DM Growth Falls in First Quarter

DIRECT MARKETING GROWTH flagged in the first quarter of 2006, dropping below the last two years’ robust levels, according to the Direct Marketing Association’s quarterly business review.

The review combines findings from three online surveys of different DM segments to produce an industry revenue index. A score above 50 represents growth from the same quarter of the previous year, below 50 a decline, and 50 indicates no change.

For this year’s first quarter, the review set that index at 59 — down from Q4 2005’s near-record-high index of 68.

“Although not as robust as the last quarter of 2005, the first quarter generally was healthy for marketers,” said Peter Johnson, the DMA’s vice president of research and market intelligence. “With the exception of the smallest companies reporting fewer sales, marketers across all sales tiers cited an increase [in business].”

Industrywide, actual revenue vs. projections slid from an index of 54 in the final 2005 quarter to 46 in Q1 this year. By segment, the indexes for revenue vs. original projections fell for direct marketers (47) and DM suppliers (42), but direct response agencies showed slightly better revenue than expected with a first quarter index of 51.

The weighted average sales change in the DM segment was 5.8% for the period, down substantially from the 12.4% increase reported in Q4 2005, but in line with more modest gains in last year’s earlier quarters.

Looking at direct marketing specializations, the DMA found that the B-to-B group had a weighted average sales change of 3.7% for Q1 — considerably lower than the 16.9% average posted in 2005’s final quarter. The catalog segment showed a revenue-vs.-projection index of 52, higher than the declining indexes noted in all four quarters of 2005.