2007 will be a good year for DM, says Winterberry Groups’ Biegel

NEW YORK – 2007 will be a banner year for direct and interactive marketers, and the industry itself.

That was a key message from Bruce Biegel, senior managing director at the direct marketing consulting firm Winterberry Group in New York. He spoke at the Direct Marketing Club of New York ‘s luncheon Jan. 11 at the Yale Club. The subject of his presentation was “Outlook 2007 – What to Expect in Direct and Interactive Marketing.” The luncheon was sponsored by Alliant, a Brewster, NY-based developer of cooperative databases that help marketers predict profitable consumer behaviors.

Mr. Biegel also discussed what Winterberry Group predicts Congress will be focusing on this year. Pharmaceutical and life sciences marketers, he said, should be aware that there may be more regulatory enforcement around the Health Insurance Portability and Accountability Act, which was enacted by Congress in 1996.

Laws surrounding privacy, phising and scamming also should be monitored closely by marketers this year, he said, because it is easy for legislators to get these types of bills passsed.

Mr. Biegel also said there have been rumblings that Congess will have hearings on marketing in general and do-not-mail bills in particular, “but we have to believe that this is mostly noise.”

The Winterberry Group is also tracking the postal rate case closely. While mailers will have a very big hit-an average increasse of about 9 percent in postal rates– next spring, “we think that this rate increase will hold through ’07. We are really not expecting one for ’08, especially because it is hard to say you need a big rate hike when you are profitable. We think rates are going to stay stable, but that in ’09 there will be another rate increase. 2009 is going to be a big year for postal,” he said.

Mr. Biegel also offered an overview of 2006, and said it was also a good year for direct marketers.

“We saw direct mail reach close to $61 billion in spend and above-the-line spend close to $165 billion,” he said. “All told this is a $671 billion industry.”

As for year-over-year growth, direct mail grew 7.5 percent, as did events and promotions, which grew 7.6 percent. He also said Internet advertising grew considerably last year, as did above-the line advertising, but above-the-line advertising was very much influenced by the World Cup and the elections.

As for 2007, Mr. Biegel said the direct mail spend will see another 7.5 percent increase, and that catalogs and other Standard Mail, as well as First-Class mail will grow. “We think mail will get more personalized this year,” he said.

In addition, Internet marketing spend will increase to 19 percent, and above-the-line increase would be 2.6 to 2.9 percent, he said.

Mr. Biegel also discussed additional postal issues. Namely, that beginning Aug. 1, mail pieces will only receive postal discounts if the U.S. Postal Service’s delivery point validation process confirms the primary number — or the first line — of the addresses. If not, the agency will take away automation discounts.

“So, if you didn’t care about the materials you were wasting when you were mailing UAA [undeliverable as addressed mail], you will now care about the fact that you will be penalized, so we think that a lot more focus will be and should be on data quality this year.”

Mr. Biegel also said that the Winterberry Group is hearing about a lot of new tools and solutions to help mailers with data quality.

Mr. Biegel said that new channels, such as advergamming, mobile marketing, rich media podcasts, blogs, and word-of-mouth marketing will continue to grow, but “the consumer is not necessarily receptive. Acceptance levels are probably going to be pretty low. So, we think that we are in a time of experimentation.”

Mr. Biegel also said that CRM databases are getting better and will continue to get better this year.

“They were a mess in ’03, they started to improve on ’04, and the tools have gotten even better,” Mr. Biegel said. “Now you can really start to think about targeted campaigns. We think adoption will start to pick up.”

Mr. Biegel also said that more and more companies are offering total direct marketing solutions-that encompass direct mail and e-mail marketing, for example-as opposed to point solutions.

However, Mr., Biegel said that right now, “there is still no best-in-class end-to-end solution. There are some very good point solutions out there. And we are seeing a beginning of suites as companies like Alterian, Aprimo, and Unica have started to add components. [But] we don’t really expect [to see a full build-out of suites] until ’08, and certainly we expect it to be fully implemented in ’09.”

In general, there are more and more larger, consolidated companies in the dirt marketing space, and “we expect to see that happen more and more in 2007.”

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