Slow growth ahead for direct marketing, report says

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Direct marketing spending and revenue will experience slower growth than other communications sectors, according to projections released August 10 by private equity firm Veronis Suhler Stevenson.

The VSS Communications Industry Forecast examined six sectors, grouping direct marketing in its “targeted media” category. While targeted media is projected to become the second-fastest-growing industry of the six analyzed – with a compound annual growth rate (CAGR) of 6.1% from 2009 to 2014 -- direct marketing and business-to-business media will grow about half as fast (3.1%), the report said.

Otherwise, pure-play consumer Internet and mobile services are expected to bolster the targeted media industry's growth.

Revenue generated by marketing services is expected to experience a 3.7% CAGR over the next five years to $227.82 billion, slower than the other industries considered in the report.

VSS forecasts that direct marketing will post modest gains because it will be hampered by the Do Not Call list, the expected reduction in Postal Service delivery and increased postal rates. VSS' definition of direct marketing includes direct mail, telesales, catalog, e-mail and DRTV.

Overall, VSS projected that communications spending would increase 3.5% in 2010 and have a 6.1% CAGR from 2009 to 2014. Gradual economic recovery, advances in digital technology and secular trends impacting the entire industry landscape were factored into the growth, the firm said.

Other industries analyzed included marketing; education and training; traditional consumer ads; entertainment and leisure; and business and professional information.

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