BtoB

GUEST COLUMN: John A. Greco Jr.

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Though I wouldn't say it has been smooth sailing over the past five years for any one business sector, b-to-b has certainly weathered the storm-perhaps better than others.

There are, of course, many reasons for this. But I believe the proficiency of b-to-b organizations in direct marketing, and the sector's ability to maintain a consistent investment in this valuable revenue source, have made a contribution. In both a struggling and now a recovering economy, b-to-b marketers have been forced to make every marketing dollar count-and that is a goal for which direct marketing is particularly well-suited.

Among the benefits of direct marketing is measurability, which enables marketers to assess and adapt their campaigns to increase response rates. Direct marketing also offers tremendous flexibility to use multiple channels in concert, thereby maximizing the effectiveness of each medium. And because it allows organizations to leverage data to understand and address their customers' needs, direct marketing is generally more customized, relevant and meaningful to recipients.

These factors have helped steer b-to-b marketers toward direct marketing in recent years, a trend that the Direct Marketing Association (DMA) has seen reflected in its ongoing "Economic Impact" research conducted by Global Insight. Consider the numbers for direct marketing advertising expenditures and the revenue generated by those investments from 2000 to 2005.

In 2000, marketers spent a combined $98.9 billion on b-to-b direct marketing, and those expenditures generated $786.5 billion in sales revenue. That's a return on marketing investment (ROMI) of almost $8 for each $1 spent. Though ad spending dropped the following year as a result of the economic downturn, sales revenue and ROMI went up. They were $853.2 billion and $8.86, respectively. And, perhaps less surprising in light of improving economic conditions, direct marketing ad expenditures, sales revenue and ROMIs have continued to rise from 2002 to the present.

In 2005, the DMA expects direct marketing ad spending in b-to-b to reach $121.5 billion, with resulting revenue exceeding $1.1 trillion. These projections are based on a number of key drivers, including advancements in e-mail and Internet marketing, and increasing interest in the small- and medium-sized business marketplace. Also, mergers and acquisitions on the service side have increased the "one-stop-shopping" direct marketing functionalities available to clients.

With this growth, the DMA is seeing the industry expand in exciting ways. Gone are the days when direct marketing referred to a narrow slice of marketing media, service providers and users. Today, we have moved into a vast array of new vertical industries. Though many of these industries do not identify themselves as direct marketers, they share a distinct commonality: the use of some direct-response techniques and channels-including telemarketing, mail order, television, radio, newspapers, magazines, e-mail, and the Internet-as parts of their overall marketing mix.

Actually, when you consider the ubiquity of multichannel advertising today, one could argue that virtually all marketing today is direct marketing.

This shift in the past decade has dramatically changed the face of the DMA. There is no longer a prototypical DMA member. We currently represent manufacturers, service pro-viders, e-tailers, retailers, nonprofits, trade associations and professional organizations, and governments.

Working with our b-to-b members, we have seen some impressive growth over the past five years. But I believe that the future still holds great promise for this sector. Though the recent economic roller-coaster has had its share of ups and downs, I urge you to hang on for the next ride. With DM strategies and techniques becoming more sophisticated, more multichannel and more database- and technology-driven by the day, the fun is just beginning.

John A. Greco Jr. is president-CEO of the Direct Marketing Association. He can be reached at jgreco@the-dma.org.

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