Social, Mobile, Email Lead Marketing Investments: DMA/Winterberry Study

Investment in marketing across most media has been increasing, and social media, mobile and email channels are leading the pack, according to the latest Direct Marketing Association/Winterberry Group Quarterly Business Review.

While the rates of spending increases on these three channels have slipped a bit between first-quarter 2011 and first-quarter 2012, they remain vibrant: The DMA measures growth on a five-point scale, and social media investment is strong, while mobile and email expenditures are up. Flat-growth channels include teleservices, place-based and digital out-of home efforts, direct response TV and radio and direct mail.

Overall, just under 40% of marketers increased spending between the fourth quarter of 2011 and the first quarter of 2012, while just under 36% anticipate bumping their spending up in the second quarter over first-quarter’s levels.

“[Growth] has been relatively consistent over the last year or so,” says Yory Wurmser, director of marketing and media insight for the DMA. The steady increase in growth reflects direct marketing’s continued climb out of the trough it had been in. “We haven’t gotten back to a strong growth pattern yet,” Wurmser notes. Overall revenue increases on the DMA’s five-point scale are currently at a 3.3 level, while spending is around 3.2. Wurmser will be more sanguine about long-term growth when levels hit and maintain a 3.5 rating.

Asked about specific channels, Wurmser noted “Social media had a rapid growth in advertising. Facebook had a terrific fourth quarter. There was a slight dip in spending in first-quarter 2012, which kinda spooked [Facebook’s initial public offering]. But there is a lot of growth in advertising in other forms of social media such as Pinterest-based sites. There is advertising on Twitter and LinkedIn. And a lot of people are spending on the infrastructure of social media, such as building their Facebook sites or spending more money on contests to generate traffic.”

If email’s growth is lagging that of social and mobile, it may be because the channel is more mature, and its dynamic is shifting. “What you are seeing now is a transition from the old-style mass email model to more targeted and trigger-driven opt-in models,” Wurmser says. “A lot of money is going into email still. But there is a transition from the type of email marketing that was prevalent five years ago to the type that is coming online now, and which will continue to develop in the next few years.”

The increases in social, email and mobile spending are contributing to an overall anticipated expenditure of $168.5 billion on direct marketing – 52.7% of all U.S. ad spending during 2012, according to the study. During the first quarter, companies allocated 61.7% of their direct and digital marketing budgets to customer acquisition, which is a two-year high-water mark for prospecting.

Marketers expect to be rewarded for their increased focus on prospecting. Sixty percent anticipate a boost to their revenue during the next quarter over first-quarter 2012, while just over 31% feel it will be flat. But it is harder to generate increases in profitability right away from new customers, and only 45% expect an increase in profitability over first-quarter 2012’s level.

The quadrennial effect, the confluence of a presidential election in the United States and the Olympics, should only have a moderate impact on direct marketing spending. Television and online revenue and spending may increase, but Wurmser does not anticipate a jump in other direct marketing channels due to these events.

There’s a curious disconnect between some of the pain points marketers indicated in their comments. Asked about the barriers to future success, several mentioned their organizations were slow to respond to opportunities, or that staff needed education on best practices of using new media and incorporating these media into traditional marketing campaigns. And more than a few said they had a lack of resources and couldn’t keep up with demand.

So where’s the disconnect? Only 24.5% increased their staff levels during the first quarter of 2012. And while another 27.5% anticipate adding headcount during the second quarter, there’s a big step between desire and action.

The most recent Quarterly Business Review is based on an online survey of 234 Direct Marketing Association members. The survey was fielded in April 2012.