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Direct spoke with Leo Kivijarv, PQ Media’s vice president of research, about the challenges of committing predictions to print in a fluid economic market. PQ Media is the econometrics data provider that partnered with Veronis Suhler Stevenson on the Communications Industry Forecast.
DIRECT: You anticipate a solid future for direct response marketing. What’s the thinking behind your predictions?
KIVIJARV: The whole [advertising and communication] industry is becoming more knowledgeable about return on investment and engagement metrics. Catalog companies are trying to justify CPM rates, and brand marketers are saying ‘give me an ROI or engagement metric that can justify this CPM.’ They weren’t asking for that as much in the past. Additionally, marketers are confronting new sets of problems such as ad-skip technologies and media multi-tasking. And some alternative channels, such as word-of-mouth advertising, are very hot right now. Other forecasters have recently predicted advertising spending recessions. But they didn’t take a look at video game advertising, mobile advertising and custom publishing. Add in the double-digit gains in alternative media and there isn’t an ad recession. Brand marketers are becoming smarter about looking at alternative media.
DIRECT: While your current forecast study was at the printer, the U.S. experienced a scare regarding the sub-prime lending market. What impact might something like that have on your predictions?
KIVIJARV: We took the impending mortgage situation into account as we were writing the chapters. We made sure our economists addressed the sub-prime issue. We would not change our economic forecast. The housing market is just one of many of these types of instances. Last year, we looked at how oil prices might affect our forecast. This year, sub-prime troubles happen to be the flavor of the month. We are dealing with 30 years of historical data. We know what happens to the advertising or communications industry at times like these. We don’t believe there will be a recession. A slowdown, yes, but not a recession.
DIRECT: In 2008, there will be an Olympics and a hotly contested presidential election. What bearing on direct response advertising and communication spending will these events have?
KIVIJARV: NBC has been smart in terms of how they have paid for telecast rights. We learned during the Italian winter Olympics in ‘06 that it is possible to generate dollars by broadcasting the games over multiple platforms, such as online streaming video, cable and mobile. In politics, direct mail will see a significant increase. Databases that feed into political direct mail become more sophisticated every year. The amount of money that has been raised, and what will be spent, is going to be phenomenal.
