Economic Worries Dog DMA's Fall Show

But Direct-Marketing Group Predicts Ad-Revenue Growth Despite Global Financial Chaos

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LAS VEGAS ( -- At its annual fall show here yesterday, the Direct Marketing Association said direct-marketing media and practices would once again outpace general advertising by a slight margin by garnering 53% of total advertising expenditures. With marketers clamoring for the cost efficiency and targeting that things such as database segmentation, CRM and e-mail marketing provide, this finding really comes as no surprise.
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"Despite the current uncertain economic times and sluggish, even declining periods in the latter part of 2008, direct marketers should realize 3.7% nominal annual growth in sales this year," said Peter Johnson, the DMA's VP-senior economist, strategy, analysis and planning. The DMA is projecting that marketers will spend $176.9 billion on direct-marketing efforts by the end of the year, slightly outpacing last year's total of $171.1 billion in 2007. Looking ahead to next year, the association is projecting direct-marketing expenditures will increase to $183.1 billion.

Activity masks uncertainty
But after two days at this year's show, numerous laps around the convention floor and conversations with a number of exhibitors, there's a sense that not a lot of discussion is going on between direct marketers and advertisers who might be looking to increase their marketing outlays. Sure, lots of people are here and numerous meetings, most of which were probably set up weeks in advance, are taking place off the convention floor in the cafeteria, offices, hotels and on the couches lining the convention center's concourse. But while exhibitors have their new-business pitches aimed at people roaming the convention floor, getting them to stop and hear the proposals has not been easy.

Some exhibitor booths are still fairly large, and many companies have small armies manning them, waiting to pounce on anyone walking by who happens to stop moving. Some booths have magicians, espresso machines and fake bars -- not sure what the point of that is exactly. As with any show, the foot traffic has its ebbs and flows, but even when there are a lot of people moving throughout the convention hall, they're doing exactly that, moving.

And with any event like this, it all depends on whom you talk to.

"A number of people I have spoken to are, not surprisingly, concerned about price," said Kevin Nielsen, an account executive at Japs-Olson Co., a midsize commercial and direct-mail printer and mailer. "I have had several promising discussions. I have been going to this show since 1985, and I have seen shows that are a lot slower and some that are a lot more productive than this particular one. Considering the economy, I have to say this isn't that bad."

Economy dominates chatter
Gary Laben, CEO of Knowledgebase Marketing, said the economy is the segue to every conversation he is having. "Everyone is talking about it, but people are doing business and making deals," he said. "The 900-point increase [in the Dow] may have put people's minds at ease, but should it drop dramatically tomorrow, talk to me then, and I might have something different to tell you."

Mr. Laben said he has only had one client, a health-care company, "drastically reduce" its marketing efforts over the last few weeks. He said it is only cutting back until the end of the year. "They just don't think their message will get through with all of the noise and clutter taking place right now," Mr. Laben said. "This was more of a marketing decision as opposed to an economic decision."

Overall, Mr. Laben said he thinks everyone at the show is there to do business on some level. "No one has come to meet with us to reduce business, and prospective business is quite strong," he said. "And there haven't been many no-shows in terms of people canceling meetings."

But for others, such as Roger Caldwell, a database-marketing consultant at InfoUSA, the show has been a bit of a disappointment. The company has one of the larger booths on the convention floor and is very centrally located at the front of the hall.

"CEOs have cut back on the people they are sending, and traffic for prospective clients and business is close to nil," Mr. Caldwell said. "There's not a lot of promising discussions taking place. The discussions I am having are from appointments I set up. There are not a lot of people walking by out of the blue and talking business with us."

One of Mr. Caldwell's colleagues said he had clients cancel a meeting with him at the last minute because of a travel freeze initiated by their company.

Free gas gets attention
Around midday today, Axciom, a global interactive-marketing services company, had a cluster of people around its booth but they weren't there to talk about a new marketing solution for their company. They were all registering for a chance to win free gas. The company has also employed a magician to entertain convention-goers.

In a day and a half, the agency had managed to get more than 250 people to register for the sweepstakes. Tim Stevenson, who runs events for Axciom, said traffic overall had been good but the sweepstakes was a good way to draw some additional foot traffic at the booth. "It has generated some promising [business] conversations," he said. "It's different than what other companies are giving away. People will be walking by and stop in their tracks and say, 'What do I have to do to win free gas?' I think that really speaks to what's on people's minds right now."

Other findings from the DMA's "Power of Direct Marketing" study include: Above-average double-digit spending growth will occur in commercial e-mail and internet marketing; expenditures in the newer online media will maintain significant growth in the coming year; commercial e-mail 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; and 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.
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