DMA's Enhanced Quarterly Business Review Finds 16th Consecutive Quarter of Positive Results in Q2
September 14, 2007 — With brand new metrics, updated figures, and expanded access, the Direct Marketing Association’s (DMA) Quarterly Business Review (QBR) for the second quarter of 2007 is new, improved, and ready for the marketing world. The 30-page report details how the greater direct marketing community — including direct marketers, agencies, and suppliers — collectively experienced a 16th consecutive quarter of positive economic growth.
“DMA is always working to ensure relevance in our research,” said Anne B. Frankel, DMA’s senior research manager in research and market intelligence. “Toward that end, with our Quarterly Business Review for the second quarter of 2007, we’re introducing a host of new metrics in the ‘DM Marketers’ chapter, focusing on expenditures and performance.”
Specifically, QBR’s new metrics measure:
· Response to marketing campaigns by channel.
· Expenditures to acquire and keep a customer (average costs rose vs. a year ago).
· Performance on customer acquisition, retention, and churn rates (marketers say that their performance has improved over Q2 2006).
· Expenditures on direct marking services or vendors (pointing to modest growth in Q3).
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 second quarter of the year, with revenue compared to the same quarter last year at 59 in Q2. Profitability results are also encouraging, at 68, remaining healthy for all three segments that QBR benchmarks — marketers, agencies, and suppliers.
“While growth is occurring at somewhat softer rates, the direct marketing community is realizing strong profits,” Frankel said. “In general, direct marketers anticipate that their revenue will grow in the next quarter, with the agency segment somewhat more optimistic about their Q3 revenue expectations.”
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QBR HIGHLIGHTS FOR 2007 QUARTER II
Direct Marketing Community Overview
According to DMA’s latest QBR report, Q2 survey results for the greater direct marketing community indicate healthy revenue vs. SQLY, at 59, and robust profitability at 68.
Revenue vs. SQLY was positive for every segment. However, with the exception of an increase over Q1 for consumer marketers, Q2 saw an overall decrease from Q1.
All three of the QBR’s surveyed direct marketing community segments are upbeat about the projected revenue for Q3, with an index reading of 65. Individually, agencies project the greatest Q3 revenue growth at 66, followed closely by marketers and suppliers, with both at 64. The projected revenue for suppliers illustrates a more positive outlook, with a two-point increase since Q2’s index.
In Q2, marketers and agencies posted the best revenue vs. SQLY results at 60 each, and the highest profitability figures, both at 68.
Suppliers saw revenue vs. SQLY reach 56, and profitability came in at 67.
Direct marketing community-wide projected revenue indices were strong, in the mid-60s, with an overall figure of 65. Agencies had the strongest showing, at 66, with marketers and suppliers both recording indices of 64.
Issues of Concern to Marketers
Client budgets and advertising remains a perennial concern for agencies and suppliers, topping their list of issues most likely to affect business in the coming quarter, according to DMA’s latest QBR.
Marketers, more so than other segments, are keeping a watchful eye on the economy; marketing issues; the Internet, e-commerce and email; and government regulations, policy, and politics. Another top issue for the direct marketing community was postal rates, which increased in Q2 and mainly affected marketers and suppliers.
QBR Highlights Relating to Direct Marketers
Key findings affecting direct marketers include:
· Q2 revenue vs. SQLY (60) dipped slightly from Q1’s 62. Profitability (68) also showed a slight decline from Q1’s 71.
· The weighted average revenue change — the measure that is more reflective of the direct marketing community in aggregate — increased 4.1 percent.
· Marketers expect future growth, with projected revenue in Q3 targeted at 64.
· In terms of Q3 spending, marketers say they expect moderate increases in their total advertising and direct marketing budgets, with larger expenditures on new customer acquisition and new product development, and direct marketing services and vendors.
QBR Highlights Regarding Direct Marketing Agencies
· Revenue vs. SQLY (60) decreased in Q2 from Q1’s 63. Although below Q4 2006’s recent high of 72, it is on par with Q3 2006. At the same time, profitability remained robust at 68, dropping only one point from Q1’s 69.
· Agencies softened revenue expectations, with Q3’s index of 66 below previous projections of Q2 (68) and Q1 (70).
· For the ninth consecutive quarter, agencies planned to spend the most in Q3 on new customer acquisition.
QBR Highlights Regarding Direct Marketing Suppliers
· As usual, revenue and profitability showed growth in the supplier segment in Q2. Revenue vs. SQLY dipped to 56 in Q2, down three points from Q1’s 59. Profitability came in at 67, identical to Q1.
· Skies are brightening for suppliers, who projected Q3 revenue at 64, up two points from Q2’s projection of 62.
· New client acquisition heads the list of Q3 expenditures, complementing the prediction that client budgets and advertising were most likely to affect Q3 performance.
Direct Marketing Breakout: B-to-B Segment
· Business is good for business-to-business (B-to-B) direct marketers, with indices remaining in positive territory despite a slight drop from Q1 numbers. Both the revenue vs. SQLY (60) and profitability (70) indices were positive, falling below numbers from Q1 of 65 and 73, respectively.
· The weighted average revenue change — the measure that is more reflective of the B-to-B community in aggregate — increased 7.3 percent.
· Looking to the horizon at Q3 projections, B-to-B marketers expect revenue to grow, with an index of 63, a four-point drop from Q1’s 67.
Direct Marketing Breakout: Catalog
· Catalog marketers registered revenue vs. SQLY of 68 and profitability of 70. These healthy figures were slightly outdone by the Q4 2006 numbers of 69 for revenue and 75 for profitability.
· The weighted average revenue change — the measure that is more reflective of the catalog community in aggregate — increased an impressive 11.4 percent.
· Catalogers are very optimistic about their future — the Q3 projected revenue index is 74. That index is 4 points higher than Q1’s projection of 70.
Direct Marketing Breakout: Consumer Products or Services
· Up six points from Q1, revenue vs. SQLY (61) reflects growth in Q2.
· Profitability (67) remained robust, matching Q1’s 67.
· Similar to profitability, consumer products or services marketers kept a steadily rosy picture of the future. The Q3 projected revenue index is 63, identical to the Q2 projection.
About DMA’s Quarterly Business Review
DMA’s Quarterly Business Review (QBR) for the second 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 July 20 through July 30, 2007. Altogether, DMA received 432 survey responses.
The report is available online for free at http://www.the-dma.org/qbr/Q22007FINAL.pdf.
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