DIRECT MAIL GAINS PEGGED AT 7.5%

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NEW YORK-A rosier outlook is nothing new to direct marketers, who have seen their own spending grow consistently, even through the latest recession.

New figures at last week's PaineWebber Media Conference from McCann-Erickson Worldwide forecaster Robert Coen predict direct mail spending will grow 7.5% in 1995, outpacing gains of all other media categories except cable and syndicated TV, expected to rise 8%.

Direct mail ad activity, pegged at $31.5 billion, far exceeds any other spending category. Preliminary figures for 1994 show direct marketing budgets also rose 7.5%, to $29.3 billion.

"Everybody seems pretty positive," said Steven Dapper, CEO at Rapp Collins Worldwide, New York. "We're getting all sorts of calls about things that were on the back burner. I'm cautiously optimistic that things will look good for next year."

But a looming postal rate increase is expected to lead many marketers to shift spending to this year. And it's likely to accelerate a trend by AT&T, Reader's Digest Association and other high-volume direct marketers to reduce overall mail volume by targeting more selectively.

"People will be prospecting less" for new customers, said George Bardenheier Jr., VP-national sales manager for consumer-product services at R.R. Donnelley's Metromail, Oak Brook, Ill. "But it helps get them off the dime and start doing sophisticated modeling and research."

This won't come as good news to the U.S. Postal Service, which would be affected most dramatically by the trend even as it earns higher rates. The postal service projected third-class mail volume would fall 1.25% for the April-through-September period.

Catalog marketers will face similar hurdles and likely see lower growth rates in spending and revenue, industry analysts said.

"We will see below-trend industry growth rate, due to a big circulation ramp-up at the end of the year," said Christopher Feiss, an analyst at Alex. Brown & Sons, Baltimore.

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