Direct mail spend down nine per cent

The report, based on a survey of more than 6,000 consumers by media consultancy Billetts, reveals that declining response rates, a shift to digital and environmental pressures are behind the decline in budget being allocated to direct mail.

Financial services companies cut back spend on mail as the first effects of the credit crunch were felt half way through 2007. The top five users of direct mail - BSkyB, Saga Group, MBNA Europe, Lloyds TSB and Halifax - all registered double-digit decreases in spend in 2007 compared to the year before.

In the same period, the online advertising market, including display, classified, email and paid search grew by 38 per cent to £2.8bn.

Capital One, formerly one of the UK's top three spenders, fell eight places to number 10 as it reduced its expenditure by 65 per cent to £11.4m in 2007. "We have moved away from direct mail to an inbound model, where you build a brand, get people to recognize your offers and get them to your website," said Justin Basini, vice-president and head of brand marketing, Capital One Europe.

Mike Welsh, chief executive of Craik Jones, said the industry had only itself to blame for the move from mail to digital. "Let's be honest - a lot of the stuff we get through our letterboxes is junk - formulaic, irrelevant and unengaging," he said. "Should we really be surprised at declining response rates when the web provides consumers with more information, more interaction and a much deeper emotional experience?"

Amanda Phillips, chief executive of Proximity London, said that with green issues under the spotlight last year, "direct mail was an obvious target".

There were three new entrants to the Top 100: QuickPages, the insurance quotation business, Virgin Media and fashion brand Oli.