The good news is that direct marketing’s slice of the total ad spending pie got larger in 2009, increasing from 52.7% of all ad spending to 54.3%. The bad news? It’s a smaller pie. Total ad spending dropped to $275 billion from $319 million, meaning that the value of DM’s slice dropped from $168.1 billion to $149.3 billion.
That’s an 11.2% drop in spending, for those keeping score. DM sales dropped by 10.9% between the years, from $1.95 trillion in 2008 to a forecast $1.74 trillion this year, according to the Direct Marketing Association’s 2009-2010 “Power of Direct Marketing” report.
Most ad sales channels will see declines in 2009 from 2008’s, with the exception of e-mail marketing, search and the young mobile marketing channel. Even the much-buzzed-about social networking medium is expected to see a falloff in expenditures this year.
Both consumer and business-to-business spending will take hits this year, with consumer ad expenditures dropping from $86.7 billion to $76.8 billion, and B-to-B spending dropping from $81.4 billion to $72.5 billion.
The good news is that the third and fourth quarters of 2009 appear to be holding their own, and in 2010 overall DM ad spending is seen as ticking up to $15.2 billion, while sales should rise to just under $1.8 billion, according to the DMA. And most channels should see modest to moderate gains in expenditures next year, with the exception of direct response newspaper, magazine and radio ads.
Where is the money going? To e-channels, of course, Non e-mail Internet advertising will make up more than 15% of all direct marketing expenditures in 2009, and will rise to nearly 17% next year. Consumer ad spending will rise 2.5%, to $78.7 billion, while B-to-B ad purchasing will increase by 2.9%, to 74.6%.
If there is good news for direct marketers, it is that their investments are having increasingly good returns. A dollar invested this year in a direct marketing ad is expended to return $11.65 in incremental revenue across all industries, according to the DMA. This is up from $11.61 in 2008.
But this figure comes with a caution. It does not mean that direct marketers should expect more than an 11-to-1 return on their investments. As DMA research manager Yoram Wurmser stressed during a presentation Monday afternoon, these benefits are calculated across all parties affected by a DM-generated sale – fulfillment houses, shippers, contact center workers as well as the marketers themselves.
DM-related headcount will take its lumps in 2009 as well, with DM advertisers dropping their employee ranks from 1.56 million a year ago to 1.44 million, and DM sellers cutting staff from 8.94 million to 8.44 million.
