Direct Marketing Expenditures Account for 50% of Total Ad Expenditures, Says DMA's 2007 'Power of Direct Marketing' Report
October 16, 2007 — Despite a US economy that shows signs of softening in key areas, growth is predicted in direct marketing (DM) expenditures, sales, return on investment (ROI), and employment through 2008, as reported in The Power of Direct Marketing, the Direct Marketing Association’s (DMA) annual forecast of direct marketing’s economic impact on the US economy, including advertising expenditures and sales. The 2007 edition of the DMA report, which was first published in 1995, was released today.
“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, 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 ‘direct’ a more reliable engine for sustaining sales, incomes, and jobs at a time when the mortgage and energy markets are heightening economic uncertainty.”
According to DMA’s latest report on the economic contributions of multichannel direct marketing, positive indicators of continued growth from direct can be found in most sectors of the economy. “Overall,” said Johnson, “business performance in 2007 is likely to be measurably brighter than it would otherwise be, thanks to the effectiveness of direct marketing.”
Direct Marketing Advertising Expenditures:
Moderate Growth in 2007, Strong Growth in 2008
The $173.2 billion in direct marketing advertising expenditures that marketers are predicted to make by the end of 2007 represents a modest 4.4 percent increase over the $166 billion actually spent in 2006. The actual 2006 figure did not achieve the higher levels that initially had been predicted for it at this time last year due to the greater-than-anticipated decline in home sales, lower automobile sales, and higher energy prices.
Looking forward, the growth rate in direct marketing expenditure for 2008 is expected to bounce back to 5.7 percent, or $183.1 billion in direct marketing advertising expenditures. Above-average spending growth is expected in commercial e-mail, Internet marketing, DRTV, and direct mail (including catalog).
Direct Marketing Sales:
Modest Growth in 2007, Strong Growth in 2008
Direct marketers should expect a reasonably successful 2007, and realize about 5.2 percent annual growth in sales. This figure is 1.5 percentage points lower than the growth recorded for 2006, and is due to the economic slowdown that continued through the middle of 2007. In 2007, total US direct marketing sales are projected to hit $2.025 trillion.
The current 2008 revenue forecast for direct marketing is even more optimistic. DMA’s new report predicts solid growth of 6.6 percent next year. In 2008, total US direct marketing sales are expected to surpass $2.158 trillion.
The biggest improvements in 2008 direct marketing revenue growth are expected in financial services, transportation, and utilities. On the other hand, utilities, natural resources, construction, and government revenues from direct marketing are forecast to grow at the slowest rate next year.
US Growth to Receive Boost from Direct Marketing in 2007-2008
“As in 2006, direct marketing will continue to help sustain the overall US economy,” said Dr. Johnson. In 2007, direct marketing advertising across all economic sectors is expected to account for over $1.41 trillion of final demand nationwide, representing 10.2 percent of total US GDP.
Key Economic Impact Findings:
· Strong Jobs Outlook: In contrast to the forecasts for both 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 percent in 2008.
· High Return on Investment: For 2007, an investment of $1 in direct marketing advertising expenditures is predicted to return, on average, $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 2007-2008, with predicted expenditures of $19.7 billion in 2007 and $23.6 billion in 2008.
DMA’s The Power of Direct Marketing report was prepared in August 2007 using the economic model of US direct marketing activity updated every year for DMA by Global Insight. Incorporating the most recent data available on developments in all sectors of the US economy, it aims to help marketers plan expenditures, sales, ROI, and employment for the 16-month period through the end of 2008.
To purchase the 2007 Power of Direct Marketing report, visit DMA’s online bookstore at www.the-dma.org/bookstore.
# # #
back to top