DMA's Quarterly Business Review (QBR) for Quarter III Indicates 17th Consecutive Quarter of Positive Results

2008 Projections Available in Latest Quarterly Benchmarking Study

Chicago, IL, October 16, 2007 — The Direct Marketing Association’s (DMA) Quarterly Business Review (QBR) for the third quarter of 2007 was released today, complete with 2008 forecasts for marketers and suppliers. The 32-page report details how the greater direct marketing community — including direct marketers, agencies, and suppliers — collectively experienced a 17th consecutive quarter of positive economic growth.

“Overall, direct marketers experienced growth in revenue during the third quarter of the year,” said Anne B. Frankel, DMA’s senior research manager in research and market intelligence. “While still at positive levels, both the revenue vs. the same quarter last year and profitability metrics have fallen from earlier quarters in 2007.”

“Growth is occurring, but at softer rates than recently recorded,” said Frankel. “About a third of the direct marketers surveyed think that an economic recession in 2008 is somewhat likely. Direct marketers are therefore being conservative about their revenue expectations.”

DMA’s quarter-three QBR report, which was released today, presents a 2008 vs. 2007 forecast in key areas. In the QBR index, a score of 1 represents no change in the coming year’s growth; scores above 1 represent growth; and those below 1 represent a decline.

· Marketers expect to increase spending on direct marketing services in 2008, with a score of 1.34. This is a smaller increase than was projected for 2007 vs. 2006 (1.54).

· Marketers anticipate that their revenue from direct response channels will be higher in 2008 than in 2007, with a score of 1.59. This is below the 1.66 posted for 2007 vs. 2006.

· Marketers anticipate that the greatest growth in their 2008 spending for direct marketing services will be on search, email marketing services, Web site development/maintenance, Web analytics, and database segmentation, overlays, and analysis.

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.

QBR readers will find that direct marketers experienced overall growth in revenue during the third quarter of 2007, with revenue compared to the same quarter last year at 57 in Q3. Profitability results are also encouraging, at 67, remaining healthy for all three segments that QBR benchmarks — marketers, agencies, and suppliers.

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QBR HIGHLIGHTS FOR 2007 QUARTER III

Direct Marketing Community: An Overview

According to DMA’s latest QBR report, Q3 survey results for the greater direct marketing community indicate healthy revenue vs. SQLY, at 57, and robust profitability at 67.

Revenue vs. SQLY was positive for every segment. However, with the exception of an increase over Q2 for suppliers, Q3 saw an overall decrease from Q2.

All three segments surveyed are upbeat about the projected revenue for Q4, with an index reading of 63. Broken out, agencies and suppliers project the greatest Q4 revenue growth, both at 64, followed closely by marketers at 62. The Q4 forecast for marketers is the 11th straight quarter that this measure has been in the 60s, signaling continued optimism.

Agencies saw the highest revenue vs. SQLY at 59 in Q3, and marketers reached a profitability figure of 70.

Also in Q3, marketers and suppliers posted robust revenue vs. SQLY results at 57 each. Agencies and suppliers had solid profitability figures, both at 65.

Issues of Concern to Marketers

Although half of all those surveyed in Q3 cited the constant concern of client budgets as having the greatest impact on Q4 revenue, this factor will likely play a far larger role for agencies and suppliers than for marketers. The economy also concerns 39 percent of direct marketing professionals.

About 25 percent of survey participants mentioned list, segmentation, and targeting issues, competitor’s strategy/tactics, and price and offer issues as likely to affect Q4 revenue (25 percent, 23 percent, and 22 percent, respectively).

QBR Highlights Relating to Direct Marketers

Key QBR findings affecting direct marketers include:

· Q3 revenue vs. SQLY (57) dipped slightly from Q2’s 60.

· Profitability (70) rose slightly from Q2’s 68.

· The weighted average revenue change — the measure that is more reflective of the direct marketing community in aggregate — was 4.9 percent.

· Marketers expect future growth, with projected revenue in Q4 targeted at 62.

· Marketers expect general economic conditions (42 percent), followed by pricing and offer issues (35 percent), and list, segmentation, and targeting issues (33 percent) to most affect their Q4 revenue.

QBR Highlights Regarding Direct Marketing Agencies

· Revenue vs. SQLY (59) decreased in Q3 from Q2’s 60, and is also below Q4 2006’s recent high of 72.

· Profitability remained robust at 65, dipping three points from Q2’s 68.

· Agencies softened revenue expectations, with Q4’s index of 64 below previous projections for Q3 (66) and Q2 (68).

· For the 10th consecutive quarter, surveyed agencies said they planned to spend the most in Q4 on new customer acquisition.

QBR Highlights Regarding Direct Marketing Suppliers

· In Q3, revenue and profitability showed growth in the supplier segment. Revenue vs. SQLY rose one point in Q3 to 57, up from Q2’s 56, but down two points from Q1’s 59.

· Profitability came in at 65. That number was two points below the 67 index reported for both Q2 and Q1 2007, and Q4 2006.

· Expectations remain bright for suppliers, with a projected Q4 revenue index of 64, identical to Q3 and up two points from Q2’s projection of 62.

· Once again, new client acquisition heads the list of Q4 expenditures, while client budgets are most likely to affect Q4 revenue performance.

About DMA’s Quarterly Business Review

DMA’s Quarterly Business Review (QBR) for the third 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 September 17 through September 25, 2007. Altogether, DMA received 342 survey responses. The report is available online for free at http://www.the-dma.org/qbr/QBRQ32007.pdf.

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 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 — are forecast to spend $173.2 billion on direct marketing in the United States. Measured against total US sales, these advertising expenditures will generate approximately $2.025 trillion in incremental sales. In 2007, direct marketing will account for 10.2 percent of total US gross domestic product. Also, there are today 1.6 million direct marketing employees in the US alone. Their collective sales efforts directly support nearly 9.0 million other jobs. That accounts for 10.6 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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