DMA Chops Expenses, Cuts Deficit In FY2010: Future Looks Better

A smaller, leaner Direct Marketing Association may be heading back into black ink, according to its most recent financial results.

During the DMA’s 2009 fiscal year, the organization ran a $5.5 million deficit. It generated $35.9 million in operating expenses, restructuring charges and pension expenses, while its total revenue stood at just under $30.5 million.

A previous report listed the DMA’s 2009 deficit as being right around $4 million. While correct, that figure did not include nearly $1.5 million in pension expenses, which were added to the total as a result of new changes to accounting standards.

Fiscal year 2010, which ended June 30, looks better. According to unaudited figures released in its most recent annual report, the organization’s revenue dropped more than 17%, to $25.2 million. But it cut its operating expenses by nearly 23%, to $26 million, and did not have pension or restructuring costs.

To be sure, the DMA ended the year $784,853 in the red. As a result, its net assets have slipped from $4.1 million to $3.3 million.

What else dropped during the year? Membership, for one: The end of FY 2009 saw the DMA report 3,115 corporate members, down 294 from the 3,409 it reported the previous year. At the end of 2010, corporate membership stood at 2,594 members – a 521-member falloff.

Membership revenue dropped from $13.8 million in FY 2009 to $12.2 million. Average dues rose by nearly $300 per member, possibly reflecting greater attrition among lower-level members.

The full-year figures do not reflect any of the time DMA CEO Lawrence M. Kimmel has been on the job. Kimmel started on Aug. 2, taking over from interim CEO Bob Allen.

While the DMA has not officially released figures from first quarter 2011, which ran through the end of September, Kimmel told Direct Newsline that selected metrics and revenue streams were running well ahead of first-quarter 2010’s levels, and financial predictions call for the organization to break even this year.

For instance, first-quarter revenue is 13% ahead of last year’s figures, and revenue less expenses ran 42% higher than during first-quarter 2010, Kimmel said.

And revenue for the DMA Annual Conference and Exhibition, which is running through Thursday in San Francisco, will come in between 30% and 38% higher than last year’s San Diego conference.

Some of that revenue boost may have already been recorded, depending on how the DMA logged exhibitor and conference attendee payments made before June 30.

Furthermore, former DMA chair Eugene R. Raitt had previously noted that San Francisco is the best-performing location, in terms of conference revenue yield. The annual conference in 2011 will be held in Boston.

But there are several areas which have shown considerable year-over-year growth during the most recent quarter, Kimmel said. Education revenue is up 206%. And the organization has seen a 100% boost in new membership signups – although Kimmel freely admitted that first-quarter 2010 was rough.

New member firms include Wal-Mart, Target and ESPN, Kimmel said, adding that they are responding to the organization’s government affairs and educational offerings.

This is curious, given that expenditures in both these categories dropped during the year. Education services spending fell by 57%, from $2.1 million to just over $900,000, while government affairs and Internet Alliance expenses dropped by 27%, from just under $5 million to $3.6 million.

Kimmel acknowledged the drop in spending, but said that the organization was planning on bringing in a new staff member in Washington DC, as well as making two other mid-level hires – one apiece for its education and marketing offerings.

The organization, which currently employs 76 people, could reach a staff level of 81 by Jan. 1, he added.