Direct Marketing Sales And Advertising Expenditures Increase Despite Challenging Year

New York, June 10, 2002 - Despite a year marred by economic uncertainty and public concern over anthrax-in-the-mail, a new report from the Direct Marketing Association (The DMA) found that U.S. sales revenue from direct and interactive marketing rose nine percent last year to $1.86 trillion from $1.71 trillion in 2000. According to The DMA's Economic Impact: U.S. Direct & Interactive Marketing Today study, direct marketing sales growth, over the next five years, will outpace overall sales growth in the U.S. by 3.5 percentage points.

"In an industry that accounts for nearly 8.6 percent of the U.S. economy, it is no surprise that direct and interactive marketing is still growing at a healthy pace," said H. Robert Wientzen, president & CEO, The DMA. "The rise during 2001 is particularly noteworthy considering that the year's direct mail growth for the second half of the year was marred by public concerns over the possibility of anthrax being sent through the mail."

According to the study, the direct and interactive marketing industry can expect to see continued economic growth. Sales are projected to reach more than $2 trillion in 2002. Overall direct marketing sales growth is forecast at 8.3 percent annually through 2006, while total U.S. sales growth is estimated at a significantly lower growth rate of 4.8 percent per year.

Industries that contributed to direct and interactive marketing sales growth in 2001 included: business services ($176.9 billion), non-store retailers such as catalogers ($152.2 billion), real estate ($63 billion), and insurance carriers/agents ($61.4 billion). Key growth industries that are poised to generate direct and interactive sales revenue during the next five years include: health services (15.8%), electrical machinery/equipment (12.6%), security/commodity brokers (12.4%) social services (11.6%), and insurance carriers/agents (11.2%)

The study also reported that spending on direct and interactive marketing rose 3.6 percent to $196.8 billion in 2001 from $189.9 billion in 2000. According to the latest findings, direct and interactive marketing represents more than 55.2 percent of total U.S. traditional advertising expenditures.

"During times of economic uncertainty, marketers are more focused on ensuring that their limited advertising dollars are working hard and reaching target audiences," said Wientzen. "As companies slashed their traditional advertising budgets last year, the trend was to shift more dollars and resources into direct marketing practices as a cost effective, measurable way to boost sales."

Direct marketing advertising dollars are working harder and will lead to higher gross profit margins. From 2001 to 2006, direct marketing is forecast to become an increasingly efficient advertising tool with sales projected to grow steadily, compared with continued slower growth in both ad spending and employment. While direct marketing sales growth between 2001 and 2006 are expected to grow by 8.3 percent, ad spending is projected to grow at a slower annual rate of 6.5 percent per year.

In 1992, The DMA commissioned The Wharton Economic Forecasting Associates (WEFA) to analyze the scope of direct marketing in the United States and develop an economic model for historical analysis and forecasting purposes. The recently updated 2002 DRI-WEFA model provides an accurate view of the impact that changes in economic conditions, government policies (including postal rates), industry structure (including the impact of the Internet), and key pricing strategies will have on the direct marketing industry.

The DMA's seventh edition of Economic Impact: U.S. Direct & Interactive Marketing Today breaks out data on direct marketing advertising expenditures, revenue, and employment throughout seven major media categories in 52 major industries.

The full report, available in late June, is priced at $495 for DMA members ($595 for non-members) and can be obtained by calling The DMA Book Distribution Center at 301.604.0187 or online at http://www.the-dma.org/cgi/offer?uid=000197.

The DMA is the leading trade association for businesses interested in interactive and database marketing, with nearly 4,700 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. Included are catalogers, Internet retailers and service providers, financial services providers, book and magazine publishers, book and music clubs, retail stores, industrial manufacturers and a host of other vertical segments, including the service industries that support them. According to a DMA-commissioned study, direct and interactive marketing sales in the United States exceeded $1.86 trillion in 2001, including $118 billion in catalog sales and $30 billion in sales generated by the Internet. The DMA's Web site is www.the-dma.org, and its consumer Web site is www.shopthenet.org.

Media Contact: Christina Duffney
212.790.1532
cduffney@the-dma.org

[Editor's Note: Charts from The DMA's Economic Impact: U.S. Direct & Interactive Marketing Today -- broken out by medium, market, state, and industry -- are available to members of the press by contacting Christina Duffney at cduffney@the-dma.org.]

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