DMA: Direct Marketers Report Soft First Quarter

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The Direct Marketing Association's Quarterly Business Review for the first quarter of 2003 indicated a soft quarter compared to last, the DMA said yesterday.

The review's index numbers, in which 50 equals no change, result from online surveys conducted April 1-14.

Net profitability stayed positive, at 60, though it declined 2 points from the previous quarter. Direct and interactive marketing revenue performance was down slightly to 54 from the previous quarter's 57.

"Although the Iraq war did not officially begin until the last two weeks of the quarter, its effects were clearly felt throughout the direct and interactive marketing industry," DMA president/CEO H. Robert Wientzen said. "Now that the war has been concluded in a timely and successful fashion, many members feel there is reason to hope that direct and interactive marketing will pick up."

Direct marketers said they entered the second quarter with cautious optimism. If the war's aftermath is as successful as the war itself, members are looking for an upturn in consumer confidence indicators. Meanwhile, DMers continue to tighten their belts on capital investments.

Other report highlights:

* More member companies reported sales losses than gains. With smaller members reporting on average higher gains more frequently than other members, there was an average sales increase for all respondents of 6.1 percent. However, when these changes were weighted by the size of the member company, sales were down for the entire industry.

* Internet, e-mail and customer acquisition remain the prime growth areas. Capital and operations budgets continue to be squeezed.

* Users of direct and interactive marketing performed essentially the same as the agency and supplier segments in terms of profit and revenue. However, users were less optimistic about the prospects for the rest of 2003 than members in the agency or supplier segments.

* Direct and interactive marketing service providers were the most optimistic about the future, with an expectations index of 65. This segment reported investing strongly in customer acquisition and customer service.

* Across all segments, DMA members expressed concern about the war, particularly its effect on consumer confidence, the economy generally and, for agencies, their clients' direct marketing budgets.

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