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The direct marketing industry has been on a relentless growth curve for as long as most people can remember. It might have flattened off a little in the past year but the IPA's most recent Bellwether Report will gladden the heart. In Q3 of this year, DM budgets were revised up by nearly six per cent on average, compared with advertising spend which slumped by nearly four per cent.

It's hard to argue with the fact that growth is good news for everyone in the DM food chain. But there's a flipside and one that's of growing concern for an industry that's being scrutinised and legislated like no other. Are the principles of direct marketing being forgotten in the rush for growth, leading to a general slide in standards?

For Adrian Robertson, head of direct marketing and new media at Walt Disney Parks and Resorts, there's no doubt that standards have taken a nosedive.

"There's definitely a falling-off in standards," he says. "This is partly to do with the number of people coming into the industry who don't necessarily have a sound grounding in what makes good direct marketing. The fact that it's meant to be measurable and actually achieve something is lost in some of the work I see. If you can't state some sort of result at the end of it, it isn't direct marketing."

Widening DM remit

This statement causes some murmurings of dissent from Sean Dewhurst, business director at Tullo Marshall Warren. "DM encompasses more than that now," he argues. "Certainly for us looking from the agency point of view, most of the growth in terms of getting new clients has been in FMCG. And FMCG brands are all about building brand equity. The likes of Unilver and Diageo are spending increasing amounts of money on what they call relationship marketing, which uses direct channels but isn't the traditional volume-driven or response-driven direct marketing."

Robertson accepts this but adds that nevertheless there should be a result at the end of the activity. DM may indeed be moving into the brand-building space, but measurement shouldn't be left behind. And it isn't, counters Dewhurst. "It does have a result - it's just that the measurability has to be done through different channels because there's an intermediary, the retailer, getting in the way of your brand and your consumer. But if you research consumers' attitudes properly through a control group, you can prove the amount of leverage you can get from a well co-ordinated DM campaign," he says.

But Dewhurst does add that those FMCG brands that have embraced direct marketing are often unique in their commitment to tracking shifts in consumer attitudes. For the majority, the basic principles of customer interaction can indeed be neglected.

"There's a rush for shiny databases with more fields than anyone can begin to understand, yet people still have call centres where calls aren't being answered," says Robertson. Paul Barnett, list broking director at Prospect Swetenhams, agrees: "Forget about CRM, for many it's back to the basics of not mailing your own customers. You need to return to those basic principles."

You would have thought that something as fundamental as suppressing prospect data against existing customer data would be a given, but unfortunately it is not. In fact, the extent to which the DM industry embraces suppression products in general is a good marker of its maturity. Striking people off a database who have died, no longer live at the address or have registered with the MPS, should be the very basics of ethical direct marketing.

But take-up isn't what it should be, according to Steve Cook, commercial director at Wegener Business Data.

"Quite a few suppression files have been launched this year and I've been surprised at the slow take-up," he says. "It's growing, but it's slow - yet you would have thought it's an easy sell. The mailing is costing you this and we save you this. But people aren't thinking about it."

"It should be about more than economic argument for suppression," interjects Dewhurst. "It's about the reputation and health of our industry rather than whether you can save a couple of quid here or there."

Damaging strategies

Any conversation about the reputation of the DM industry will inevitably turn to credit card mailers. The strategy of saturating the population's doormat in an attempt to gain market share quickly has done immeasurable damage to the reputation of direct marketing, believes Dewhurst. "If you're MBNA or Capital One and don't have any brand equity in the UK, that approach is fine. You play the numbers game and get some response. But if you're a competitor brand with some brand equity, you get sucked into that same game of sending five million mailings a month."

So it's not that standards are slipping across the board necessarily, the panel argues, but that the behaviour of a few tars the whole industry with the same bush. However, there is some defence for credit card mailers from Barnett: "Credit cards have started to move away from prospect pools to multi-data sourcing and that's a big improvement. It's a step in the right direction at least."

There may be signs of improvement, but it's still hard to steer the big mailers away from the volume approach, argues Lee Witherell, client services director at Claritas. "Clients come to us and say, 'I need to mail half a million people to get 10,000 accounts opened'. Why do you think you need to mail half a million and why do you think you're going to get 10,000 off the back of it? What's your offer, what's your profile of customer, what's the market size?"

"Wouldn't it be nice," adds Barnett, "if a client to came to you and said, 'I need to achieve this number of new customers. How few can I mail to get the results I need?'."

