The industry is facing a much different landscape than a scant 12 months ago. Budgets have tightened, and everything costs more. Postal rates are up as of yesterday (and are rumored to be going way, way up in another year), and FedEx and UPS will boost their rates next month. Paper prices are increasing, and mailers said they wouldn’t be as aggressive in their marketing plans for the new year. Most retailers reported dismal holiday sales, and two — Montgomery Ward and Bradlees — said they’ll go out of business. Federated said it still hasn’t fixed things with its Fingerhut unit, and printer R.R. Donnelley is experiencing problems related to higher fuel costs.
However, a light is growing at the end of the tunnel. Fuel prices have been high but are expected to drop soon. The Federal Reserve lowered short-term interest rates because of sinking consumer confidence and worries about a recession. Let’s hope last week’s rally on Wall Street will help people start buying products and services again. Industry trackers still expect advertising and marketing spending to increase this year, though at a slower rate than in 2000. That’s fine. When belts get tightened, companies migrate from high-priced mass media to more targeted promotions. This is why direct marketers can’t ignore their craft, particularly now. One area on the rise ever since the Food and Drug Administration loosened its restrictions in 1997 is direct-to-consumer advertising for pharmaceutical products. Last year, spending was up 40 percent, to $1.8 billion.
