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DM budgets heading upward

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Direct marketing budgets are expected to increase this year for a substantial majority of companies, according to a recent study from Alterian, a database marketing software company.

For its second annual survey, Alterian polled 280 marketers and 281 marketing service providers in the U.S. and U.K. Sixty percent of marketer respondents said their direct marketing budgets would increase this year, while only 5% said their budgets would shrink.

There were no discernable differences between responses from the U.S. and the U.K.

Alterian said the rebounding economy was a major factor in the improved budget outlook.

"There was an incredibly tight economy for two years," said Luke McKeever, exec VP at Alterian. "We saw toe-dipping last year, but what we're seeing now is [marketers] are prepared to put more money in direct marketing because they saw what worked last year."

McKeever said the ability to track results is also playing a part in the increased investments. Recently enacted financial reporting laws have made media that are easier to measure, such as direct marketing, more appealing to marketers. "Legislation like Sarbanes-Oxley has had an impact," McKeever said. "You need to be able to present how money is spent in a more clear and accountable manner."

Thirty percent of the marketers surveyed said they spend more than $5 million annually on direct marketing (excluding printing and postage). Another 22% said they spend between $1 million and $5 million on direct.

Marketing strategy/planning expertise was cited by 22% of marketers as the discipline that would add the most value to their direct marketing process.

Identifying problems

"The really good firms in this space are the ones with a good level of industry knowledge and [the ones that] help me identify what my problems are," said Don Van Scyoc, president of Personal Benefits Consultants, a company that provides insurance to employees during gaps in company coverage.

Twenty percent of survey respondents said data and list hygiene was most important in terms of value. Creative expertise (18%), analytical expertise (15%) and database marketing expertise (14%) were also cited by a number of marketers polled.

The biggest challenge for marketers using marketing service providers, according to the report, is the absence of strategic understanding of their business. Forty percent said their vendors lacked such an understanding.

"It seems you are often trying to teach a contact at the service provider what your strategy is," Van Scyoc said. "Of anyone in the world who needs to live by what they teach, it's got to be marketing service providers." M

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