There's an historic precedent that advises spend on direct marketing and other BTL disciplines will rise when times are tight. Of course, greater accountability, more focused targeting, lower overall campaign costs and a more immediate impact makes BTL all the more attractive to marketers.
This all makes sense when your marketing budget's just been slashed, as you'll probably find a way of making your existing ad creative work harder instead of creating new ones. We all know DM can be relied upon to keep sales ticking over with less initial outlay.
But in this economic downturn, there is a new dynamic that the industry must consider and act upon. The root of the credit crunch has after all been the problems that have arisen from sub-prime lending; selling (mortgages in this case) to customers that couldn't afford repayments.
This lax selling has cost billions of pounds, and interestingly has resulted in a grassroots shift in marketing activity, from focusing simply on mass acquisition, to concentrating on attracting and importantly retaining quality customers who are of more worth to the brand. So now targeting has become more of a business imperative that just a marketing practice. This should ultimately lead to high profits AND lower risk, and this is certainly a good thing for the direct marketer.
However, while the industry is embracing this change, altering strategies to focus on building long-term relationships with customers and shifting budgets towards direct activity to achieve this, it can't be ignored that total spend on the discipline is falling. This is of course driven by the rise of digital, and the idea that it is a more cost-effective form of direct communication.
So, in this latest period of economic uncertainty is it better to be a digital marketer? Will this offer a better a chance of survival? The simple answer is no. Just like those ad campaigns that clients decide to stick with, rather than spending thousands on creating new ones, the cost of redeveloping or launching a new site can also be shelved for a year. Site builds still often make up a hefty chunk of digital budgets. It is digital direct communications that will see the growth at the expense of other channels, and you don't need a specialist digital agency for those. In today's increasingly competitive world, if you can't successfully incorporate digital you can't really claim to be experts at direct marketing anyway.
All communication, regardless of channel, is becoming more ‘direct'. An online advertisement for example, is in essence much more of a direct communication than an advert. With the already unrelenting shift towards more accountable, more flexible and more personalised activity, this economic downturn may just speed up the way direct marketing was naturally evolving within the industry anyway.
It's this shift in the nature of consumers' interactions with brands that will allow direct marketing to hold its own in an industry that will face difficulties as the current financial climate continues to take hold. And it is in-depth interaction, more cost-effective targeting and greater accountability that will truly help the discipline better prepare itself for the other side of the ‘credit crunch' and the issues that a more cautious environment will bring.
Sam Jordan is the managing director of Baber Smith.