Direct marketing sales will hit $3 trillion and grow annually by 9% by 2007, outpacing the rest of the U.S. economy which is expected to increase by 5% during that period, predicted Don Libey, principal in investment banking and venture capital firm Libey-Concordia.
This comes as industry productivity is rising.
He made these assertions at Merit Direct’s fifth annual Business Mailer’s Co-Op and Conference at the Westchester Renaissance Hotel in White Plains, NY.
Broken down, business-to-business direct marketing sales will total $1.4 trillion over the next three years and consumer DM will reach $1.6 trillion, he noted.
To each these levels, the direct marketing industry as a whole will spend $260 billion in advertising by 2007 — making up 60% of total U.S. advertising expenditure of $430 billion.
That mean direct marketers will spend $260 billion to drive $3 trillion in sales, an advertising cost of 8.5%, including rising postage costs.
But just as postage costs are rising, telemarketing costs are declining and online marketing costs remain low.
Coupled with this economic expansion is the fact that employment growth is slowing: by 2007, DM employment growth will be at about 3.5% a year, versus 5% a year during the previous five years.
“If we look at the effectiveness of direct marketing over the prior eight year period, we can see how the online channel has reduced the need for people and how technology in every area of our industry has raised productivity and reduced the need for human capital,” he said. “This is very attractive to investors.”
Despite these advances, Libey warned that the industry still has not increased overall response rates and retention, nor even made he most of recency frequency and monetary value.
“We have much to do and much of it is basics,” he said.
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