DMA Releases Quarterly Business Review (QBR) for Q3 2011

November 17, 2011 — The Direct Marketing Association (DMA) today released its Quarterly Business Review (QBR) for the third quarter of 2011. On this report, DMA partnered with Winterberry Group, a leading strategic management consulting firm that helps advertising and marketing companies build shareholder value.

In Q3 2011, marketers reported net gains for all key indicators, including sales revenue, spending on direct and digital marketing efforts, profitability, and staffing. Moreover, customer acquisition efforts accounted for 59 percent of marketing budgets, the highest proportion over the past year and a good indication of optimism among marketers. At the same time, however, 14.7 percent of marketers indicated that they cut expenditures in Q3 when compared with the same quarter last year (SQLY), as opposed to 7.0 percent who reported a fall in Q2 spending versus SQLY. 14.7 percent also expected to cut marketing expenditures in Q4.

“Overall, more marketers are increasing spending and expanding acquisition efforts, but a significant portion are cutting back,” said Yory Wurmser, DMA’s director of marketing & media insights. “As much as we want to put the economic problems of the past couple years behind us, we’re not yet in a strong recovery. With the troubles in Europe getting deeper by the week, we expect to see marketers face continued obstacles to growth in the coming months.”

“For the last few quarters, we’ve seen a consistent macroeconomic trend emerge in the world of digital and direct marketing: For every two steps forward we take, we immediately take one-and-a-half steps back,” said Jonathan Margulies, a vice president at Winterberry Group. “Though the survey data on marketer spending, sales revenue, staffing, and profitability all suggest continued growth, we’re clearly facing some substantial headwinds when it comes to the economy and its ongoing impact on confidence across the industry.”

Key findings include:

· “General economic conditions” remains the leading inhibitor of expanded marketing activity.

· Total direct/digital marketing spending grew or remained constant for nearly 90 percent of respondents compared to spending last quarter (Q2 2011). Compared to the same quarter last year (Q3 2010), spending is flat or up for 82.2 percent of marketers.

· Despite a pronounced increase in the percentage of marketers who expect spending will decline next quarter, a far greater proportion — 43.4 percent — anticipate their spending will grow during Q4 2011.

· “Pressure from the C-suite” to demonstrate quantifiable marketing performance improvements was listed as the top driver of new marketing investment, overtaking several other concerns (including “general demand for new digital channels”) that had been cited as more important drivers in previous quarters.

· Just under half of marketers and suppliers say they anticipate an increase in profitability in the next quarter (Q4 2011).

· Although the majority of both marketers and suppliers maintained the same staffing levels as the last quarter (Q2 2011), far more marketers reported increases in staff (38.7 percent) than those who reported decreases (11.8 percent) over this time period.

· Digital channels once again delivered the highest return on investment of all direct and digital marketing channels, with search, social, and mobile tallying the most substantial reported ROI improvements since last quarter (Q2 2011). Accordingly, marketers say they plan to increase spending on these channels most (as well as email and place-based media) over the next 12 months.

About DMA’s Quarterly Business Review

DMA’s Quarterly Business Review (QBR) for the third quarter of 2011 is based on an online survey conducted by DMA’s Research and Market Intelligence department in October 2011. Altogether, DMA received 293 usable survey responses.

The report is free for DMA members. Non-members can purchase a copy for $49.95 from DMA’s Bookstore by clicking here.

About Winterberry Group

Winterberry Group is a unique, global strategic consulting firm that helps advertising and marketing companies grow shareholder value. Based in New York, it offers a combination of corporate strategy, market intelligence and merger and acquisition due diligence support services aimed at helping clients identify opportunities for growth and achieve transformative results. The Firm’s global stable of clients includes service providers, marketers and financial investors representing every segment of the advertising and marketing industries, including Acxiom Corporation, Alterian plc., American Capital Strategies, arvato Services / Bertelsmann AG, Canada Post Corporation, Capital One Financial Corp., The Carlyle Group, Direct Group, Eastman Kodak Company, eCircle AG, Hewlett Packard Co., IWCO Direct, MediMedia USA, Meredith, Onex Corporation, Rosetta, Transcontinental, Inc., Xerox and Yahoo!.

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About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) 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 companies from dozens of vertical industries in the US and 48 other nations, including nearly half of the Fortune 100 companies, as well as nonprofit organizations.

In 2011, marketers – commercial and nonprofit – will spend $163 billion on direct marketing, which accounts for 52.1 percent of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures will generate approximately $1.96 trillion in incremental sales. In 2011, direct marketing will account for 8.7 percent of total US gross domestic product. Also in 2011, there were 1.3 million direct marketing employees in the US. Their collective sales efforts directly support 7.9 million other jobs, accounting for a total of 9.2 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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