Coen: U.S. Direct Mail Spending Forecast to Rise

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U.S. direct mail spending is forecast to rise 8 percent this year to $59.6 billion, according to noted researcher Robert J. Coen, senior vice president and director of forecasting with Universal McCann.
In his June 2006 Insider's Report, Mr. Coen said national direct mail spending grew 6.7 percent in the first quarter of 2006 as marketers sought alternatives to their former telemarketing programs.
"Restrictions on telemarketing calls have continued to generate increases in the class of mail mainly used for direct response advertising," he said in the report.
Regular Automation Presort Standard Mail increased 3.4 percent between 2005 and 2006 in the January to March timeframe, from 12.4 billion pieces to 12.8 billion. Regular Enhanced Carrier Route Standard Mail rose 4.3 percent, from 7.5 billion pieces to 7.8 billion.

Mr. Coen said that in the opening quarter of 2006, "postal rates and other costs for advertising mailing rose, and it is noteworthy that despite the higher cost, the number of regular standard rate pieces of mail rose. Usually, in the first quarter, after a postal rate increase, piece volume will decline."

Mr. Coen added that mail advertising continues to be on the rise and "as political contests intensify, activity in this sector is likely to rise further."

He also reported high national spending gains in the first quarter of 2006 for the Internet is at19.4 percent, and added that the majority of the increase came from a limited number of product categories, such as insurance and real estate, financial, amusements, telecommunications and retailers.

Other categories that saw spending gains in the first quarter of 2006 include adverting on the four television networks, up 13.3 percent; national spot TV, up 7.5 percent; syndication TV, up 6.2 percent; magazines, up 5.9 percent; spot radio, up 3 percent; and cable TV, up 1.4 percent.

The only category that saw a decrease in advertising spending was newspapers, which fell 4.8 percent.

Along with the projected increase in direct mail ad spending in 2006, Mr. Coen said spending for Internet advertising is expected to climb 25 percent to $9.7 billion for 2006. The total U.S. ad spending is expected to increase 7.1 percent this year to $185.1 billion, he said.

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