Direct marketing a tale of rapid recovery

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Consumers' phones and e-mail boxes will likely get a break this Sept. 11, following the Direct Marketing Association's urging that telemarketing and e-mail campaigns cease on the anniversary of the terrorist attacks.

One year earlier, the direct-marketing industry suffered a steep falloff in the week following the attacks, but recovered quickly-despite the anthrax scare-and is poised for 2002 growth. Advertisers will spend $206.1 billion on direct marketing-including $49.1 billion on direct mail-this year, up 4.7% from the $196.8 billion spent in 2001, according to the DMA.

"The short-term impact was profound, but America responded and our advertisers responded," said Paul Gordon, exec VP-marketing and sales at Cox Target Media, which annually mails more than 500 million Valpak envelopes containing 16 billion offers from advertisers. Cox spent $500,000 on additional security measures in the wake of the anthrax scare but is seeing double-digit sales growth this year, according to Mr. Gordon, thanks in part to new advertisers including Cingular Wireless and Hilton Hotels.

But some direct marketers are still feeling the effects of the weak economy, the industry's primary challenge today.

"Sept. 11 was not an isolated incident. The industry is responding more to the impact of a fairly long-term recession than it is to 9/11," said Donn Rappaport, chairman-CEO of American List Counsel, which builds and manages databases for marketers.

Also a concern for direct marketers is the ailing U.S. Postal Service, which was hit particularly hard by Sept. 11 and anthrax, and was struggling financially even before those events. "The higher level of security is costing the Postal Service more money at a time when they have reduced volume and reduced revenue," said DMA President-CEO H. Robert Wientzen, adding that the Postal Service could have a $1 billion deficit this year, despite rate hikes. "We're very concerned about that."

Some marketers have responded to the slow economy by shifting to more targeted communications and refocusing on customer acquisition.

"Our clients and ourselves are sending fewer, far more targeted catalogs" and shifting to more cost-efficient Web-based catalogs, said Dave Peer, senior director-merchandising and fulfillment at Carlson Marketing Group, Minneapolis. Although the shift to the Web was a natural evolution, Sept 11 "created an impetus that didn't exist before," Mr. Peer said.

But marketers can't afford not to attract new consumers. A year ago, advertisers primarily were communicating with existing customers, but today they're focusing on new ones, Mr. Rappaport said. "Most of the major direct marketers have come full circle and realized you can only go back to the well so many times before it goes dry."

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