According to the Direct Marketing Association’s yearly report, The Power of Direct Marketing, direct marketing is anticipating growth in all areas, including expenditures, return on investment (ROI), sales and employment this year. This is despite an economy that is lagging in most areas.
“For the first time ever, direct marketing represents more than 50 percent of total advertising expenditures in the US, growing faster than total advertising spending and the US economy as a whole,” said Dr. Peter Johnson, the Direct Marketing Association’s research strategy and platforms vice president, and lead author of the report. “Marketers are moving dollars into direct marketing because of its higher ROI relative to other forms of advertising. This makes ‘direct’ a more reliable engine for sustaining sales, incomes, and jobs at a time when the mortgage and energy markets are heightening economic uncertainty.”, as noted on the DMA website. “Overall,” said Johnson, “business performance this year is likely to be measurably brighter than it would otherwise be, thanks to the effectiveness of direct marketing.”
The direct mail market predicts $173.2 billion in advertising expenditures’ by the end of this year, showing a 4.4% increase over last year. The ROI for these expenditures is $11.69/dollar spent, when taking into consideration the $2 trillion dollars in subsequent sales this year. The final numbers for 2006 were affected by the steep decline in the housing market, increases in energy costs as well as a decrease in auto sales. Up to a 5.5% increase in response rates is expected in commercial email, Internet marketing and direct mail.
The report also shows that direct marketers could realize up to a 5.2% increase in sales, which is 1.5% lower than the growth realized in 2006, due to the continuing economic slowdown. Direct sales could hit $2.025 trillion in 2008. The revenue forecast for next year in the report anticipates a 6.6% growth.
To what is this continued growth attributed? It’s felt that marketers continue to source money in to direct marketing due to its ROI when compared to other forms of advertising. With an economy that is continuing to lag, direct mail marketing allows companies to see hard results for their advertising dollar. While many industries continue to see a increase in their direct mail marketing investment, there are still some that are cutting back their direct mail advertising.
According to the report, manufacturing, financial banks, and education services are among many industries that continue to dump significant money into direct marketing advertising. Lags are seen in areas like petroleum, real estate and furniture industries.
Johnson notes that he feels that direct mail marketing will “continue to help sustain the overall US economy.” This estimation is based on the fact that as much as 10.2% of the US GDP, or $1.41 trillion of demand is represented by direct marketing.
Employment in direct marketing in 2007 is responsible for 10.6 million jobs. A prediction of a 2.2% increase is expected for next year. Internet marketing has predicted expenditures of $23.6 billion in 2008, which is almost a $4 billion increase from 2007.
Despite this growth, many company’s marketing departments are concerned about the state of the economy. If the housing market continues to stagnate and fuel costs keep climbing, it is possible that overall marketing expenditures could be adversely affected. Considering direct marketing’s effect on our GDP this year, a decrease in its economic viability is something to be concerned about.
From: Scott Allen About.com