Direct Marketing Revenue Growth Outpaces Overall U.S. Advertising Sales Growth By 54%.

The growth in direct marketing sales continues to outpace overall sales growth in the U.S. by 54 percent. According to the Direct Marketing Association’s (The DMA) report 2000 Economic Impact: U.S. Direct & Interactive Marketing Today, U.S. sales revenue attributed to direct marketing reached $1.73 trillion in 2000.

“The results of this study show that even in the face of an economic downturn, businesses still depend on direct and interactive marketing techniques to improve their sales operations,” said H. Robert Wientzen, president & CEO, The DMA.

According to the report, direct and interactive marketing can expect to see continued relatively strong economic growth, with business plant and equipment spending, the housing sector, and employment all growing. However, the torrid pace of 2000 will not be repeated, and economic growth will occur at healthy, but diminishing rates for the next few years. Overall direct marketing sales growth is forecast at 9.6 percent annually through 2005, while total U.S. sales growth is estimated at a significantly lower growth rate of 5.4 percent per year.

From 2000 to 2005, direct marketing is forecast to become an increasingly efficient advertising tool with sales projected to grow steadily, compared with continued slower growth in both ad spending and employment. While direct marketing sales growth between 2000 and 2005 are expected to grow by 9.6 percent, ad spending is projected to grow at a slower annual rate of 7.1 percent per year.

“Every dollar spent for direct response advertising generates $9.03 in sales,” Wientzen noted. “This is up from $7.67 in 1990 and $8.05 in 1995, which indicates direct marketing ad dollars are working harder and will lead to higher gross profit margins.”

Annual direct marketing employment growth rates, another important cost factor, are also slowing. From 1995 to 2000, direct marketing employment grew at a rate of 5.6 percent per year. For the next five years, employment growth is forecast at 4.7 percent annually. This compares to an overall U.S. estimated employment growth rate of 1.3 percent annually through 2005.

“Shortages of qualified labor amid the dot-com boom was a key driver in the trend of direct marketers moving to substitute capital/technology – such as databases, automation and interactive methods – for labor,” Wientzen added.

Additional findings and analysis from The DMA 2000 Economic Impact Report include:

Overall ad spending for direct marketing reached $191.6 billion in 2000 — up 8.5 percent over 1999’s expenditures. Direct marketing advertising expenditures now represent more than half — 56.5 percent — of total U.S. ad expenditures, which were projected to be $339.3 billion in 2000.

Consumer direct marketing sales hit $937.7 billion in 2000 – an increase of 9.2 percent over 1999 sales. Consumer direct marketing sales increased by 9.1 percent annually from 1995 to 2000, compared to total U.S. consumer sales growth of 6.5 percent from 1995 to 2000.

Business-to-business (b-to-b) direct marketing continues to grow at almost double the growth rate of total U.S. b-to-b sales. B-to-b direct marketing sales were $792.8 billion in 2000 — an increase of 12.1 percent over 1999 b-to-b sales.
In terms of direct response sales revenue by state, California led the nation with $194.2 billion in 2000. New York, at $121.4 billion, overtook Texas ($119.7 billion) for second place, followed by Florida ($96.8 billion), and Illinois ($83.2 billion).

For more information at http://www.the-dma.org.