Direct Marketing, Mail Order, and E-commerce News from the National Mail Order Association

Direct Marketing and Mail Order Association
                                        Newsletter Sponsor
Shopping Cart, Advertising Management and Affiliate Tracking System

Direct Marketing Delivers 18th Consecutive Quarter of Positive Results


New York, NY,  — Despite some recession concerns, direct marketers are expecting growth in the coming quarter, according to the Direct Marketing Association’s (DMA) Quarterly Business Review (QBR) for the fourth quarter of 2007.  The 30-page report details how the greater direct marketing community — including direct marketers, agencies, and suppliers — collectively experienced an 18th consecutive quarter of positive economic growth. 


“Direct marketers recognize that many areas of the economy are slowing,” said Anne B. Frankel, DMA’s senior research manager in research and market intelligence.  “That concerns them.  So, while for the most part all three segments experienced growth in Q4 and also forecast growth in Q1, both their results and forecasts are more modest than in recent quarters.”


An Overall Strong Quarter


In the QBR index, a score of 50 represents no change in the direct marketing business’ performance during the quarter versus the same quarter last year (SQLY); scores above 50 represent growth; and those below 50 represent a decline.


Readers will find that direct marketers experienced overall growth in revenue during the fourth quarter of the year, with revenue compared to the same quarter last year at 55 in Q4.  Profitability results are also strong, at 65, remaining healthy for all three segments that QBR benchmarks:  marketers, agencies, and suppliers.


* * *




Direct Marketing Community Overview


According to DMA’s latest QBR report, Q4 survey results indicate growth for the greater direct marketing community, with revenue vs. SQLY reaching 55, and strong profitability at 65.  However, Q4 2007’s revenue vs. SQLY represents the first time in five years that the fourth quarter ended lower than the Q1, Q2, and Q3 results.


Revenue vs. SQLY was positive for every segment.  The agency segment posted a somewhat higher index at 57, than both marketers — 55, and suppliers — 54.


The healthiest results came from profitability figures, where marketers registered the strongest index at 68.  Suppliers and agencies each reported somewhat lower numbers — 63 and 62, respectively.    


Taking a cue from former Federal Reserve Board Chairman Alan Greenspan, direct marketers avoided “irrational exuberance” when looking toward Q1 2008.  While still optimistic, their expectations have lowered since they made their Q4 2007 predictions.  Overall, the direct marketing projected revenue index was 57, down six points from the 63 for Q4 2007, eight points below the 65 projected for Q3, and nine from the 66 forecast for Q2.  Individually, agencies and suppliers project the greatest Q1 2008 revenue growth at 59, followed by marketers at 55. 


Issues of Concern to Marketers


Accordingly, direct marketers said that the economy was the factor most likely to impact their Q1 2008 revenue.  Logically, client budgets came in a close second, with 51 percent of survey respondents citing the economy and 48 percent pinpointing the budgets as the two factors most likely to affect their next quarter revenue.


This focus on the economy’s impact on Q1 2008 revenue represents a marked increase from the expectations in Q4 2007, when 39 percent of direct marketers overall cited it as a concern.  Marketers and agencies cited the economy somewhat more often than did suppliers.


DMA’s latest QBR also reflects the fact that direct marketers are concerned about consumer perceptions; 32 percent cite consumer confidence as a factor that may affect Q1 2008 revenue. 


“QBR first asked marketers about their expectations of a recession in the Q3 2007 survey,” Frankel said.  “At that time, just over a third (36 percent) of marketers felt that a recession was at least somewhat likely in 2008.  Now, three months later, marketers seem more certain that a recession may be imminent — with 47 percent saying it is somewhat likely, and 19 percent stating that it is very likely to take place in 2008.  Given these economic concerns, it comes as no surprise that marketers also voiced more conservative expectations vis-à-vis revenue in 2008.”


In the event of a recession, just about half (47 percent) of marketers will keep their marketing budget the same but reallocate expenditures.  Of those marketers who plan to alter their spending, 42 percent plan to reduce spending on postage, while 50 percent plan to increase expenditures on email marketing.


QBR Highlights Relating to Direct Marketers


Key findings affecting direct marketers include:


·         Q4 revenue vs. SQLY (55) dipped slightly from Q3’s 57.  Profitability (68) also showed a slight decline from Q3’s 70.


·         The weighted average revenue change (the measure that is more reflective of the direct marketing community in aggregate) was 2.8 percent.


·         Marketers expect future growth, with a projected revenue index for Q1 of 55.


·         In terms of Q1 spending, marketers project moderate increases in their budgets for total advertising, direct marketing, and direct marketing services and vendors, with larger expenditures on new customer acquisition.  Unlike previous quarters, marketers expect to hold new product development expenditures flat.


QBR Highlights Regarding Direct Marketing Agencies


·         Revenue vs. SQLY (57) decreased in Q4 from Q3’s 59.  Q4 continued this metric’s steady drop in 2007, with Q2 at 60 and Q1 at 63.  While stronger than revenue, profitability is also seeing a steady fall at 62, three points lower than Q3’s 65, six points below Q2’s 68, and seven points lower than Q1’s 69. 


·         Agencies also steadily lowered revenue expectations, with a Q1 2008 projected revenue index of 59 representing a five point drop from that for Q4 2007 (64), and down seven points from the Q3 projection (66).  This was nine points lower than that of Q2 (68), and 11 points lower than that of Q1 2007 (70).


·         For the 11th consecutive quarter, agencies planned to spend the most in the next quarter on new customer acquisition.


