In Spain, with its 38 million population and 14 million households, direct response advertising has grown at a rapid pace in tune with the country’s speedy economic expansion since its entry to the EC in 1986. Since 1985 the medium has grown by approximately 30 percent to 35 percent and it is thought to account for 8 percent of the total amount spent on advertising.
Yet despite this growth, expenditure is still relatively low compared with other EC states, and because of a comparative shortage of figures and facilities, Spain presents a number of difficulties in using direct response advertising.
There are only 10 major agencies and five computer bureaus of significant size that specialize in direct mail. Major laser printers number only six, and of the various mailing list suppliers there are just five of importance. There are, however, 12 specialist lettershops.
While there are severe legal restrictions applied to direct mail relating to sweepstakes, there are no restrictions on mailings offering premiums, games of chance or competitions.
No geodemographic system exists in Spain, although there are at least two service companies (one an agency and the other a computer bureau) that are actively investigating microsegmentation and hope to produce a system soon.
Spanish towns have a five-digit postcode with only one level of postcode sorting. Bulk mailers are required to sort by postal rebate sequence and, as a result, obtain rebates of between 15 percent and 25 percent. Postage rates are currently relatively low — a factor that is believed to have contributed significant to the growth in direct mail.
There are no statistics available for the size of the list business in Spain, but oe experienced industry observer estimates the number of addresses dealt with by brokers at 1 million. Rigorous controls are applied to ensure that lists are not copied when they are supplied to computer bureaux. Settlement of invoices is expected within 30, 60 or 90 days, dependent on the client. Some brokers require either total or partial advance payment from new clients.
In the absence of reliable statistics, opinions and experiences vary widely as to the number of clients that are willing to provide response data. It seems, however, that in general, clients are cooperative, and approximately 40 percent do supply response data.
In general direct response advertising is felt to be successful, although the lack of professionalism and proper planning of the past may not have been completely eradicated. But campaigns now garner strong results and there is considerable customer loyalty to continued campaigns and promotions.
The future of direct response advertising in Spain is unpredictable. In the short term, the industry is expected to boom, partly because it is as yet underdeveloped and can therefore only expand in the current economic climate; and partly because the ongoing arrival of the major international agencies in Spain will virtually guarantee continued rapid growth.
Besides being the year of the inauguration of the single European market, 1992 has further special significance for Spain. Three major events are scheduled which are already imposing a profound expansionary effect on the economy: the full integration of Spain into the EC, the Olympic Games to be held in Barcelona and the World Expo ’92 to be held in Seville.
While people within the industry are looking forward to enormous expansion, they also point out that greater facilities and resources are required and that there is a need for more professionals in the business. While there has been a successful launch of the 900 toll-free telephone number, there is concern that Spain’s full accession to the EC will bring greatly increased postal charges.
By contrast, the Netherlands is one of the most sophisticated of the European countries using direct mail. In the Netherlands — with a population of 14.6 million and 5.6 million households — direct mail accounted for an estimated 22 percent of all advertising expenditure in 1988, while the volume of addressed mail in 1987 was 588 million items.
Data protection legislation came into force for the first time in the Netherlands on July 1, 1989. It had been in the preparation stage for around a decade. And, in the meantime, since the pressure from the Dutch government and consumer organisations has been intense, direct response advertisers (and in particular members of DMIN, the Dutch Direct Marketing Association) have had a self-imposed code of conduct.
Towns in the Netherlands have a four-digit postcode and there is only one level of postcode sorting. Substantial rebates are available to bulk mailers, ranging from 19 percent to 53 percent, and while sorting by postcode sequence is not mandatory, the financial penalty is high if mail is not sorted.
Legal restrictions on mailings involving lotteries are severe, but are less strict on mailings involving sweepstakes, premiums, games of chance and competitions.
There are three geodemographic systems available in the Netherlands: MOSAIC, developed by CCN, Omnidata, developed as a result of the cooperation of Reader’s Digest with the PTT, and Geomarktprofiel. There are a number of list suppliers of which only three brokers can be considered major. In addition, The PTT is an important source of consumer lists. The list business in the Netherlands is estimated to be worth around Dfl. 25 million. Of this, 70 percent is thought to result from direct deals with owners and 30 percent to have been accomplished through list brokers.
The list brokerage cycle operates in a very similar manner to the EC, with clients signing a contract outlining the rights of address use and the penalties that can be incurred if a list is misused. The list broker’s commission is normally 10 percent to 20 percent of the price charged per address. About 70 percent of the clients are normally willing to provide response data from their campaigns.
According to an experienced Dutch direct response advertising observer, a number of suppliers are currently “dabbling” in direct marketing. This was expressed in the views of these advertisers in a survey that was recently published by BBDO in which 33 percent said they are not satisfied with the level of suppliers’ expertise. This criticism was leveled notably at the agencies.
There is overcapacity among lettershops at present. Medium-sized operations with limited machinery available are experiencing increasing difficulties.
It is expected that greater technical expertise and the integration of computer, laser printing and lettershop facilities will be important in the future.
There are already a few examples of integrated “high tech” production facilities. They originate from the forms printing industry. Three forms printers have set up production lines on which they produce complete personalised full-colour mailing packages ready for delivery to the post office. These facilities are very cost effective if the mailed quantity is at least 250,000 and the package does not contain too many changing elements other than personalisation. Then, of course, there remains large mult-disk data depositories with several RAID 5 and RAID 10 server banks. Each is backed up to ensure data recovery problems are minimized. In cases of catastrophic hard drive crash, an expert is called in.
The list brokerage business in the Netherlands is relatively small and seems likely to remain so. This is mostly because the country itself is small and does not allow room for specialised lists with sufficient addresses per list to be of commercial interest. Agencies which used to have their own list departments have reverted to using the few outside brokers available. The protitable segments in the list business are company addresses with a high level of detail per address (e.g., medical people, computer users).
Among laser printing bureaux there is a wide selection of specialised companies which are expert in dealing with direct mail. The computer service bureaux are seen to be lagging somewhat compared with the laser printers, but these are likely to develop further in the course of the next five years.
The direct response agency scene is now dominated by the mostly American international advertising agency networks, notably the ones with a specialized direct marketing division. The main reason for their success is thought in the Netherlands to lie in their willingness to invest “up front” in capable people and good facilities. This investment impresses and attracts major local advertisers. Additionally, within their general advertisers’ client base, they aggressively pitch for the specialised direct marketing part of the business.
As the largest list supplier in the business, the Dutch post office has done a great deal for the popularity of direct marketing. It has also been a strong promoter of international direct marketing. But since the post office was recently privatised we have no wait until the transition to becoming a private company has become fully effective.
For the future, direct response advertisers are watching the opening of country borders with interest, in order to determine what effect new legislation will have on the industry.
The new data protection and privacy laws also make their mark, although at least one observer has expressed grave doubts about the practiciality of stringent legislation being enforced as the use of databases is probably already too well established.
Following five years in the wine trade, Frank MacGinty joined Thames Television and made substantial progress in developing the company’s advertising sales business. He then moved to Airship Industries where he successfully established its passenger carrying airships as an advertising medium in Australia, Japan, Europe and North America, on behalf of the Bond Corporation. MacGinty now serves as chief executive of the Direct Mail Sales Bureau.