DMA Releases Economic Impact Perspective of Attacks

The Direct Marketing Association has released a perspective on the economic impact of the “Attack on America” on U.S. direct marketing and what to expect in the weeks and months ahead.

Many economists predict that the attack will exacerbate the economic downturn leading to a recession, according to the papers. The economy grew at a sluggish rate of 0.2% last quarter. And while some believe that the attack will tip the economy over into recession, there are those who believe that the responses of business and public authorities may prove a counterweight to any such tendency.

The state of consumer confidence can play a key role in the direction the economy takes. Consumer confidence has been declining steadily in the last year. In the most heavily affected areas following the attacks, consumer confidence will be slower to recover. The direct marketing impact in the New York metropolitan region, given its population and wealth, is unclear. While the New York public may become fearful of public spaces, they may also turn to direct marketing as an alternative. It will take “a number of months” for the New York region to restore normalcy. The nation’s psychological health could suffer adversely should a prolonged official military response occur, according to the perspective.

Consumer confidence outside the affected areas depends in large measure on the content and success of political responses to terrorism. Consumer attitudes may follow the uncertainties of war. If the response to terrorism is swift and effective, confidence will be restored. Multi-channel marketers are in a good position to redirect efforts from one channel to another. Direct marketing will resume its daily norm when baseball does and when television ceases to broadcast news 24 hours a day.

Catalogs mailed the week before, of and after the attacks are likely to have very poor response rates. Catalogers are suffering declines of 50% or more in response. During the Gulf War, responses to direct marketing tapered off 10% to 30%, most attributed to catalog responses. It took the industry three weeks to rebound there. Medium and long-term impacts depend in large part on the changes in consumer confidence.

Outbound calls have been suspended by many direct marketers but are likely to resume in a week outside the impacted areas. Some direct marketers are considering a black-out period of three weeks to one month for the heavily impacted areas. Non profits are the exception as appeals for disaster relief may find higher response rates.

In addition to the economic consequences of the attacks, the perspective also prescribes some actions that direct marketing executives should consider implementing.