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What Effect Will War Have On DM?

Though mailers apparently have not changed their plans much yet, their list companies and agencies expect that a war with Iraq would have consequences on direct marketing efforts.

“No one we know of is making specific contingency plans, [but] we are certain that should we engage in war, there will be a downturn in response rates,” said Amy Lyons, marketing services director at ClientLogic Specialists Marketing Services, Weehawken, NJ.

Another list professional agreed with Lyons but added that mail plans were already conservative based on results from the fall/holiday season.

“Looking at spring and summer, circulation plans are pretty flat or down a bit from the overall softness of the economy and results,” said Mike Hayden, senior vice president of list brokerage at Millard Group Inc., Peterborough, NH. “If there is a war, I think that there's some balancing that mailers have to do as to how far to extend themselves.”

Postal officials said last week that they expect flat numbers for the rest of the U.S. Postal Service's fiscal year, which ends in September.

“We don't see the economic recovery that people saw last summer coming about during the first part of this calendar year,” Richard Strasser, USPS chief financial officer, said at last week's Mailers Technical Advisory Committee meeting in Washington. “The field has, in fact, reduced their budgets so that they'll be able to accommodate the expectation that there won't be significant volume growth.”

Also at MTAC, postmaster general John E. Potter said one of the most immediate ways war would affect the USPS is that it would lose employees who are called to war.

“Our concern for our employees is paramount,” he said.

Price of oil is another issue, though Potter said that experts predict “we won't see a dramatic spike in gasoline prices.” The USPS also is concerned if terrorism comes into play “in terms of the ability to move oil from the field to the markets.”

As for how a war would affect mailers' response rates, most direct marketers are looking to past conflicts to gauge what might happen.

“I believe it will be consistent with prior events such as the stock market crash of '87, the Gulf War of '91, the World Trade Center bombing of '93 or the Oklahoma City bombing of '95,” said Chris Paradysz, CEO of ParadyszMatera, New York. “We'll see a Dow decrease of something in the order of 3-5 or maybe even 7 percent and a resulting downtrend of the economy.”

That, in turn, would have a big effect on consumer confidence and buying behavior, which drive response rates more than anything, Paradysz said.

Though a war would depress response rates, Mark Rovner, senior vice president at Craver, Matthews, Smith & Co., Arlington, VA, said too close a comparison to previous events might be a mistake.

“There's much greater apprehension of attacks in the United States,” he said. “That will have an even more dramatic, paralyzing effect on response than just a war that we all watched on CNN 10 years ago.” CMS is a direct marketing agency that works with nonprofits.

Hayden estimated that a war probably would knock up to 5 percent off response rates, if not more. He said he did not remember a huge effect on overall response rates from the Persian Gulf War, though a war now certainly would affect the 2003 fall/holiday season.

“The way it looks, I'm not sure that we will really have a turnaround until next year,” he said.

Lyons noted that during the Persian Gulf War and the aftermath of 9/11, many marketers — particularly catalogers — experienced a drastic slowdown while some publishers experienced unprecedented success in response rates.

On the nonprofit side, there are other issues to contend with, such as whether to incorporate the war into the message of the organization, said Rovner, who discussed the topic in a forum sponsored by the Direct Marketing Association of Washington last week.

“Broadly, there are people who have something to say and some involvement, such as peace groups, human rights groups, civil liberties groups and refugee groups,” he said. “Their challenge is very different than a soup kitchen or a choice group or something that is fundamentally unrelated to the issue of the war in Iraq.”

Organizations should stay true to their mission and constituency. Don't be tempted to force a connection to what's going on to try to be more relevant.

“I think that's more likely to backfire and turn off donors,” Rovner said.

Though the economy is bad and consumer confidence is already low, panelists agreed that more money would be lost by not mailing during a war than by mailing wisely. However, they cautioned against testing unless it was a minor detail of a package that was previously effective.

Several panelists warned against telemarketing because people will be too busy watching television coverage. Another panelist suggested not dating printed forms in case an anthrax-like mail hold-up were to occur again during the conflict.

One bright spot, list professionals say, is that response might pick up in the post-war period. However, Rovner said, it's impossible to predict whether the uptick after the Persian Gulf War will hold true again

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