Direct marketing rose 3.6% in '01

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Despite the weak economy that forced down traditional ad spending last year, marketers increased direct and interactive marketing expenditures to $196.8 billion, up 3.6% from $189.9 billion in 2000, according to a Direct Marketing Association study.

And while bricks-and-mortar retailers continue to suffer declines, direct sales grew 9% in 2001, to $1.86 trillion from $1.71 trillion the year earlier, representing $9.50 of sales for every dollar spent on direct.

That efficiency will continue, contends the Direct Marketing Association's seventh annual Economic Impact study, conducted by Wharton Economic Forecasting Associates. While spending on direct advertising is expected to rise at an annual rate of 6.5% until 2006, sales are projected to grow 8.5% per year.

"It is becoming more efficient due to targeting," which is improving, thanks to more sophisticated technology and databases, said H. Robert Wientzen, DMA president-CEO, who added growth over the next five years will result from new categories turning to direct media, including social services and entertainment.

Business-to-consumer marketers accounted for 48%, or $94.3 billion, of 2001 direct-marketing spending and will grow 5.9% per year through 2006, while business-to-business spending will rise at a rate of 7.0% annually, the study said.

Although marketers' spending on and sales from direct methods are increasing, agencies are not faring as well. Agency revenue from direct marketing and sales promotions fell 6.9% in 2001, with eight of the top 10 shops experiencing revenue declines, according to Advertising Age's annual marketing-services report (AA, May 20).

Mr. Wientzen said that discrepancy results from "direct volume that doesn't involve agencies at all," such as phone marketing and direct mail, the two biggest categories, accounting for $76.2 billion and $46.5 billion of 2001 spending, respectively.

The DMA's $46.5 billion direct-mail figure tracks closely with data from Robert J. Coen, senior VP-forecasting at Interpublic Group of Cos.' Universal McCann, who said direct-mail spending last year increased 0.3% to $44.7 billion even as overall ad spending fell 6.5%.

"Whenever there's an economic squeeze, there's always a push toward accountability and measurement," said Tom Collinger, associate professor-director of direct, database and e-commerce in Northwestern University's integrated marketing communications program.

FAST FACTS

Direct-marketing expenditures:

2001: $196.8 billion

2002*: $206.1 billion

2006*: $269.2 billion

Sales from direct marketing:

2001: $1.86 trillion

2002*: $2.02 trillion

2006*: $2.78 trillion

* Projected figures Source: Direct Marketing Assoc. study

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