DIRECT & INTERACTIVE MARKETERS REPORT IMPROVED RESULTS FOR THIRD QUARTER

ORLANDO, OCTOBER 13, 2003 -- Responses to the Direct Marketing Association's (The DMA) Quarterly Business Review (QBR) for the third quarter of 2003 indicate that relief from the economic malaise of the last two years may have finally arrived. The DMA's benchmark Revenue Index numbers for the third quarter of 2003, in which 50 equals no change and anything above 50 indicates growth, jumped dramatically to 63 from the second quarter's performance index of 49.

2002

2003

Q3

Q4

Q1

Q2

Q3

DM Revenue vs. Same Quarter Last Year

N/A

57

54

49

63

Net Profitability

N/A

62

60

54

61

Furthermore, direct and interactive marketers reported an industry wide projected revenue index of 63 for the fourth quarter of 2003, up from 57 in the second quarter.

"Overall, this is clearly the best quarterly performance the Direct and Interactive marketing industry has seen since the launch of the Quarterly Business Review almost a year and a half ago," said H. Robert Wientzen, president & CEO, The DMA. "As a result of these solid results, we anticipate continued strong growth into the all-important holiday-shopping season."

Industry Segment Results

Users of Direct Response Marketing: At long last, business seems to be turning around for the beleaguered companies who employ direct and interactive marketing channels to drive their business. DMA member companies in the User segment reported impressive average sales increases of 11.6% for the third quarter. Over half the respondents indicated sales increases, while only about one fifth of respondents reported sales declines. Average Return on Investment -- ROI -- was up moderately at 56, based on two chief components of ROI, average response rates (53) and average order size (52). Moving into the fourth quarter, user companies plan to invest in new customer acquisition (62), e-mail and internet integration/e-commerce solutions (61). Users cite economic conditions (16 percent), e-commerce/Spam (13 percent), and government policy (10 percent) as issues most likely to impact growth in the fourth quarter.

Direct Response Agencies: DMA members in the Agency segment report a level of optimism and even enthusiasm that has not been seen in some time -- no doubt reflecting the increased opportunities offered by companies that use direct and interactive marketing methods experiencing robust sales and revenue growth. Agencies reported a net profitability index in the third quarter of 63 -- up from 54 in the second quarter of 2003. The number of clients reported by agencies this quarter was up significantly from an index level of 54 in the second quarter to 62 in the third quarter. Agency respondents also reported they focused their efforts on client cross/upselling and retention efforts. As a result, 19 percent of agency respondents reported they entered a new client segment or product line in the last quarter, while the employment index for agencies rose last quarter to 51, up from an index of 39 in the second quarter. Agencies reported an optimistic look toward the fourth quarter, with revenue projections indexed at 57. Economic conditions (19.6 percent), clients and budgets (16.3 percent), and consumer confidence (14.1 percent) were all cited as issues likely to impact agencies in the fourth quarter.

Direct Response Suppliers: The majority of respondents in the supplier category (28.9 percent) indicated they introduced a major new product line in the third quarter. Suppliers anticipate improved revenue performance next quarter, with an index at 63, and foresee expenditure increases in new customer acquisition. Economic conditions (29.6) and government policy (17.6) were cited as issues likely to impact their performance in the fourth quarter.

The DMA’s Quarterly Business Review serves to benchmark the direct and interactive marketing industry's financial performance and identify the trends that will impact future performance such as changes in sales revenue, customer response rates, marketing expenditures, and staffing levels, among others. Results came from online surveys conducted by The DMA’s Strategic Information Unit from September 14, 2003 through October 1, 2003. The report generated 200 responses.

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 surpassed $2 trillion in 2002, including $125 billion in catalog sales and $33 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.

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[Editor’s Note: An executive summary of The DMA’s Third Quarter of 2003 Quarterly Business Review -- including breakout data for direct marketing agencies, users, and suppliers -- can be obtained by contacting Christina Duffney at cduffney@the-dma.org]

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