Hurricane Katrina Hurt Response Rates

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ATLANTA -- Hurricane Katrina caused marketers' response rates to fall at the beginning of September, according to the Direct Marketing Association's Quarterly Business Review, released this week.


The DMA polled marketers from Sept. 8 to 27 about the effects of Hurricane Katrina on their response rates for the weeks of Aug. 31, Sept. 7 and Sept. 14. Forty-five percent of respondents said the hurricane had an impact while 55 percent said it did not.


The projected change in response rates measured 34, 31 and 39, respectively, on a scale of 100. A score over 50 indicates growth, 50 reflects no change and anything below 50 indicates a decline.


Many respondents also expect the impact may still be felt in the fourth quarter depending on how much consumers cut back on discretionary spending. In addition, many catalogers are excluding Alabama, Louisiana and Mississippi from all mailings until 2006.


Yet despite the hurricane, the direct marketing industry delivered another strong performance in the third quarter, continuing a trend. It's been "the best four quarters the direct marketing industry has seen since 9/11," DMA senior economist Peter A. Johnson said in a presentation yesterday at DMAo05 to discuss the results.


The Quarterly Business Review is based on a survey of DMA member marketers, agencies and suppliers. For the Q3 2005 edition, the DMA received 224 responses.


Overall, the DM industry posted a 61 on the revenue index for the third quarter. This compares to 69, 63 and 65 for the previous three quarters.


Marketers showed an average sales increase of 3.4 percent versus last quarter's 7.3 percent increase. ROI also declined slightly after staying constant for the first quarters of 2005, and response rates fell below 50 for the first time this year.


Looking to the fourth quarter, marketers expect to increase their total advertising and direct marketing budgets over the next three months, with Internet integration and e-commerce leading the list of projected expenditures.


They also expect to achieve a 60 on the revenue index in the fourth quarter. Much of their optimism can be attributed to projected numbers for holiday catalog and Internet sales. An overwhelming majority of marketers expect holiday sales to rise or stay constant. Catalog marketers predict a 3.5 percent increase in holiday sales while Internet retailers expect sales to gain 6.8 percent.


The business-to-business segment generated a 52 on the revenue index versus Q2's 46. The average sales increase was 9.7 percent, up slightly from Q2's 9.5 percent. Projected revenue for the fourth quarter comes in at 65 on the index.


The catalog segment posted a steep decline in profitability, falling from 69 in Q2 to 60 in Q3. Average sales were up 2.9 percent. The segment expects to post a 62 on the revenue index.


Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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