QBR Highlights Regarding Direct Marketing Suppliers


·         Suppliers saw modest revenue vs. SQLY growth in Q4 2007, at 54.  This figure reflects a three point decrease from Q3, a two-point drop from Q2 2007, and a five-point drop from Q1.   Despite the conservative revenue reports, suppliers saw profitability remain healthy at 63.  This, however, remained below profitability figures from the previous quarters of Q3, Q2, or Q1 2007 (65, 67, and 67, respectively).


·         Optimistic suppliers expect healthy Q1 2008 revenues, at 59.  This figure is down from Q3 and Q4’s 64, but closer to Q2’s 62.


·         Consistent with the previous eight quarters, new client acquisition heads the list of projected Q1 expenditures, complementing the prediction that client budgets were most likely to affect Q1 performance.


Direct Marketing Breakout:  B-to-B Segment


·         Both the revenue vs. SQLY (53) and profitability (65) indices were positive for business-to-business (B-to-B) direct marketers. 


·         The weighted average revenue change — the measure that is more reflective of the B-to-B community in aggregate — was 7.3 percent.


·         Looking at the horizon for Q1 2008 projections, B-to-B marketers expect revenue to grow, with an index of 54.  But it’s not all fair skies; B-to-B expectations dove seven points since the Q4 2007 projection of 61.


Direct Marketing Breakout:  Catalog


·         Catalog marketers registered revenue vs. SQLY of 53 and profitability of 69.  These figures were below the Q3 2007 numbers of 60 for revenue and a low 70s measure for profitability.


·         The weighted average revenue change (the measure that is more reflective of the catalog community in aggregate) remained positive at 1.5 percent.  But this metric registered a sharp drop since Q3 2007, when it was 10.7 percent.


·         Catalogers expect very modest growth — the Q1 projected revenue index is 51.  Their expectations have become much more conservative since Q4 2007, when the index was 63.


Direct Marketing Breakout:  Business-to-Consumer Segment


·         Down one point from Q3 2007, revenue vs. SQLY (56) reflects a slight decline in Q4.


·         Profitability (68) remained robust.


·         Consumer marketers expect future growth, but with softened expectations.  The Q1 2008 metric is 56, while the Q4 2007 projected revenue index was 63.


About DMA’s Quarterly Business Review


DMA’s Quarterly Business Review (QBR) for the fourth quarter of 2007 is based on three online surveys of DMA marketer, agency, and supplier member companies.  The surveys were conducted by DMA’s Research and Market Intelligence department from January 16, 2008, through January 24, 2008.  Altogether, DMA received 447 survey responses.


About Direct Marketing Association (DMA)


The Direct Marketing Association ( is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques.  DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process.  Founded in 1917, DMA today represents nearly 3,600 companies from dozens of vertical industries in the US and 50 other nations, including a majority of the Fortune 100 companies, as well as nonprofit organizations.


In 2007, marketers — commercial and nonprofit — spent $173.2 billion on direct marketing in the United States.  Measured against total US sales, these advertising expenditures generated approximately $2.025 trillion in incremental sales.  In 2007, direct marketing accounted for 10.2 percent of total US gross domestic product.  Also in 2007, there were 1.6 million direct marketing employees in the US.  Their collective sales efforts directly supported nearly 9.0 million other jobs, accounting for a total of 10.6 million US jobs.

Newsletter Sponsors

Email Marketing Management Software Wholesale Color Printing and Mailing Marketing Management Tools for Small Business Get a Free Blog Site Live Chat for Websites
Marketing with articles the easy way

Useful Direct Marketing and Mail Order Links.

Advertising- Bridal Market Advertising Guide

Advertising- Christian Market Advertising Guide

Advertising- Hispanic/Latino Market Advertising Guide

Advertising- Hispanic/Latino Market Advertising Guide- Master Series

Advertising- Home Furnishing and Decor Advertising Guide

Advertising- Home Gardening Advertising Guide

Advertising- Parenting Market Advertising Guide

Advertising-Pet Market Advertising Guide

Advertising- Woman's Market Advertising Guide

Advertising- How to Create Great Small Business Advertising

Call Centers- Telephone Order Taking Services

Catalogs- Catalog and E-commerce Benchmarks

Catalogs- The Catalog Strategists Toolkit

Catalogs- Directory of Mail Order Catalogs

Catalogs- Top 150 Catalogs in the United States

Classified Advertising- How to Market using Classified Ads

Direct Mail- Copywriters and Creative Services Guide

Direct Mail- Directory of Major Direct Mailers

Direct Mail- Inside Direct Mail Newsletter

Direct Marketing- Direct Marketing Seminars and Events

Direct Marketing- Direct Marketing Statistics

Direct Marketing- Direct Marketing Response Rates

Direct Marketing- Direct Marketing Toolkit

Direct Marketing- Industry Contact Directory

Direct Marketing- Direct Marketing Speakers

Fulfillment- Warehouse and Order Fulfillment Centers

Mailing Lists- Direct Mail and E-mail Lists

New Products for Direct Marketers to Sell

Product Marketing- Promote your Product to Catalog and Direct Marketing Companies.

Product Marketing- How to Market a Product for Under $500

Start a Home Based Mail Order Business- Direct Marketing Toolkit

Wholesale and Drop Shipping- Professional Wholesale Resource Guide

Wholesale Search Engine

Direct Marketing and Mail Order Bookstore

National Mail Order Association Home

Direct Marketing Article Archive