Despite the economic gloom, direct marketing spend in the UK is set to grow 7% this year, driven by investment in email and social media, according to new research from the Direct Marketing Association (DMA).
The report comes just days after the Government announced the UK economy had shrunk by 0.7% in the second quarter of the year.
According to the findings of the DMA’s inaugural Putting a price on direct marketing study, UK businesses reported spending £14.2 billion on direct marketing in 2011 and forecast their expenditure to increase by 7% in 2012 to nearly £15.2 billion.
Growth is expected to be driven primarily by increased expenditure on digital channels.
Companies predict their investment in email marketing will grow by 11.9% to £2.5 billion, social media marketing expenditure will rise by 8.1% to £2.2 billion and total internet search advertising spend will increase by 6.3% to £516 million.
Elsewhere, the report reveals that UK companies on average attribute 23% of their total sales to direct marketing, with this rising to 32% for the travel and leisure sector, 30% for the retail and wholesale sectors and 28% for the financial services sector.
The study also reports a projected increase in the number of people employed by the direct marketing industry. Total industry headcount in 2011 topped 530,000 workers in 2011; this is expected to rise by the end of 2012 with 23% of telecoms and utilities, 15% of business and professional services and 12% of financial services companies expecting to add extra direct marketing personnel.
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The findings were based on interviews conducted by the report’s authors who polled 600 businesses selected to represent UK businesses as a whole.
Commenting on the findings Chris Combemale, executive director of the DMA, said: “While the UK remains mired in a protracted recession, the creative industries are among the few that are performing strongly, with direct marketing in particular making an outstanding contribution to the UK economy.
“The industry is bucking the prevailing trend with increases in overall expenditure and employment figures forecast for 2012.
“As Putting a price on direct marketing demonstrates, the Government must make every effort to ensure the industry can continue to play its part in dragging the UK out of recession.”
The report also includes estimates of the expected cost to businesses of the forthcoming EU Data Protection Regulation, the draft of which was published in January of this year.
According to the businesses polled the average cost per company through lost sales and additional costs caused by the Regulation could potentially reach £76,000, or £47 billion for the UK economy.