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DMA Releases New ‘The Power of Direct Marketing’ Industry Forecast

October 3, 2011
WASHINGTON, DC—Oct. 3, 2011—The Direct Marketing Association (DMA) released “The Power of Direct Marketing,” a biennial forecast of direct marketing’s economic impact on the US economy. First published in 1995, the report is released every other year in conjunction with DMA’s Annual Conference and delivers historic trends, current year estimates, and one-year and five-year projections for direct marketing expenditures, sales, ROI and employment. No other publication covers the economic impact of direct marketing channels with the same level of detail.

Direct Marketing continues to grow at a quicker pace than the overall U.S. economy. DM-driven sales will grow 7.1 percent this year to nearly $2 trillion, compared with 5.1 percent for sales overall in the states. Overall, 8.7 percent of U.S. GDP comes from direct marketing. “It’s fair to say that direct marketing is one of the current engines of economic growth for the US,” says Yory Wurmser, DMA’s director of marketing and media insights.

Direct Marketing Advertising Expenditures: A Larger Share of Total Advertising

Spending on direct marketing grew at a 5.6 percent clip to $163 billion in 2011 and now accounts for 52.1 percent of total advertising spending in the United States. This share has increased steadily over the past five years, a trend expected to continue through 2016.

A parallel trend may explain this. ROI for direct marketing in 2011 is projected at $12.03 of sales per dollar of expenditures, compared with $5.24 for general advertising.

Growth Led by Digital Channels

Much of this growth is driven by online media, which continue to outpace other channels in expenditure growth. DMA expects digital channels to continue to increase their share of the marketing budget from 19 percent in 2011 to 21 percent in 2012. The total spend on digital marketing has grown by $14.5 billion since 2006.

Mobile marketing will lead all channels in 2011, with an annual growth rate exceeding 50 percent. Social network marketing, search engine marketing, and “Internet other” (a catch-all for rich-media ads, advergaming, blogs, etc.) will all increase by more than 20 percent, and the two largest components of Internet advertising — search and display, will both grow at a rate over 18 percent. “Growth in advertising spending on online media over the past year exceeded our expectations,” says Wurmser.

Although spending on most traditional channels remains below the peak year of 2007, direct mail and DRTV both bounced back strongly in 2011. Direct mail expenditures will grow 4.6 percent to just over $50 billion, DRTV will have even higher growth (6.1 percent). As strong as these numbers are, direct response magazine, direct response radio, inserts, and telephone marketing all will experience negligible growth at real rates (adjusted for inflation). Spending on direct response newspaper will continue to fall.

Economy Slows at End of 2011 with Weak Growth Expected in 2012


The economic recovery has slowed significantly in the second half of 2011, with little improvement seen for 2012 even if the US avoids a double-dip recession. Although direct marketing is expected to continue to outperform the broader US economy, growth in all channels will slide from 2011 numbers. The fastest growth again will be with mobile marketing, which is expected to rise nearly 40 percent, followed by the various online channels, all with double-digit increases. Virtually all traditional media, however, will see growth rates either in the low single digits or in negative territory.

9.2 Million Jobs Generated by Direct Marketing

The increased economic activity produced by direct marketing will support 9.2 million jobs in the US in 2011. Companies continue to work on improving their productivity, which limits the number of new jobs created. Despite the strong growth in sales and expenditures in direct marketing, a net of only 66,000 new jobs will be created in 2012.

Preparation of the Report

DMA’s The Power of Direct Marketing Report was prepared in August 2011 using the economic model of US direct marketing activity updated every year for DMA by Global Insight. Incorporating the most recent data available on developments in all sectors of the US economy, it aims to help marketers plan expenditures, sales, ROI, and employment for the 16-month period through the end of 2009.

The report is available for download on DMA’s online bookstore. The cost is $295 for DMA members and $595 for non-members.

About Direct Marketing Association (DMA)

The Direct Marketing Association is the world’s largest global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents companies from dozens of vertical industries in the US and 48 other nations, including half of the Fortune 100 companies.

Source: DMA.

 

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