DMA Benchmark Survey Shows Q3 Improvement

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ORLANDO, FL -- Direct marketing is making a steady recovery toward a strong holiday season, according to the Direct Marketing Association's benchmark revenue index numbers for the third quarter of this year.


Released at the DMA's 86th Annual Conference & Exhibition here, the number for July through September jumped to 63 from second quarter's 49. The benchmark calculates 50 as equal to no change, and more than 50 indicates growth.


The DMA said the third quarter was the best quarterly performance the industry has seen since the index began a year and a half ago.


Broken into three industry segments, the index particularly found that users of direct response marketing are seeing a turnaround. More than half of the respondents reported sales increases and only a fifth had declines.


In addition, return on investment was up at 56 under index measurements. DM users in the third quarter said they plan to invest in customer acquisition (62), e-mail and integrated online and e-commerce solutions (61).


As to what likely would affect growth in the third quarter, 16 percent of the users cited economic conditions, 13 percent e-commerce and spam and 10 percent government policy.


There was optimism from the suppliers' side, too. Of the suppliers in the quarterly business review, 28.9 percent said they introduced a major new product line in the third quarter.


Suppliers also expect improved revenue performance next quarter -- 63 points in the index -- and budgetary increases in customer acquisition. Of those answering, 29.6 percent cited economic conditions and 17.6 percent said government policy could hinder their performance in the third quarter.


Direct marketing agencies were equally enthusiastic. They reported a net profitability index in the third quarter of 63, up from 54 in the second quarter. The number of clients for the third quarter was up from an index level of 54 in the second quarter to 62 in the third.


Client cross-sell, upsell and retention rose, too. Nineteen percent of agencies said they entered a new client segment or product line in the third quarter, and the employment index was 51 from 39 in the second quarter. At 57, they expect a positive fourth quarter.


Like DM users and suppliers, agencies cited economic conditions as the No. 1 concern for the fourth quarter -- a fifth of those surveyed. The DMA said 16.3 percent of them said clients and budgets and 14.1 percent cited consumer confidence as issues that worried them in the fall.


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