DMA's 'Power of Direct Marketing' Report Finds Direct Marketing Ad Expenditures Climb to Over 54%

Digital Media to Have Greater Impact on the Rebounding US Economy

San Diego, CA, October 19, 2009 — The Direct Marketing Association (DMA) today released The Power of Direct Marketing, an annual forecast of direct marketing’s economic impact on the US economy, including advertising expenditures and sales. First published in 1995, the report is released each year in conjunction with the DMA09 Conference and Exhibition, the Global Event for Integrated Marketing.

“For the first time, this edition of the Power of Direct Marketing includes ad spending and DM-driven sales data for five new categories: Mobile, Internet Display, Search, Social Networking, and Internet (Other),” said DMA research manager, Yoram Wurmser, PhD. “As digital media continue to take up a bigger role the direct marketing world, we are seeing a permanent shift in spending from offline to online, with a significant increase in email and mobile.

“These tough times have acted as a catalyst for the marketing community, as businesses have shifted marketing spending to mobile, Internet, and email for their greater efficiencies and ROI,” continued Wurmser. “Now that the economy is picking up, and there are signs that we are bottoming out, these channels will continue to benefit most.”

Direct Marketing Advertising Expenditures:

DM Ad Spend Increases Share of Total Ad Spend

As a highlight, 2009 will mark the fifth year in which direct marketing has captured more than half of all advertising spend nationwide. This figure is up to 54.3 percent from last year’s 52.7 percent, and is forecasted to remain above 53 percent for the next five years.

In 2010, total direct marketing ad spending is expected to increase 2.7 percent, yielding $153.3 billion overall.

Although the direct marketing share of total advertising continues to increase, ad budgets of all types suffered in 2009. Due to decreases in corporate profits, consumers economizing, belt tightening by businesses, and limited credit options, direct marketing advertising expenditures are predicted to fall to $149.3 billion in 2009, a decline of 11.2 percent compared to 2008. However, direct marketing is still performing better than general advertising which fell to $125.7 billion, down 14.2 percent from 2008. “Direct marketing is now a bigger slice of an overall smaller marketing pie,” added Wurmser.

Direct Marketing Sales:

Economy Begins Slow and Uneven Recovery, Second Half of 2009 and into 2010

Future economic growth will be slow, but is expected to be positive in the third and fourth quarters of this year.

Direct marketers should expect DM-driven sales revenue to decrease, nearly proportionate to ad spending, by 10.9 percent in 2009, reaching $1,738 billion from an actual $1,951.7 billion in 2008.

For 2010, sales generated from direct marketing are forecasted to grow by 3.5 percent to $1,798 billion. Several broad sectors are expected to realize above-average direct marketing sales growth in 2010, including Financial Services, Retail Trade, and Manufacturing, Resources.

Direct Marketing Adds 8.3 Percent to US Economy During 2009

“As in 2008, the overall US Gross Domestic Product (GDP) in 2009 will benefit from direct marketing,” said Wurmser. In 2009, direct marketing advertising across all economic sectors is expected to add over $1.2 trillion of incremental final demand nation-wide, accounting for almost 8.3 percent of total US GDP.

Key Economic Impact Findings:

· Employment Transfers: Although the overall picture for direct marketing employment is expected to drop in 2009 and into 2010, direct marketing employment, in general, is shifting from traditional, offline media to online, new media — mobile, Internet, and social networking will lead this trend.

· Higher Return on Investment: For 2009, an investment of $1 in direct marketing advertising expenditures is predicted to return, on average, $11.65 in incremental revenue across all industries. This exceeds the $11.61 achieved in 2008 and is expected to improve further to $11.73 in 2010.

· Shift in the Media Mix: While offline channels will continue to account for the bulk of advertising dollars in 2009, the most significant developments for the 2009 – 2010 period are the continued shift of dollars towards online media. Non-email Internet advertising will claim over 15 percent of all direct marketing advertising dollars in 2009, and nearly 17 percent in 2010.

DMA’s The Power of Direct Marketing Report was prepared in August 2009 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 2009.

The report is available for download on DMA’s online bookstore. The cost is $345 for DMA members and $595 for non-members. To purchase, please click here.

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 more than 3,100 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 2009, marketers – commercial and nonprofit – will spend $149.3 billion on direct marketing, which accounts for 54.3% of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures will generate approximately $1.783 trillion in incremental sales. In 2009, direct marketing accounted for 8.3% of total US gross domestic product. Also in 2009, there were 1.4 million direct marketing employees in the US. Their collective sales efforts directly support 8.4 million other jobs, accounting for a total of 9.9 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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