Database Investment Flattens Out
Don’t expect a big jump in database investment this year.
That’s one of the main findings of Direct magazine’s 2005 database marketing survey.
Just over 33% of the respondents plan to allocate more dollars to developing or maintaining their databases, down from 50% in 2004. Indeed, most firms expected their development and maintenance expenses to hold steady: Conversely, the number forecasting budget decreases, which was in the high single digits last year, fell to the low single digits. And this pattern held true regardless of market segment.
How much should you spend on your system? Across all categories, marketers expected to earmark around 11% of their direct marketing budgets for database upkeep. And almost 25% of those surveyed planned to invest in their systems within the next 12 months.
And what did those firms intend to buy? The top item was expanded data mining capabilities. Others planned to invest in outsourcing their databases, or bringing them in house. And some expected to combine departmental systems into a central location, incorporate a CRM system, buy new software, refresh data from an outside source or append e-mail addresses.
Of course, the amounts varied. Nearly 50% anticipated shelling out $50,000 or less for their efforts, but the average investment cited was $167,000 thanks to a few large-ticket upgrades.
It may be money well spent. Only 40% now calculate lifetime value—the same as last year, with consumer DMers doing it at twice the rate of their B-to-B brethren. But almost 66% use customer data to personalize their offerings or solicitations. And 60% vary the level of personalization they offer based on the customer’s value, while 40% likely will increase their personalization budgets during 2005.
Direct also found the following:
•At 60% of the companies surveyed, marketing departments played a role in overseeing database implementation. Forty percent gave IS/IT departments a role in setting them up, and 29% said that sales had a hand in it.
•Small companies allocated the largest percentage (16%) of their DM budgets to database maintenance, compared with 9% for midsize firms and 8% for those with revenue above $100 million annually.
•Accounting/accounts payable departments keep their data in separate databases at 45% of the companies surveyed. That percentage drops to 36% for sales forces.
•E-mail data is maintained in separate databases by 29% of the responding firms, and online/Web data at 25%.
Direct surveyed 288 direct marketing professionals. For more survey results, visit www.directmag.com
