Small Growth Expected for Direct Ad Sales, Revenue, DMA Says

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SAN FRANCISCO -- Ad spending and sales revenue attributed to U.S. direct and interactive marketing are forecast to grow at a slower pace than they have in the past decade, according to an updated report from the Direct Marketing Association.


According to the DMA's updated "2002 Economic Impact: U.S. Direct & Interactive Marketing Today," marketers this year are projected to spend $193 billion on direct response advertising, down 6.8 percent from $206.1 billion a year ago.


Under new 2002 projections, direct response ad spending is forecast to compound 5.8 percent annually during the next five years in comparison to 2001's projected 6.5 percent annual growth rate through 2006.


Direct marketing-driven sales are still projected to exceed $2 trillion this year. According to the most recent economic data, industry sales are projected to compound 8.3 percent annually during the next five years and reach $3 trillion in 2007. In that period, the report estimates overall U.S. retail sales will grow 5.5 percent annually.


Other findings and analysis include:


· Overall direct marketing-driven sales are estimated to reach $2.17 trillion next year, up 8.2 percent over '02 sales.


· Overall ad spending for DM is estimated to reach $204.8 billion next year, up 5.9 percent over '02 expenditures, including $107.4 billion in business-to-business and $97.4 billion in consumer expenditures. Direct marketing ad expenditures represent more than 55 percent of total U.S. ad expenditures.


· Of the $2 trillion direct marketing-driven sales forecast for '02, 54 percent, or $1.09 trillion, are attributed to consumer sales, and 46 percent, or $913 billion, to BTB sales.


· Consumer direct marketing sales are estimated to reach $1.2 trillion next year, up 7.2 percent over 2002 consumer sales. Consumer direct marketing sales compounded by 8.8 percent annually between '97 and '02 and are projected to compound 8 percent annually during the next five years.


· BTB direct marketing sales continue to grow at almost double the rate of total U.S. BTB sales. BTB direct marketing sales are forecast to reach $998.4 billion next year, up 9.3 percent over 2002 BTB sales. These sales rose annually 10.3 percent between '97 and '02 and are projected to compound 9.1 percent annually during the next five years.


· Outbound telephone marketing expenditures represent $75.3 billion and are estimated to grow 5.8 percent annually, reaching $99.7 billion in '07.


· Direct response radio is projected to compound annually 6.7 percent, and DRTV is forecast to grow 6.4 percent annually during the next five years.


· In other news, interactive/e-commerce sales are expected to rise 12.3 percent this year to $33.7 billion, up from $30 billion last year. The study projects Web-driven sales to reach $41.5 billion next year and compound 21 percent annually, reaching $87 billion in 2007.


According to the most recent economic data, marketers this year are projected to spend $3.8 billion on interactive marketing, up 11.8 percent over $3.4 billion last year. Interactive/e-commerce ad spending is forecast to compound 18.5 percent annually during the next five years.


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