DMA publishes direct marketing trends and forecast
Despite a softening US economy, the Direct Marketing Association (DMA) still predicts growth in direct marketing expenditure, sales, return on investment, and employment throughout 2008.
The DMA's annual forecast of direct marketing's economic impact on the US economy, 'The Power of Direct Marketing', found that direct marketing represents more than 50% of total advertising expenditures in the US, growing faster than total advertising spending and the US economy as a whole
Higher returns from DM According to Dr Peter Johnson, the DMA'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 DM a more reliable engine for sustaining sales, incomes, and jobs at a time when the mortgage and energy markets are heightening economic uncertainty."
The DMA's study of the economic contributions of multi-channel direct marketing also noted that positive indicators of continued growth from DM can be found in most sectors of the economy. Overall, the report concludes, business performance in 2007 is likely to be measurably better than it would have otherwise been, thanks largely to the ongoing effectiveness of direct marketing.
DM advertising trend The US$173.2 billion worth of direct marketing advertising expenditure that marketers are predicted to make by the end of 2007 represents a modest 4.4% increase over the US$166 billion that was actually spent in 2006. The 2006 figure did not achieve the higher levels that had originally been predicted due to a greater-than-anticipated decline in home sales, lower vehicle sales, and higher energy prices.
But, looking forward, the growth rate in direct marketing expenditure for 2008 is expected to bounce back to 5.7%, or US$183.1 billion. Above-average spending growth is expected in commercial e-mail, internet marketing, DRTV (direct response), and direct mail (including catalogues).
DM sales trend Direct marketers can also expect a reasonably successful 2007, and realise about 5.2% annual growth in sales. This figure is 1.5 percentage points lower than the growth recorded in 2006, and is largely due to the economic slowdown that continued through to the middle of 2007. In 2007, total US direct marketing sales are projected to reach some US$2.025 trillion.
The current 2008 revenue forecast for direct marketing is even more optimistic. The DMA's report predicts growth of 6.6% next year, with total US direct marketing sales for the year being expected to pass US$2.158 trillion. The biggest improvements in 2008 direct marketing revenue growth are expected in financial services, transportation, and utilities. Conversely, utilities, natural resources, construction, and government revenues from direct marketing are forecast to grow at the slowest rate in 2008.
In 2007, direct marketing advertising across all economic sectors is expected to account for over US$1.41 trillion of final demand nationwide, representing 10.2% of total US GDP.
DM's economic impact Among the report's key findings regarding the impact of direct marketing activities on the US economy:
- Strong jobs outlook In contrast to the forecasts for expenditures and sales, the overall picture for direct marketing employment looks better for 2008 than in 2007. In 2007, direct marketing will directly support 10.6 million jobs. This employment figure is expected to grow by 2.2% in 2008.
- High ROI For 2007, an investment of US$1 in direct marketing advertising expenditures is predicted to return, on average, US$11.69 in incremental revenue across all industries.
- Growth for interactive marketing Expenditures in internet marketing and commercial e-mail will continue to grow in 2007 and 2008, with predicted expenditures of US$19.7 billion in 2007 and US$23.6 billion in 2008.
The full report has been made available for purchase from the DMA's online bookstore - click here.