The proof is in the payoff: Direct marketers generated higher revenue during the first nine months of 2004, compared with the first three quarters of 2003. The number reporting declines was nearly half last year’s level. Margins matched this trend, with those reporting higher profits increasing and fewer saying their margins had dropped.
Money follows money, and in addition to making more, marketers are spending more—at least on DM. Last year respondents earmarked a quarter of their total marketing budgets for DM; this year that jumped to 45%.
What are they spending it on? Well, after a several-year trend of defensive expenditures, such as house lists and customer retention strategies, prospecting has returned to the front burner. Marketers are allocating 62% of their budgets to customer acquisition, compared with 46% a year ago.
Look for them to rent more lists: Fifty-five percent send direct mail to outside lists, compared with 51% last year. And 54% anticipate increasing their total mail volume in 2005, compared with exactly half last year.
Direct mail to customers, prospects and catalogs continues to be the workhorse channel, but DRTV and search engine marketing and optimization are grabbing increasing shares of marketer’s attention—and wallets. Not surprisingly, given the regulatory environment, outbound telemarketing continued a multiyear slide.
For the first time, Direct asked its readers where they coordinated their direct marketing creative design. The overwhelming majority indicated they use in-house agencies or staff, but just under a third indicated they use advertising agencies, and a similar amount retain freelancers (the survey allowed multiple choices). On average, marketers devote 10% of their direct marketing budgets to advertising agencies.
Finally, marketers, who often are the strongest users of direct marketing for their own purchases, continue to be increasingly protective of the channels used to reach them personally. Sixty-two percent said they had signed up for a do-not-call list, up from 59% last year.
Expanded results of the survey will be released in the December issue of Direct.
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