DMA: Effect of Iraq War Lessened as Conflict Continued

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ORLANDO, FL - The U.S.-Iraq war produced an average sales drop of about 5 percent compared with the same period in 2002. That was the finding of a report released by the Direct Marketing Association Saturday at the organization's annual conference here.

"The report found that, with respect to the use of different media, direct mail is especially vulnerable," said Peter Johnson, director of the DMA's Strategic Information Unit, which produced the report. According to the "Impact of War on Direct and Interactive Marketing" white paper, respondents reported an average sales drop for the four-week period of the war of 5.4 percent.

About half the respondents suffered revenue declines and around one-sixth experienced sales increases as most of the war's effect was felt in its first week. Losses were generally less severe in the second and third weeks. Member companies started to experience increased sales by the fourth week.

An analysis of the war's effect by member segment showed that as BTB and BTC markets suffered, the nonprofit segment appeared to have gained in fundraising. Also, small businesses were most insulated from the effects of the war as large organizations suffered losses double the industry average.

The small number of BTB members reported net sales decreases of 6.25 percent as nonprofits, once monthly respondents were included, produced increases of 8.42 percent. Consumer marketers -- defined as catalog, publishing and financial industries -- generated net sales decreases of 6.97 percent.

Larger firms suffered larger losses (9.63 percent) as smaller and medium-sized companies experienced decreases of 2.04 percent and 1.91 percent, respectively.

The DMA reported that the long buildup to the war permitted some marketers to conceive and execute war-related marketing strategies as well as entire campaigns. Direct and interactive marketers that delayed or staggered campaigns to spread out the risk apparently minimized losses, "or even performed well," as those who initiated campaigns as the ultimatum was issued to Iraq felt the full effect of the war. Also, marketers acknowledging the war coverage - for nonprofits - and that incorporated patriotic messages had the best results.

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