Russians, Poles Push DM Growth at FEDMA

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BRUSSELS--Russian and Polish direct marketers used the second annual FEDMA Forum here to once again push Eastern Europe as fertile ground for U.S. DM business.


Elena Dubeutec of Russia Direct, a leading Moscow DM agency, argued that last year was the turning point of the Russian economy and will make solid growth of direct marketing in a nation of 149 million people possible.


The key, she said, was the switch from years of negative growth -- GDP plunged 50 percent since 1990 -- to a small gain of 0.4 percent. That may not seem like much, she said, but it actually represents a gain of nearly 8 percent. The 1996 economy was down 7 percent. Inflation last year dropped from 20.4 percent in 1993 to 12 percent, while industrial production grew for the first time since 1990, up by 1.9 percent.


Russia now has 5,000 stable businesses that employ more than 500 workers each. Eighty thousand small businesses, out of a total of 95,000, have been privatized. Russia has 2,173 banks and 2,300 insurance companies. Overall, 123,000 enterprises have been privatized, comprising 53 percent of total businesses in Russia. The service sector has shown robust growth, the Russian direct marketer said.


That kind of economic underpinning, she said, has been accompanied by a 300 percent growth in the DM industry. Dubeutec did not -- a common custom in Eastern Europe -- cite exact figures.


[Direct marketing is] growing much faster than the mainstream advertising market," she said. "There are 82 companies that provide DM services in Russia, and many of these can be defined as full-service agencies.


Direct mail is effective with average mail pieces read by five to six people, and almost all questionnaires sent in the mail are filled out and returned. Data is cheap because in the past it was seen as having no value.


Russian law regulates advertising but does not consider DM as part of the advertising business, "so you can do whatever your like and even create your own law," she said. Even tobacco and alcohol, banned from mainstream advertising, can be promoted through DM.


On the negative end of the scale lies fear of crime that makes door-to-door canvassing almost impossible. Russians don't open their doors to strangers. Geographic classifications don't make much sense because the rich and the poor literally live next door to each other, if not in the same houses. That makes unaddressed mail almost useless as a DM tool.


Direct marketing beyond Moscow and St. Petersburg is complicated by independent regional postal services, which require DMers to make separate agreements with all 88 of them -- doable but costly in terms of time and money.


Finally, Russian lacks a DM language. Success on the Russian market means invention of a Russian DM language.


In Poland, direct marketing is at a takeoff stage, the former director of Reader's Digest in Poland told the seminar on Eastern Europe. Only 2 percent of all advertising is done through direct mail. But major direct marketers like Bertelsmann, the Digest, Otto Versand, Quelle, both large German mail-order houses, and Willems, a Dutch concern, are all active in Poland.


Response rates are high, ranging from 15 to 40 percent, with 80 percent response rates not unheard of. Lists are poor and expensive, up to $5 a name. Lists with less than 5 percent wrong addresses are considered good. Demographic information is sparse. Poland is about to adopt a data protection law, in effect a carbon copy of the EU's directive, which is set to go into effect this fall.
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