Germany's DM Boom Continues as Sales Hit New Record

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WIESBADEN, Germany - German direct marketing is enjoying an unprecedented boom in which sales have almost doubled in just three years, rising from sales in 1996 of roughly 23 billion Deutschmarks to an estimated DM 40.1 billion ($26.6 billion) this year.


The boom has spread across all sectors of the industry, from traditional direct mail to telemarketing and interactive media - the industry's star attraction. Though gross numbers are still small, sales more than doubled, rising from DM 1 billion in 1997 to DM 2.4 billion in 1998.


Deutsche Post, the German Post Office, which considers DM a key growth area, conducted an exhaustive survey of 3,000 representative German firms to come up with these findings. In all, 822,000 German companies use some form of direct marketing, Deutsche Post reported.


Addressed direct mail continued to lead the media pack, accounting for 33 percent or DM 12 billion ($6.5 billion), but the rate of increase was slight - up from DM 11.7 billion in 1997.


Telemarketing was second with DM 4.6 billion (roughly $2.5 billion) compared to DM 4.3 billion in 1997. But German telemarketers look for higher revenues this year and improved profit margins. Unaddressed mail was third with DM3.8 billion.


Nor is growth in Germany limited to sales. The German Post survey found that use of direct marketing grew most rapidly among medium-sized enterprises with annual sales of DM 2 million ($1.2 million) to DM 50 million (roughly $30 million)


These firms account for 74 percent of companies using DM, compared to 67 percent in the previous year. Deutsche Post credits its network of 32 DM centers which specialize in helping small and medium-sized enterprises use DM for this growth. Anecdotal evidence from German direct marketers at last month's DIMA show here supports the survey's findings.


"We're growing very rapidly in all phases of our business," said Wolfgang Roelle, the principal of SAZ, a full service DM company located just outside Hanover.


"It would be presumptuous of us to complain," commented Dietmar Weixler, owner of a mid-size independent call center operation. His company is close to doubling sales this year.


Demand for DM personnel is also rising sharply, to the point where lack of qualified experts in call center management and database marketing are threatening to slow growth.


A survey of DDV (the German DMA) members revealed that 250 businesses are looking for 180 entry-level database marketers and 325 managers trained in that discipline. DDV is pushing for more business school level courses in German universities.


"Only introduction of recognized education programs offering degrees in direct marketing will make this industry interesting to young people and thus assure its future," said Holger Albers, the DDV's managing director.


A first step is planned for next summer when the DDV, some of its leading members and the Deutsche Post agreed to finance a DM chair at the University of Siegen. The holder of the chair will be selected by next spring.


On the negative side of Germany's DM ledger are continued governmental curbs and restrictions on industry activities, ranging from a new data protection law to curbs on cross-selling and telemarketing, disputes abut e-commerce law, and bans on some forms of advertising, such as tobacco and liquor.


Germany is more than a year late in turning the EU's data protection directive into national law and faces a court challenge if it doesn't get moving. Legislation should be enacted by the middle of next year.


The DDV argues that Germany already has one of the toughest data protection laws and doesn't need stiffer curbs. It is particularly unhappy with one section that demands mailers print the source of every name used in a mailing on the envelope.


A massive lobbying campaign is underway to eliminate that provision. Albers has written both to Chancellor Gerhard Schroeder and to the ministry of economics soliciting their support. DDV argues enactment threatens loss of 100,000 jobs.


On e-commerce the Germans take issue with the EU draft in one key area - they favor that laws of the country of destination are used in any cross-border Internet sale while the EU and the European parliament favor giving preference to country of origin law. n
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