But for the questions to start changing, perhaps the way data is sold needs to change too, points out Dewhurst. "To what extend are there deals around that allow the client to pay you based on results? I accept that you need some element of control over what was being sold, how appropriate it was to the target audience, what price it was and so on. But do those mechanisms exist?"

Cook is quick to respond. "The problem is it's always the data's fault. And because there's that inbred negativity about it, I don't think I'd do it. Also, it's not as if a client is prepared to pay me a £1 per name anyway. They want to pay 5p a name and then they'd say it's based on results. You're not going to win."

Data is too often bought and sold as a commodity, and this is particularly true when it comes to email data. While email is certainly to be welcomed as another direct channel to be added to a marketer's armoury, it's also temptingly cheap. And that can encourage marketer's to cut corners because they've got less to lose, says Cook.

"We've been surprised by the number of people prepared to buy email addresses even if they don't know anything about what they're buying in terms of the profile of the audience or where they came from. In some respects, targeting and measurability seems to go out of the window because it's not costing much in the first place."

But Cook is also the first to agree that some suppliers contribute to the mindset that data is a commodity to be bought at the cheapest price possible. He cites a firm that was offering a client prospect data for free in exchange for doing some data cleaning and analytics work. "This company offered 20,000 to 50,000 records but the client said, 'if that's how you value your data, you don't understand how valuable data is to me and I'm not interested'. But nine out of ten would buy it."

So if there is indeed a lack of professionalism in some quarters of the industry, it would be simplistic to simply point the finger at the client. Suppliers too can contribute to a commoditised market by undercutting each other and driving down the value of the very services they provide. The net result of this will always be a drop in quality and that's when the industry at large suffers.

Improving data analysis

But this should by no means be seen as the norm, and there are some real improvements being made in terms of data analysis, says Dewhurst.

"The real spurt towards professionalism within DM has been the ease of number crunching," he says. "An agency like ours can now cost effectively buy in enough computing power and expertise to do the kind of analysis that ten years ago just wouldn't have been possible."

From the client's point of view, working with an agency that has both creative and data segmentation and profiling skills is an appealing combination, bringing the two distinct areas much closer together with neither in ascendant. "Previously we were playing in the dark," says Dewhurst. "Now we have enough computers and people to use them to do some decent profiling and modelling work ourselves."

He adds that the agency would also work with a data provider "to find look-alike data". "We have decent relationships with the likes of Claritas and other experienced data providers so we can get access to what's happening in a particular industry without having to outsource all our analysis."

The fact that agencies are increasingly championing good data practice as well as creative excellence can only help to raise the bar across the industry. And some sectors, most notably FMCG, automotive and charities, are recognised by the panel as leading the field in terms of setting standards.

"Charities simply don't have the sort of budgets that large credit card companies boast. Because they're restricted by cost, they have to go down the route of testing and measurability," says Witherell.

Other sectors are improving, including online travel brands, points out Robertson. "The online players have grown up quickly. They've gone from blasting out generic email newsletters to being quite state of the art."

So rather than beating itself up for its failings, the panel agreed that the bad practice of a few shouldn't overshadow the achievements of many.

THE PANELIST LINE UP

Adrian Robertson, head of direct marketing and new media, Walt Disney Parks and Resorts

Robertson joined Walt Disney this year after two years as CRM manager at First Choice Holidays and Flights. He started out in 1995 as DM manager at Ionica before joining BT in the same role in 1997. In 1999, Robertson moved to the holiday sector as DM manager at JMC Holidays.

Sean Dewhurst, business director, Tullo Marshall Warren

Dewhurst spent the first year of his career running a wine merchants in Fulham, followed by 18 months at a sales promotion agency in Hammersmith. He joined TMW in 1993 and is now responsible for its Diageo business.

Lee Witherell, client services director, Claritas UK

Witherell started out in Eagle Star Insurance's market research department. He then moved to CMT as data analyst, leaving to join Equifax, where he set up the analytical function within the marketing services division. He joined Claritas in 1998 and was promoted to his current role in January this year.

Steve Cook, commercial director, Wegener Business Data Solutions

Cook began his career as a business analyst for Dun & Bradstreet in 1981. He joined the B2B DM unit in 1987, becoming general manager in 1992. Cook took up his current position in November 2002.

Paul Barnett, list broking director, Prospect Swetenhams

Barnett started as an account manager at Thompson Directories, before moving to Experian in 1997 where he was a senior manager looking after the mail order, charity, motor, FMCG and entertainment sectors. Barnett joined Swetenhams in May 2003.

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