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GROWTH CONTINUES WITHIN THE DIRECT MARKETING INDUSTRY
New York, NY May 12, 2005 - The Direct Marketing Association's (The DMA) Quarterly Business Review (QBR) reports a Revenue Index of 63, marking the seventh consecutive quarter of highly favorable results. The industry continues its pattern of growth with index numbers remaining positive for Users, Agencies, and Suppliers alike. In addition, revenue projections for the second quarter of 2005 continue to be optimistic.BR index, a score of 50 represents no change in the industry's performance this quarter versus the same quarter last year. Scores above 50 represent growth and those below 50 represent a decline.
"Although not quite at the level of the fourth quarter's record-breaking 69, the first quarter of 2005 continues to demonstrate the overall vitality of the direct marketing industry," said John A. Greco, Jr., president and CEO, The DMA. "We fully anticipate that this trend will continue throughout the second quarter of 2005."
All three DMA segments anticipate continued revenue growth with an overall index of 64, with Users and Supplies particularly optimistic. The Agency Revenue Index of 56 is substantially lower than that for the other segments and may reflect a new trend for this segment.
"While both revenue indices for DM Users are lower for Q1 2005 than Q4, profitability holds steady with a strongly optimistic index of 72," said Greco.
Consistent with the reported Revenue Index, Users' weighted sales change - the best measure of sales growth for the industry as a whole - was 6.5 percent, almost equal to the 6.6 percent weighted sales change in Q4. For the User segment as a whole, the average sales increase was 10.9 percent, up slightly from 9.4 percent in Q4.
DM Users continue to remain concerned about economic conditions, although the degree to which direct marketers in general focus on this issue has diminished since Q4 (15 percent versus 25 percent, respectively). More surprisingly, marketing issues have become one of the top five issues likely to affect Q2 performance and are especially important to Suppliers.
DMA members in the User segment see a strong second quarter, with a projected Revenue Index of 67. Users continue to see the economy as the factor most likely to affect growth. Other important metrics are e-commerce/Spam, consumer confidence, and postal rates and postal reform.
Overall the B-to-B segment reported high revenues for Q1 although somewhat below those reported in Q4. Profitability showed a major increase in Q1 with an index of 73 compared with 63 for Q4. Most importantly, the B-to-B segment continues to project growing revenues in Q2. The average sales increase for the B-to B segment as a whole was 9.3 percent, down from 14.8 percent in Q4.
In the Catalog segment, the revenue versus same quarter last year and profitability indices are slightly lower than that for the overall User segment at 61 and 65, respectively. However, revenue versus same quarter last year increased from Q4. In addition, 66 percent of Catalog marketers reported an increase in sales while only 15 percent reported a decrease. The Catalog segment reported a large increase for weighted sales change in Q1 of 4.9 percent compared to -0.7 percent in Q4.
The Consumer Products or Services segment reported lower index numbers compared to Users on all three key measures, as well as being substantially lower than those reported for Q4. The Profitability Index was a healthy 66, although lower than that reported by Users overall. At 10.6 percent, the Q1 average unweighted sales change was slightly lower than in Q4 for this segment. The Consumer Products or Services segment experienced a 5.4 percent average weighted sales change with respondents in the top sales range (more than $5 billion in sales) reporting an average increase of 7.3 percent.
The first quarter of 2005 was a good quarter for The DMA Agency segment with both revenue and profit figures pointing to growth. DM Agencies anticipate a healthy second quarter with a project Revenue Index of 63. Wages and salaries, followed by employee benefits and operations budgets, now top the list of project expenditures, whereas in Q4 new customer acquisition took top the top spot.
The DM Supplier segment saw higher revenue than originally projected. At the same time, revenues versus same quarter last year and profitability were on par with Q4. Showing optimism for Q2, Suppliers expect continued revenue growth and at the same robust rate that they had anticipated for Q1. Looking to drive their businesses, Suppliers say that new customer acquisition will head the list of projected spending.
The DMA's Quarterly Business Review is based on three online surveys of DMA member companies conducted by The DMA's Strategic Information Unit from April 7, 2005 through April 22, 2005. Altogether The DMA received 323 survey responses. For a complete copy of The DMA Quarterly Business Review please visit The DMA's Web site at http://www.the-dma.org/qbr/.
About The DMA
The Direct Marketing Association (www.the-dma.org) is the leading trade association for businesses and organizations interested in direct, interactive, and database marketing, which in 2004 generated more than $2.3 trillion in US sales, including $143.3 billion in catalog sales and $52.5 billion in Web-driven sales. In addition to catalogs and the Web, DMA members employ a wide variety of marketing media, including mail, e-mail, telephone, newspapers and magazines, interactive television, and radio, among others. Founded in 1917, The DMA today has more than 5,200 corporate, affiliate, and chapter members from the US and 44 other nations, including 55 companies listed on the Fortune 100. Reflecting the significant and growing role that direct marketing plays in today's advertising mix, The DMA's membership represents marketers from every business segment, including catalogers, Internet retailers, retail stores, nonprofit organizations, advertising agencies, financial services providers, book and magazine publishers, book and music clubs, industrial manufacturers, and a host of other vertical segments, as well as the service industries that support marketers.