Wednesday, November 26, 2008

Direct Marketing To Comprise 53% Of '09 Ad Spend

Original Post: Marketing Vox

Expenditures on direct marketing media and processes will again outpace general advertising in 2008 and 2009, and - though they will grow slowly - are on track to capture 53% of total advertising expenditures next year, according to a yearly forecast report from The Direct Marketing Association (DMA), writes MarketingCharts.

dma-power-direct-marketing-ad-expenditures-vs-total-us-expenditures-2008.png

"The Power of Direct Marketing Report," an annual accounting of direct marketing's impact on the US economy - including advertising expenditures and sales - reports that advertising dollars are continuing their long-term migration from general advertising to direct marketing.

At the same time, direct marketing expenditures are expected to grow slowly in 2008 and 2009, while direct marketing sales will grow slowly in 2008 but slightly faster in 2009, the report said.

Key findings are reported below.

Direct Marketing Ad Expenditures:

  • DMA predicts that marketers will make $176.9 billion in direct marketing advertising expenditures by the end of 2008. This represents a modest 3.0% increase over the $171.7 billion actually spent in 2007.

dma-power-direct-marketing-expenditures-sales-2007-2008.jpg

  • The slow growth in 2008 is being caused by the worsening impact of lower home sales, a meltdown in mortgage lending, lower furniture, appliance, and automobile sales, and higher energy prices, according to the report.
  • In 2009, total direct marketing advertising expenditures are expected to increase 3.5%, yielding $183.1 billion.
  • Above average, double-digit spending growth will occur in commercial email and internet marketing as businesses take advantage of the continued move toward electronic purchasing.
  • Financial services, professional services and retail are among the top industries in direct-marketing spend in 2008.

dma-power-direct-marketing-top-10-industries-by-expenditure-2008-2009.jpg

Direct Marketing Sales:

  • Despite the current economy and several expected sluggish, even declining periods in the latter part of 2008, direct marketers should expect 3.7% revenue growth by the end of 2008, reaching revenues of $2,058 billion from an actual $1,985 billion in 2007, the DMA said.
  • Sales generated from direct marketing should continue to rise in 2009 and are forecast to grow by 4.5%, to $2,150 billion.
  • Several broad sectors are expected to see above-average direct marketing sales growth in 2009 including financial services, information, transportation services, and wholesale trade.

"Direct marketing's integration of multiple sales channels and highly targeted offers means that businesses utilizing direct marketing typically outperform their competitors, even when sailing into financial headwinds," Peter A. Johnson, PhD, DMA’s VP, strategy, analysis, and planning, and lead author of the report.

Key Economic Impact Findings:

The report also predicts economic implications for direct marketing in today's financial climate, as well and direct marketing's impact on the US economy.

  • Increased Employment: Although the overall picture for direct marketing employment is expected to be weak for both 2008 and 2009, direct marketing is still expected to perform better than employment in many other economic sectors. The total US employment, which is forecast to remain virtually unchanged in 2008 and 2009, will receive a net boost from total direct marketing driven employment, whose net growth of 0.3% in 2008 and 0.2% in 2009 will help compensate for job losses elsewhere in the national economy.

dma-power-direct-marketing-employment-2007-2008.jpg

  • Higher Return on Investment: For 2008, an investment of $1 in direct marketing advertising expenditures is predicted to return, on average, $11.63 in incremental revenue across all industries. This exceeds the $11.56 achieved in 2007 and is expected to improve further to $11.74 in 2009.
  • Growth for Interactive Marketing: Expenditures in the newer online media will maintain significant growth in the coming year. Commercial email will continue to claim the top growth ranking for 2009, while internet advertising will claim more than 15% of all direct marketing advertising dollars in 2009.

"As in 2007, the overall US Gross Domestic Product (GDP) in 2008 will benefit from the growth generated by direct marketing," said Johnson. In 2008, direct marketing advertising across all economic sectors is expected to add over $1.43 trillion of incremental final demand nation-wide, accounting for almost 10 percent of total US GDP.

This year's report also provides – for the first time ever - more granular industry data, including ad spending and direct-marketing-driven sales data for the 52 industry verticals broken down by media channel and by intended purpose of the offer. The DMA said that these breakouts will enable direct marketers to more precisely pinpoint which channels and intended purposes within industry groups are growing - as well as those that are declining.

About the report: This year's report was prepared in August 2008 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 yearly report was first published in 1995.