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DMA: Industry Stays Optimistic

Despite a slow economic recovery, sagging consumer confidence and the threat of war, the Direct Marketing Association's Quarterly Business Review for the fourth quarter of 2002 indicates that direct and interactive marketers were less disappointed in that quarter than the previous quarter.

The DMA said many direct marketers had trimmed costs and lowered expectations to maintain profitability. As a result, they anticipate 2003 will bring better revenue than last year.

Notable industry segment trends included:

· Direct response ad agencies were most optimistic for 2003, projecting “moderately better” revenue. Agencies said their client ad budgets were off significantly in fourth-quarter 2002. Like other segments, agencies are consolidating offices and cutting capital expenditures to the bone while investing in customer acquisition. As a result, the number of agencies that closed offices outnumbered those who opened offices last year 10 to 1.

· The Catalog/Direct Mail segment experienced moderate profit and improved revenue in the fourth quarter compared with 2001. Catalogers reported the most disappointing results for fourth-quarter 2002 relative to beginning-of-year projections. On the spending side, this segment continues to move strongly into e-mail marketing and the Internet while reducing its operations and capital budgets.

· Consumer Products and Services had strong growth relative to last year. These marketers anticipate increasing their direct response budget and investing more in e-mail marketing and Internet solutions.

· Business-to-Business projected the highest across-the-board increase in spending for first-quarter 2003.

· Capital and operational budgets are neutral or declining. However, marketers plan to invest more in e-mail marketing, Internet solutions, new product development and better targeting capabilities through database segmentation.

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