a survey they had filled out, or we would have certain bits of information on an individual, based on modelled, rather than actual, data.

What is happening now is that companies are using a combination of the two. There is definitely a growing use of far more sophisticated modelling techniques.'

Loan broker loans.co.uk, the UK's 15th-biggest spender on direct mail, according to Nielsen Media Research, has historically sent the same mailer to all recipients. Now separate mailers are sent to different segments, according to marketing director Andy Pelley. For instance, the company now sends an 'upmarket' or a 'downmarket' mail pack with different offers and creative designed to appeal to the motivations of each group.

Peter Ramsdale, director of Iceberg Marketing, whose clients include loans.co.uk, Clydesdale Financial Services and Coventry Building Society, says that it is more economical for companies to test the response to different packs. 'We are doing an awful lot more testing and I think it is the same with a lot of companies. Historically, financial services companies would have sent out 1m packs all the same, whereas now, there would be 10 different packs,' he says.

In April, Royal Mail changed its volume-based pricing, so discounts that once kicked in for mailings of 1m pieces now take effect for those comprising as few as 100,000 letters. 'For companies that mail in the millions, this means that they can conduct more creative and targeted tests,' says Ramsdale.

On a broad industry level, there are two approaches at work. On one hand, companies are buying in lists and data as always to mount campaigns, and applying slightly better techniques to avoid waste. On the other hand, there are clients whose focus is on data strategy, not campaigns.

'My business is splitting into two,' says Acxiom's Orr. 'There are those companies that want high-end, intellectual, proprietary interpretation.

This is where we carry out bespoke work for high-value, low-frequency clients, such as Sky, BT, Capital One, MBNA and Asda. They are the ones that are now interrogating and honing down their targeting to really understand the value of data.

At the other end are the companies that do a decent job of targeting, and take a more DIY approach of just buying in data for campaigns.'

It is an experience shared by other companies supplying direct marketing data and services. 'If you look at our own business, traditionally it started from supplying geodemographic data, but we are finding our analysis teams are the fastest-growing side of our business,' says Shelagh Regester, client services director at CACI Information.

At the same time there is a rise in companies that aggregate and benchmark third-party data on behalf of clients and integrate the information with customer databases, such as Clarity Blue and Alchemetrics.

Clarity Blue, for instance, has built separate databases for all the major mobile phone operators, recording the time, length and tariff of each and every phone call. Analysing this consumer activity helps the mobile operators develop new products and services.

'One company has used the insights from its database to proactively make sure its customers are on the best tariff, and to refund them automatically if they are not,' says Archer-Brown.

'All this is done to drive retention. We help at a macro-level to understand customer behaviour to make sure the companies are designing the right kind of products, tariffs and bundles to fuel a high uptake, then create specific messages to retain their customers a little longer.'

CACI also uses customer insight to design tailored products for mobile clients. 'The mobile phone market is one of the most commoditised markets out there, with very few points of differentiation,' says CACI's Regester.

The trick is to identify the most lucrative customers and employ direct marketing at key triggers in the customer life-cycle, such as when they are learning how to use a new phone, wanting to experiment with extra services, or when the contract nears its end.

'If there is a high-value customer, you need to offer a higher-value service, as we have seen with American Express or British Airways,' says Regester. 'We help the mobile networks find the nuggets in their customer data, the interesting bits, and then work at a strategic level, which will help them exploit that information,' she adds.

According to Acxiom's Orr, customer behaviour is key to successful up-selling and cross-selling. 'The more you can see changes in the database in terms of behaviour, the more it gives you an idea of what offer to design.'

Another factor that is having an effect on mailing volumes is the rise in online marketing, although Nielsen Media Research's head of media insights, Paul Dunn, adds that its impact is difficult to quantify on an industry-wide level.

According to loans.co.uk's Pelley, his company is seeing more customers completing loans over the internet, rather than the telephone.

The danger, however, is to assume that customers are arriving at the website through internet searches, which would overlook the fact it may be direct mail that is driving consumers online to complete the transaction.

Traditionally, consumers respond to direct mail by telephone, and judged by that response mechanism alone, rates appear to have fallen. But while callers are generally willing to give call-centre staff the code of a mailer, internet users are less likely to type it in on their own initiative, which can artificially reduce measured response rates of direct mail.

In recent focus groups, consumers told loans.co.uk that they search online and do not respond to direct mail. In practice, however, the company has found that this is not the case.

Although it is difficult to trace an internet conversion back to a letter, loans.co.uk has developed sophisticated modelling techniques to come up with response rates. It has found that its customers are responding to direct mail via the internet, which is why the company has not stopped investing in targeting consumers using this channel.

