Surviving the bummer economy

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Larry Organ
Larry Organ

There is no denying that 2008 has been a rough year for those of us in direct marketing. Besides a rise in postal rates, prices have risen for everything from paper to quali­fied talent. And, of course, consumers have been keeping a tight grip on their money. We have even witnessed the bankruptcy of vener­able players in our industry, such as Lillian Vernon and Sharper Image.

While attending a recent show, I noticed that the feelings of desperation were almost palpable. A common topic of conversation among attendees was shock that things had gone so bad, so quickly. Always remember, however, that in this business things can turn for the better just as fast. Direct marketing has always been a bit like fishing and requires patience until response starts to pick up.

Tough economic times, though painful, are a necessity in any industry. They enforce discipline, increase efficiencies and push innovation. Also, consider that advertisers, with marketing budgets that face tougher scrutiny, are more apt to switch their brand marketing dollars to direct to better account for them. When better times return, those dollars will remain largely in place.

As an industry, direct marketing has never had a larger slice of the marketing pie. Last fall, the Direct Marketing Association reported that, for the first time ever, direct marketing accounted for more than half of total advertising expenditures. Additionally, the DMA expects that, despite a weakened economy, the direct marketing spend for 2008 will be up 5.7% for a total of more than $183 billion.

There are other reasons for optimism. Revised consumer spending, which was expected to dip this spring, actually eked out some small growth. I continue to hear positive news about so-called “value” com­panies, such as Costco. Their profits were up by more than 30% for the quarter that ended in late May and analysts expect the trend to persist. Such evidence tells us that consumers are being careful with their money and are seeking value — but have not stopped buying. For the direct marketer with a product to sell this means that opportunities exist even if offers need to be fine-tuned.

Keep fighting the good fight. Conditions will improve — they always do — and compa­nies that weather this latest storm will emerge stronger, and better for it.

larry.organ@consumerbase.com

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