DM Spending to Reach $194 Million in 2010: Forecast

Direct marketing expenditures are seen as growing by 6% annually, a rate that will boost 2006’s $154.5 billion to $194.2 billion by 2010, according to the most recent Veronis Suhler Stevenson Communications Industry Forecast study. DM’s growth will keep it atop the list of all communications industry segments when ranked by pure size. Overall, communications spending is seen as rising from $961.9 billion this year to $1.24 trillion by 2010.

DM’s anticipated growth rate is faster than those for broadcast television; newspapers; radio; consumer book publishing; education and training media; business-to-business promotions; yellow pages or consumer promotion. In fact, it is the third-fastest growth rate — save for public relations and cable and satellite television — among any channel that currently generates more than $50 billion in spending.

Those numbers don’t even include Internet and mobile content. According to Veronis Suhler, these channels generated $20.28 billion in 2005, or 42% of marketing spending, up from 16% in 2000.

What drives this forecast is Veronis Suhler’s observation “…the media industry is in the midst of a fundamental change, driven by technology innovation, the emergence of new media options, quickening audience fragmentation, more multitasking, an increased demand for customization and tighter focus on ROI.” Many of these drivers feed right into DM’s wheelhouse.

Telemarketing continues to be the largest segment within direct marketing, even despite the impact of the national do-not-call list. Telemarketing spending rose 5.9%, to $60.2 billion, in 2005. Direct mail rose 8.5%, to $55.7 billion, while interactive marketing, spurred on by e-mail efforts, was the fastest growing segment, boasting nearly 18% year-over-year growth in 2005.

Keyword search advertising made up the largest part of online advertising in 2005: Marketers spent nearly $5.2 billion on it during the year. Display ad spending made up the second-largest chunk, a $2.29 billion. E-mail advertising spending was $188 million, reflecting growth in its use as a retention tool.