Not all companies are so convinced, however. While Royal Mail's Roche says that many companies, partic-ularly catalogue marketers, are using direct mail to drive consumers to the internet, which is the main channel of conversion, CACI's Weir believes that some sectors in particular, such as entertainment and media, may be using less direct mail because the use of digital media has proved more efficient.

One reason for this is that marketers are being faced with fewer people to whom they can mail addressed letters. Historically, the UK's main list has been the 44.9m names on the Electoral Roll. But since 2003, householders have been able to opt out from allowing their personal details to be used for general direct marketing purposes; that opt-out rate now averages 29%.

Roche is adamant that companies using the Electoral Roll for acquisition may be having to work to find other data sources to reach people, but overall the opt-out clause is having a marginal, rather than a major impact.

CACI's Weir says that all of the main data companies are now using alternative sources, such as information from lifestyle questionnaires, to try to fill in the names and addresses 'missing' from their registers. However, she adds that opt-outs mean that no marketer or data supplier has a complete file at their disposal any more.

'There could be some element of opt-out from the Electoral Roll affecting mailing volume,' she admits. 'There may not be as much data available, especially at the top end - the higher-income demographics are more likely to opt out.'

The irony is that if enough people opt out from allowing the use of their details from the Electoral Roll or sign up for the MPS, there could be more untargeted mail coming their way. Householders who sign up to either scheme can reduce the amount of mail that lands on their doormat addressed to them personally, but neither action can stop a firm from using door-drops to deliver bucketloads of 'To the occupant' letters through the letterbox.

