It's been a tough year for the industry.
The dip in the economy, superimposed with the events of Sept. 11 and the anthrax scares, have caused DM businesses to shut down, downsize, reorganize and initiate major cost cuts, DMA president H. Robert Wientzen said during the opening session at the DMA's 84th annual conference.
Growth for sales and ad spending have slowed significantly this year with spending projections dropping by more than $2 billion or 1%. And, 2001 sales projections are down 2.4% after the Sept. 11 attacks, equating to $42 billion in lost revenue.
The anthrax scare alone has created overwhelming public concern about the safety of mail and has cost the USPS millions of dollars it can ill afford, Wientzen said.
In the seven weeks into the postal service's new fiscal year, which began Sept. 8, total mail volume has dropped 5%. If the trends holds, it would mean a $3.5 billion loss for the current fiscal year.
The DMA had worked in recent weeks conducting surveys to gauge consumer confidence in the mail. While a number of people did indicate that, in the future they'd be less inclined to open direct mail, the latest survey found that 59% of consumers reported that recent events would not impact their holiday spending. "Which is good news for us," Wientzen said.
The study concluded that DMers should continue to market to consumers avoiding hyperbole and implementing practices recently outlined by the DMA such as identifying the sender and return address on the outer envelope.
Despite the dismal outlook, DM continues to grow but at a slower pace. American marketers are expected to spend $196 billion on DR advertising, a 3.6% increase over last year. However, that's about half the annual growth that the industry has experienced over the past five years. Over the next five years, ad spending is forecast to return to "normal" and increase 6.4% annually.
U.S. direct and interactive marketers are projected to generate nearly $1.9 trillion is sales, a 9% increase over last year. Sales are forecast to reach $2.7 trillion in 2006. Top countries outside the U.S. in industry sales are Japan, Germany, France and the UK.
In Europe, industry sales are going strong, with Ireland, Finland, Greece and Italy standing out. While Switzerland has the lowest five-year growth forecast of the 30 countries, it ranks number seven globally in direct marketing sales.
The marketing medium with the most robust growth is the Web. "Not surprisingly," Wientzen said.
Almost every DMA member has an online presence, and 49% report operating at a profit, he added. For example, 11% of Fingerhut's orders arrive via the Web, Lillian Vernon's online sales have gone up five points in the past year, 15% of Plow & Hearth's sales are online and Land's End's are 16%. Adding it all up, DMers will generate about $34 billion in online sales this year. Direct mail is projected to generate $582 billion in sales.
