US Direct Marketers Confront Recession Threat

04 March 2008

NEW YORK: Direct marketers in the USA have significantly reined-in such optimism for 2008 as they may once have had, as the threat of recession looms large over the nation.

The Direct Marketing Association's Quarterly Business Review has revised down its growth forecasts to more "conservative" and "realistic" levels, while "general economic conditions" have been cited as the factor most exercising the collective mind of the industry.

Revenue projections have declined since Q2 last year, amid fears that the economy is "marked with a high level of anxiety and anticipation as to what is going to happen next and how it will shake out".

The 447 marketers, agencies and suppliers surveyed by the DMA projected an overall growth index of 57 for this year's Q1 (no change = 50). Marketers were the least optimistic, at 55, while agencies and suppliers projected an index of 59.  

This is in marked contrast to the same period last year when the industry forecast an index of 66 for Q2 in 2007. From which point it dropped to 65 in Q3 and 63 for Q4.

Comments DMA senior research manager Anne Frankel: "There is profitability. But they are working that much harder to get it. We haven't seen anyone holding up a red flag. [Their projections] are just more conservative and realistic."

Among the marketers surveyed, 47% believed a recession was likely but they would keep budgets at their current levels. However, they said direct mail would be an area of belt tightening, with 42% of marketers saying they would reduce postage costs.

Email marketing, database segmentation and search-engine optimization, on the other hand, would see an increase in funding.

More than half of agency respondents (51%) said general economic conditions are likely to affect their DM revenue this quarter, as are client budgets (48%) and consumer confidence (32%).

Data sourced from; additional content by WARC staff