DIRECT MAIL - TOP-SPENDING COMPANIES Company Spend Volume Reten- Acqui- Budget Spend (pounds) tion sition (%) y/y (%) (%) (%) 1 Capital One 39,611,412 88,025,359 1.6 98.4 63.2 -8.8 2 Lloyds TSB 37,381,976 83,071,058 24.9 75.1 68.5 -27.4 3 MBNA Europe 31,675,634 70,390,298 23.4 76.6 92.2 -46.6 4 Saga Services 29,470,546 65,490,102 27.5 72.5 89.8 57.1 5 Direct Wines 29,332,296 34,508,584 23.5 76.5 96.3 -3.4 6 Redcats UK 23,253,561 37,505,744 17.8 82.2 96.7 -1.7 7 BSkyB 22,191,845 40,348,809 11.5 88.5 22.8 12.7 8 Liverpool Victoria 22,032,822 48,961,827 23.7 76.3 89.8 3.6 9 NTL 21,897,681 32,977,075 1.4 98.6 89.1 87.7 10 Norwich Union Direct 21,383,968 47,519,930 15.7 84.3 53.1 35.5 11 Halifax 18,339,518 40,754,485 5.4 94.6 57.1 -9.6 12 Reader's Digest 16,882,105 23,126,172 4.4 95.6 94.1 3.2 13 Book People 16,557,414 22,681,389 37.4 62.6 98.2 33.9 14 Littlewoods 16,507,860 26,625,580 5.1 94.9 79.9 14.9 15 Loans.co.uk 16,017,792 35,595,093 30.0 70.0 92.3 -43.7 16 BCA 15,327,904 20,997,129 5.4 94.6 82.3 -42.6 17 JD Williams & Co 14,599,801 23,548,067 41.5 58.5 36.2 90.6 18 Damart 14,372,430 23,181,339 38.5 61.5 95.6 -27.2 19 First Direct 13,525,696 30,057,102 26.4 73.6 75.9 -26.4 20 Freemans 13,345,151 21,524,438 6.4 93.6 93.3 51.7 21 Saga Holidays 13,157,495 21,929,158 23.9 76.1 77.3 0.2 22 BT 12,735,141 23,154,802 8.7 91.3 15.1 67.0 23 DFS 12,226,655 23,069,161 0.1 99.9 14.2 2.9 24 British Gas 12,211,326 22,202,410 14.5 85.5 34.2 24.3 25 Matalan 11,140,530 21,019,868 0.1 99.9 46.0 -10.8 26 American Express Europe 11,061,565 24,581,257 5.8 94.2 51.9 -22.1 27 HFS Loans 10,457,820 23,239,601 0.00 100.00 93.2 30.7 28 Egg 10,105,822 22,457,383 16.4 83.6 46.2 23.6 29 Morgan Stanley 10,041,248 22,313,884 3.9 96.1 70.3 -41.3 30 RDP 9,812,671 15,826,889 2.9 97.1 100.0 43.2 31 Healthy Direct 9,737,132 12,483,503 17.6 82.4 93.3 47.3 32 Churchill Insurance 9,603,656 11,298,419 14.6 85.4 23.1 174.1 33 Shop Direct 9,551,368 15,405,432 31.0 69.0 37.8 -2.3 34 Thompson & Morgan 9,507,903 17,939,439 9.4 90.6 98.7 46.5 35 Healthy Living 9,469,379 12,140,230 12.9 87.1 94.5 -48.8 36 Cancer Research UK 9,367,736 22,304,132 13.1 86.9 53.7 42.3 37 Grattan 9,286,077 14,977,544 20.8 79.2 93.1 20.9 38 NatWest 8,946,046 19,880,103 35.8 64.2 43.5 0.3 39 Citicard 8,811,603 19,581,339 1.6 98.4 99.9 6.7 40 Telewest 8,800,303 16,000,550 3.7 96.3 50.9 -34.6 41 Consumers' Association 8,754,054 11,991,855 5.6 94.4 87.1 -45.9 42 Debenhams 8,732,466 16,476,350 12.7 87.3 31.3 -24.2 43 Royal British Legion 8,662,381 20,624,716 0.4 99.6 80.6 78.8 44 Kaleidoscope 8,585,138 13,846,997 26.3 73.7 87.8 -27.6 45 Beaconsfield Footwear 8,009,339 12,918,288 10.9 89.1 94.5 9.4 46 Barclaycard 7,990,062 17,755,694 27.9 72.1 56.6 -41.3 47 Flying Flowers 7,977,434 15,051,762 6.8 93.2 79.0 6.0 48 RIAS 7,957,801 17,684,002 3.5 96.5 88.5 56.1 49 Telegraph Newspapers 7,709,396 10,560,816 6.9 93.1 66.7 -26.1 50 Esure 7,666,653 17,037,007 0.8 99.2 31.5 15.6 51 Hospital Plan Insurance 7,586,815 16,859,589 5.4 94.6 100.0 -67.5 52 Nature's Range 7,534,553 9,659,683 4.9 95.1 99.9 23.3 53 Domestic & General 7,497,688 16,661,528 99.7 0.3 99.9 55.2 54 Barclays Bank 7,401,016 16,446,701 18.5 81.5 23.1 -70.5 55 Nat Savings & Investments 7,223,238 16,051,641 63.4 36.6 54.4 94.2 56 Abbey 7,201,628 16,003,618 72.8 27.2 20.5 -28.8 57 Goldshield 7,165,427 9,186,445 8.1 91.9 95.6 -7.9 58 Sainsbury's 6,954,395 13,121,500 51.2 48.8 12.5 56.1 59 JND 6,943,032 11,198,438 8.1 91.9 99.9 13.6 60 Health & Home Shopping 6,813,235 10,989,089 10.7 89.3 80.5 -3.0 61 La Redoute 6,805,648 10,976,852 24.6 75.4 86.8 -15.1 62 Intl Master Publishers 6,698,547 9,176,092 0.0 100.0 93.0 -24.3 63 News Intl 6,634,234 9,087,992 1.1 98.9 17.9 -17.3 64 Goldfish 6,632,596 14,739,101 1.4 98.6 100.0 -64.3 65 Home Service GB 6,499,976 14,444,391 96.6 3.4 100.0 13.5 66 Bose 6,461,119 12,190,790 0.2 99.8 52.8 35.6 67 Yves Rocher 6,415,920 8,225,538 25.3 74.7 99.4 5.7 68 IFAW 6,402,273 15,243,507 22.3 77.7 98.0 29.0 69 PDSA 6,270,243 14,929,149 39.8 60.2 79.3 -28.8 70 Tower Health 6,236,131 7,995,040 0.9 99.1 100.0 92.0 71 Bank of Scotland 6,175,453 13,723,228 27.3 72.7 63.1 -10.6 72 HFS 6,163,504 13,696,676 3.1 96.9 93.5 79.4 73 Bradford Exchange 6,149,100 9,917,904 15.8 84.2 77.3 -39.1 74 Procter & Gamble 6,139,828 7,223,327 4.4 95.6 3.1 -24.1 75 Powergen 6,090,311 11,073,294 25.5 74.5 48.3 131.2 76 RNLI 6,064,279 14,438,760 1.9 98.1 95.3 269.5 77 Virgin Money 6,058,956 13,464,347 0.7 99.3 53.4 -35.3 78 Chums 5,966,523 9,623,424 6.6 93.4 70.9 39.2 79 AXA Sun Life 5,934,967 13,188,816 32.1 67.9 48.4 24.3 80 Mint 5,911,049 13,135,664 6.1 93.9 54.0 -49.4 81 Westminster Collection 5,908,341 9,529,582 0.3 99.7 76.6 -17.5 82 Rodale health books 5,853,812 8,018,920 1.6 98.4 99.8 10.2 83 Everest 5,803,148 10,949,336 0.1 99.9 94.8 -6.5 84 Marks & Spencer Money 5,788,426 12,863,169 96.5 3.5 68.6 -43.0 85 Tesco 5,761,738 10,871,203 40.9 59.1 10.0 -27.1 86 Sainsbury's Bank 5,708,567 12,685,705 5.5 94.5 67.1 -14.3 87 Compton & Woodhouse 5,628,785 9,078,685 13.5 86.5 46.3 68.0 88 Alliance & Leicester 5,610,269 12,467,265 39.6 60.4 26.2 -32.0 89 Norwich Union Personal Fin 5,532,089 12,293,530 0.0 100.0 35.4 -18.2 90 RAC 5,504,760 6,476,188 3.0 97.0 51.3 50.7 91 Bakker 5,466,956 10,315,011 37.6 62.4 99.9 -5.4 92 HBOS card services 5,408,641 12,019,202 29.4 70.6 80.6 -54.9 93 Legal & General 5,305,323 11,789,606 76.6 23.4 62.1 417.7 94 Unicef 5,280,090 12,571,643 5.4 94.6 86.3 18.0 95 Vision of Health 5,212,040 6,682,102 0.5 99.5 100.0 642.7 96 Conservative Central Office 5,142,741 9,703,284 32.0 68.0 47.4 2028.2 97 Tesco Personal Finance 5,047,095 11,215,766 59.0 41.0 23.3 -36.5 98 Direct Line 4,971,976 5,849,384 3.0 97.0 17.8 -33.2 99 Nationwide Building Society 4,937,541 10,972,313 17.2 82.8 19.9 -26.8 100 Natl Geographic Society 4,918,371 6,737,495 1.1 98.9 99.7 -8.3 Source: Nielsen Media Research Note: figures are for 12 months to June 2005

