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Rather like the Government, it seems many senior direct marketers fear the worst thing the industry can do in the current climate is panic. Instead, they suggest, this period of uncertainty is a time to take stock and think hard about what customers want - and how they want to receive it.

This is particularly true of financial services' clients. "It makes perfect sense to look more closely at our own customer data, taking a holistic view as to what customers' financial needs and pressures may be," says Paul Clark, head of acquisition at Abbey credit cards. "By targeting those customers we know most about, we give ourselves the greatest chance of achieving long-term customer value."

The uncertainty is putting particular pressure on those responsible for new business development. But Richard Lloyd, former head of B2B at Experian who now runs InfoUK, part of data giant InfoUSA, is determined to see virtue in the downturn. "We're telling clients and prospects that now is a good time to get a message out there as volumes of mail and emails are dropping," says Lloyd. "Clients can get standout, especially if they're offering a product or service that gives their customers a chance to save money."

Agencies and suppliers will be under pressure to cut prices, but Lloyd says companies should resist this. "We need to emphasise the value we bring clients," he adds.

Many are forecasting a rejection of clients' hitherto acquisition-hungry approach in favour of a more CRM-led strategy, with channel preference and optimisation at its heart. Dave Webber, product and marketing manager at Transactis, says: "If there was more attention given to which channels or which combination of channels were providing the best performance, campaigns could be optimised accordingly."

Data supplier DLG is perhaps the most high-profile supplier affected by the credit crunch. Its CEO Jeremy Whitaker is vowing that "it's business as usual", despite the fact that its parent, Kaupthing Singer & Friedlander, the UK arm of Iceland's biggest bank, was put into administration by the UK government.

The IPA Bellwether survey has added to the gloom. It recorded another negative quarter for direct marketing and negative readings for all sectors of marketing spend except for the internet and search, which were both slightly positive.

Blue Sheep's executive chairman, Iain Lovatt, urges clients to stop taking a short-term view of ROI. "Sometimes it's a case of 'if I can't prove it will pay back on day one, I'll cut back'," he says. "Many then spend more on PPC - which can be a short-term payback, as these customers tend to be more transient in nature."

As clients start to finalise budgets for 2009, Lou Barber, MD at Proximity London, says that brands need to focus on regular customers and avoid knee-jerk reactions. "The slash-and-burn approach to budgets is a dangerous tactic. Brands need to nurture customer relationships more than ever."

Clients can do their part by breaking down internal silos. "Marketing communications is very 'sequential' with people working in isolation," says Kevin O'Donnell, marketing manager at Xerox. "It can be a game of Chinese whispers at times."

The days of "unaccountable excess" are dead, says Abbey's Clark. "We're looking at suppliers who understand that marketing budgets are under daily scrutiny as companies adapt to the unfolding situation," he says.

Q: How has the financial crisis affected client morale and their intentions to spend on marketing services?

EDWARD WEATHERALL - Managing director, Concep

"Marketing departments always get seen as a cost centre. Now, they'll have to fight their corner even more. But clients must invest in marketing when times are hard. I think the big challenge is that sales and marketing departments are often competing. Sales might think, 'I don't want to give marketing my data. I might not get so much commission.'

"Compliance will grow in financial services - there'll be more tick boxes. Marketing departments weren't demonstrating what they were doing in good times, and they'll now have to pitch must harder.

"This widespread lack of trust means that the route to market is being delayed. We're seeing marketing directors able to sign off £10,000 as opposed to the £100,000 before. Digital projects can be up and running in a week, but if sign-up slows, it will be delayed."

Q: What do brands need to do to survive this storm? Do they have to shift emphasis in their DM spend in any way?

HEATHER WESTGATE - Managing director, TDA

"It's important not to panic. Also someone's bad news might be someone else's good news. Too many have been going down the acquisition route. Looking after existing customers is extremely important now. And it costs less than acquisition.

"Brands will have to decide whether to keep separate or to merge. Entire strategies will be rethought. This could be a positive.

"At the moment, we're still working for the Derbyshire Building Society, which is being merged with Nationwide, and as far as we're aware the brand is carrying on marketing as usual.

"People have been too singular about channel. This situation may in fact produce better DM - in conjunction with the right mix of PR, advertising, sales promotion and direct."

Q: How has the credit crunch affected your clients, and how can you protect your agency from the fallout?

ANDREW BURGESS - Managing director, Equi=Media

"This is an abnormal period. Things are taking place that are beyond our control.

"I have a client who wants to spend on marketing, but can't lend to customers. They can't place the loans. Others - car manufacturers - have moved to four-day weeks. I think we'll see a lot of (client) redundancies in the forthcoming months.

"It's about ROI, being trackable, providing a line of sight. Luckily, we chose to diversify 18 months ago. We used to have 80 per cent financial services clients - now it's 40 per cent.

"We're also trying to streamline, so clients can get the data they need quickly, especially in an emergency. We're moving into things such as website build, user journey analysis and creative work. I think the advertising business will be challenged."

Q: Brands may question direct mail's ROI in a downturn. How can they ensure they're investing wisely?

DAVID COLE - Managing director, CCB

"The whole DM industry hasn't embraced the web in the way it should have. It's fast, cost-effective, quantitative and insightful. In a traditional test using direct mail you can only test the one variable. So the chance of getting it right is slim.

"In times of volatility, people turn to research for reassurance because the downside of getting it wrong in a recession can be severe. It will be even more important now to use the web to learn and use the traditional processes to sell.

"Most things are sold offline. Mail is still powerful, but it takes time to test in the conventional DM way. Yet to stop using it is wrong."

Q: How have suppliers such as Capscan been impacted? Can you trim your sails any more than you may have done?

TERRY HILES - Managing director, Capscan

"We've not been affected as yet, although some customers are reducing the number of licences and the volume of direct mail they send out.

"It helps that our software saves money by making direct mail more targeted, thereby reducing wastage and the amount of mail sent to the wrong address. That means you get discounts from Royal Mail.

"SMEs and mailing houses will need to watch their overheads more. But many are fairly lean anyway."

Q: Which sectors are feeling the pinch, in your company's experience? What's your strategy for the future?

RACHEL ROBINSON - Business development manager, Teleperformance

"We've seen the effects in travel and leisure. There's been a drop-off of about 20 per cent in inbound response handling. People are travelling less, and there's not a lot companies can do. And there's more to come as clients are now having conversations about their 2009 budgets.

"But we're not as impacted as some may be, since we have governmental clients and their calls are continuing as normal. Crisis management or emergency calls have actually gone up.

"The market is slightly tougher now; we need to refine what we do. I don't think we can make cuts anywhere else. The service industry has been running so leanly for the past 15 years, with the pricing often the same as it was 15 years ago. We may have to end up forcing customers to pay a premium."