While total direct marketing sales in the United States are expected to exceed $2 trillion in five years, DM sales, advertising expenditures and employment growth rates are expected to slow, according to a newly updated study commissioned by the Direct Marketing Association and conducted by the WEFA Group.
The study, called the 1999 Economic Impact: U.S. Direct and Interactive Marketing Today, forecasted sales of $2.3 billion-including $1.2 billion in consumer sales and $1.1 billion in business-to-business sales-by 2004. B-to-B sales are projected to comprise close to half of all sales.
In addition, the study reported that DM sales growth continues to outpace overall sales growth in the U.S. economy. From 1994 to 1999, sales to consumers increased at a compound annual growth rate of 8.5% per year, compared to 5.5% annual growth in total U.S. consumer sales. During those same years, B-to-B sales increased 11% per year, versus a 5.6% annual growth rate in overall B-to-B sales. However, over the next five years, the study predicts that growth rate to slow to 7.5% for consumer sales and to 10.3% for B-to-B sales.
Direct response advertising spending is estimated to reach $176.5 billion this year, comprising 57.1% of total U.S. advertising expenditures of $308.9 billion. And, since DR advertising is also becoming more efficient, ad spending is projected to grow at a slower pace than sales across all DM media from 1999 to 2004.
Over the last five years, consumer ad spending increased at a compound annual growth rate of 7.1%, compared with the expected 5.2% increase from 1999 to 2004. B-to-B spending grew by 8.4% over that last five years, compared with the predicted 7.4% over the next five years. Total ad spending is expected to reach $240.7 billion by 2004, including $111.7 billion in consumer expenditures and $128.9 billion in business spending.
The study also found that the growth in DM jobs continues to outpace overall U.S. employment growth. Over the next five years, DM industry employment growth is expected to grow at an annual rate of 4.2%, more than four times the overall U.S. annual employment growth rate of 1%.
However, that figure is down slightly from the annual growth rate of 5.6% reported from 1994 to 1999.
This year, the industry employed an estimated 14.1 million people. That number is expected to rise to 17.3 million in 2004. Today, DM accounts for nearly one in 11 jobs in the United States.
This year's study, commissioned annually for the past five years, will be available late this month.
