For the first time in two and a half years more UK companies have raised their marketing budgets than made cutbacks, according to the latest Bellwether survey.

The survey shows 21% of companies reported that they had raised their budgets in the first quarter of 2010, compared with 16% that said they cut back spending.

This is the first time since the third quarter in 2007 that a higher percentage of companies have reported an increase in marketing budgets than a decrease.

Internet-related marketing has been on the up for some time now and is expected to grow for the third quarter in a row. The proportion of companies increasing digital marketing spend was the largest in two years.

Direct marketing budgets however remained unchanged and PR (which comes in the ”all other” category) was once again down.

42% of marketing executives said they were more optimistic about the financial prospects for their company than they were in the last quarter of 2009. Almost a third were more optimistic about the prospects for their industry as a whole.

So here’s the question – when everything else is picking up, why is direct marketing static?

The growth in advertising spending is real, and is part of the general upturn in the economy.  But direct marketing is in fact in a strange situation, because of the growth of email.

Email appears to offer direct marketing at a much lower price, and indeed many firms that have been running into marketing difficulty have found some solace in email marketing.

Thus the volume of marketing is probably increasing, but the cost of the marketing appears to be going down.

The problem is that just as poor direct marketing can bring in poor results, so this is also true with poor email marketing.  And because it is possible for companies to set up and do email marketing entirely themselves, it is also possible that they can get some very poor results.

For this reason I suspect that there is going to be a further shake out in the field of direct marketing.  But for now the figures showing static direct marketing spend need to take the advent of low cost email marketing into account.

If you would like to talk about email and direct marketing and the comparative use of each, please do give me a call on 01536 399 000.

Tony Attwood