Below the line now accounts for the majority of advertising budgets set by e-commerce companies, with on-line organisations using more direct mail as part of a growing trend towards targeted advertising. Far from being replaced by digital media, direct mail is increasing its share of advertising budgets.
The average annual spend on direct mail by e-commerce companies is £1.58 million, according to a new survey by DMIS. It interviewed 87 companies trading on-line about their marketing budgets and how these are changing.
Total advertising budgets in the sector averaged £9.8 million, with brand.coms* having the highest average at £15.3 million and e-brands* the lowest at £7.9 million. Just over half of companies reported growth in their advertising budgets in the last two years.
Below the line now accounts for 54.7 per cent of ad spend, with dot.coms* spending an above average 58.5 per cent. A remarkably high number of e-commerce companies (17 per cent) report that over 91 per cent of their advertising budget is spent below the line.
Direct mail takes an average of 55.9 per cent of below the line marketing budgets, making it the largest single medium. The biggest spenders are brand.coms*, with an average of £3 million, while e-brands* spend a below average £1.09 million on direct mail.
This heavy usage of the medium is set to continue, with 44 per cent of companies saying they are using more direct mail. Its growth is higher than any other medium - only 16 per cent said they were using the Internet more for marketing, although this may reflect an existing high level of on-line marketing activity.
The main drivers of the shift into below the line and direct mail are a more targeted advertising strategy, which 16 per cent named, greater media diversity (9 per cent), or more direct media (9 per cent).
Jo Howard-Brown, Managing Director of DMIS, comments: "Many e-marketers forecast that traditional direct marketing methods would be replaced by the digital revolution. Instead, e-commerce companies are finding that direct marketing - and especially direct mail - is central to achieving their marketing objectives.
* E-commerce companies in the survey fell into three types:
Dot.coms - Internet-only organisations which exist solely on-line and have no presence in any other channel (11 per cent of the sample).
Brand.coms - Mainstream companies with an established brand that have set up a separate e-commerce division. This may be branded in the same way, be a sub-brand or have its own brand identity (25 per cent).
E-brands - Organisations which have made Internet access a central part of their proposition as part of a multi-channel approach to the market (63 per cent).