METHODOLOGY - DIRECT MAIL SPEND

Nielsen Media Research, which set up the UK's first direct mail monitor in 1987, manages the country's biggest consumer direct mail panel, comprising 10,000 individuals.

Using information supplied by Experian and the Office for National Statistics, targets are set to ensure that the panellists are representative of the UK population in terms of their region, age and gender.

All targets and performance indicators are monitored monthly, as well as reviewed quarterly and annually.

Each month, the panellists send Nielsen their direct mail. Upon receipt, each bundle is sorted, scanned, coded and filed.

In addition to its direct mail research, Nielsen also measures adspend and volume across press, television, radio, cinema, outdoor and the internet.

DIRECT MAIL - TOP-SPENDING SECTORS Industry Spend Volume Reten- Acquisi- Budget Spend (pounds) tion (%) tion(%) (%) y/y (%) Finance 603,805,203 1,341,533,838 38.0 62.0 39.8 -18.9 Mail order 525,795,148 818,523,343 30.6 69.4 72.3 -3.6 Charity 214,895,968 506,249,675 26.8 73.2 76.6 24.8 Entertain- ment/media 132,134,767 199,493,445 18.2 81.8 14.1 2.3 Travel/ transport 95,265,348 158,755,788 18.7 81.3 17.7 -8.7 Retail 72,491,457 129,296,698 53.0 47.0 9.4 -1.3 Motors 60,589,575 71,468,698 17.7 82.3 6.5 12.8 Pharma- ceutical 57,762,517 74,230,282 16.5 83.5 16.5 21.1 Telecoms 53,658,058 97,569,686 29.4 70.6 8.1 -3.4 Household equipment 31,980,567 59,121,583 22.7 77.3 8.5 6.7 Utilities 31,833,915 56,260,425 53.2 46.8 13.6 -10.7 Cosmetics/ toiletries 20,871,159 27,661,793 25.8 74.2 3.4 -18.6 Drink 16,054,315 19,008,545 22.3 77.7 5.5 10.1 Food 14,564,498 17,510,116 21.8 78.2 2.1 -22.3 Leisure equipment 11,199,074 19,963,851 23.9 76.1 2.0 30.1 Supermarkets 8,684,477 15,489,744 50.2 49.8 6.0 30.0 Computers 8,128,586 14,746,593 40.6 59.4 2.0 -15.6 Political parties 7,073,837 16,664,472 28.5 71.5 40.0 1621.8 Household stores 6,977,335 9,005,877 18.1 81.9 2.5 -23.2 Online retail 5,931,378 10,954,929 16.9 83.1 18.9 133.9 Gardening/ agriculture 5,233,166 9,796,432 11.1 88.9 13.4 -48.8 Clothing/ accessories 4,963,887 8,667,410 51.1 48.9 2.3 -23.5 Household appliances 3,639,857 6,831,126 32.3 67.7 4.0 59.1 Government 1,959,949 4,617,226 18.4 81.6 1.0 -1.5 Property 1,758,463 2,934,470 4.7 95.3 2.4 1.0 Other 206,497 452,017 23.9 76.1 1.2 -16.2 Total 1,997,459,002 3,696,808,062 31.8 68.2 18.0 -5.3 Source: Nielsen Media Research Note: figures are for 12 months to June 2005 Totals may not tally due to rounding