• by Jack Loechner , Staff Writer @mp_research, January 12, 2005

DM Budgets Up in US and UK, but MSPs Need Better Strategic Understanding

Alterian, a provider of database solutions, recently released the results of its annual trans-atlantic survey. The 2004 survey examined attitudes of marketers and marketing service providers (MSPs) in the UK and North American direct marketing industries.

Key findings reveal that while both MSPs and marketers are optimistic about the state of the market and prospects for 2005, major issues still need to be overcome and investment challenges met. 60% of respondents said their DM expenditure was expected to increase over the next 12 months while only 5% believe it will decrease.

Major business opportunities for MSPs were highlighted:

• "Database marketing and analytical expertise" as the area where MSPs can make the most valuable contribution, also reflecting the forecast rise in DM spending.
• "Marketing strategy and planning" was the second most popular answer with a quarter of votes.
• "Campaign planning and execution" being the second lowest choice, attracting only 8% of responses.

The study underlines the shift in marketers' perceptions of MSPs, from execution houses to providers of more consultative/strategic services.

The survey revealed that the primary challenge for most marketers when using an MSP was lack of strategic understanding of client's business, with 40% of participants indicating this. MSPs also believed it to be the biggest challenge when working with them (42%). Concerns about cost remain high with marketers stating this was the second most important concern.

David Eldridge, CEO of Alterian, said "Marketers are keen to work with MSPs which can add value in the area of database marketing. However, these service providers must also satisfy the requirement for an improved strategic understanding of their clients' operations."

Marketers and MSPs were in agreement on what the three main areas of focus over the next six months should be:

• Improved tracking and measurability of campaigns (30%)
• Provision of the ability to explore customer/prospect data (32%)
• Analytical solutions (24%)

MSPs and agencies which have not already aligned with this market demand, says the report, need to re-assess their focus if they are to take advantage of future growth opportunities.

Eldridge commented: "The optimism on both sides of the Atlantic is incredibly encouraging; it reflects both the UK's DMA 2003-2004 Census which forecast a return to growth for the direct marketing industry and recent findings from Forrester Research that reveal database marketing budgets and influence are rising in North America."

You can find out more here.