DMA's Quarterly Business Review (QBR) for Q2 Finds Profitability Growth Despite Decline in Year-Over- Year Revenue
September 16, 2008 — The Direct Marketing Association (DMA) today released its Quarterly Business Review (QBR) for the second quarter of 2008.
The headline QBR Revenue Index vs. Same Quarter Last Year (SQLY) for Q2 2008 was 47, marking a one point difference from Q1’s 48. In the QBR Index, scores below 50 represent a decline in direct marketing business performance during the quarter versus the SQLY, while a score of 50 represents no change and scores above 50 represent growth.
Consistent with this revenue Index below 50, QBR estimates that direct marketers’ aggregate revenues declined approximately 3.6 percent on a weighted basis (a measure that adjusts for the size of direct marketing firms responding to the survey). This figure was unchanged from Q1.
Despite the second quarter of soft revenue performance, overall profitability remained robust at 63, with each of the three segments that QBR benchmarks — marketers, agencies, and suppliers — posting an index in the low 60s or better.
“Overall, results show that weak economic conditions during the second quarter of 2008 caused direct marketers to experience softer revenues relative to the same quarter one year earlier,” said Anne B. Frankel, senior research manager. “While the revenue vs. same quarter last year measure was negative, it is encouraging that the profitability results were positive.”
Published every quarter, the DMA’s Quarterly Business Review allows direct marketers, agencies, and suppliers to benchmark their performance on key metrics such as: current and projected revenue; profits; ROI; sales; employment; as well as a wide range of expenditure areas.
* * *
QBR HIGHLIGHTS FOR 2008 QUARTER II
Direct Marketing Community: An Overview
Q2’s Profitability remained solid at 63, matching the Q1 index. This quarter’s Revenue vs. SQLY, with an overall index of 47, reflects a single point decline from the previous quarter.
The Agency segment had the best performance on the Revenue vs. SQLY metric, with an index of 51; the Marketer and Supplier performance was softer than that of a year ago, with indices of 46 and 44, respectively.
Projected revenue for Q3 2008 points to modest growth, with an overall index of 52. This metric is down three points from the 55 posted for Q2 and down five points from the 57 for Q1. With an index of 60, agencies are the most optimistic about revenue growth in Q3 2008, followed by Suppliers (51 index); Marketers anticipate a small decrease in their next quarter revenue (48 index).
Issues of Concern to Marketers
General Economic Conditions is again in overall first place in terms of factors most likely to impact revenue for Q3 2008, with 60 percent mentioning it — up from 56 percent for Q2 and 51 percent for Q1 2008.
“With these concerns about the economy, it is not surprising that marketers are voicing more modest expectations in terms of revenue going into Q3 2008,” continued Frankel. “However, monetary investments in direct marketing will continue despite the slowdown in certain sectors of the economy, as Marketers intend to increase spending in areas such as Email, Websites, and Search.”
Two-thirds of Marketers feel that a recession is somewhat (34 percent) or very likely (35 percent) in the next 12 months.
· In case of a recession, Marketers are most likely to keep their marketing budget the same but reallocate expenses (44 percent).
· Marketers expect to increase spending in a number of key areas in the event of a recession, notably in online and analytics areas.
QBR Highlights Relating to Direct Marketers
· Q2’s Revenue vs. SQLY index of 46 has stayed constant from Q1.
· Profitability increased by two points to 63 from Q1’s 61.
· Also unchanged from Q1, the weighted average revenue change (the measure that is more reflective of the direct marketing community in aggregate) for Q2 was -3.6 percent.
· Marketers’ revenue projections for Q3 2008 entered negative territory, dropping by six points from Q2, to 48.
· Marketers indicated that their average spending to Acquire a New Customer (58 index) and to Retain a Customer (55 index) grew relative to the same period just one year earlier.
· Spending on online channels continued to grow more quickly than on offline channels, as Marketers most often increased expenditures on Email, New Media, and Search (indices of 65, 63, and 61, respectively).
QBR Highlights Regarding Direct Marketing Agencies
· Revenue vs. SQLY was 51, representing a one-point gain from Q1’s 50.
· Profitability remained strong with an index of 65.
· Agencies remain optimistic for Q3, with a forecast of 60 that reflects expectations of growth in revenue.
QBR Highlights Regarding Direct Marketing Suppliers
· Revenue vs. SQLY registered a decline in Q2, dropping three points to 44 from Q1’s 47.
· Profitability remained positive at 61, matching Q1’s index.
· Revenue is expected to grow modestly in Q3 2008, with a Projected Revenue index of 51, which is a more conservative expectation than in previous quarters.
Direct Marketing Breakout: B-to-B Segment
· The Revenue vs. SQLY index gained two points from Q1, to 46.
· Profitability remained strong in Q2, with an index of 64.
· In Q2, the weighted average revenue change for B-to-B Segment was -5.2 percent. This segment experienced a larger overall weighted revenue decline partly because companies in the largest revenue tiers experience larger decreases, on average.
· B-to-B Marketers anticipate a softening in revenue in Q3 2008, with a projected revenue index of 47.
Direct Marketing Breakout: B-to-C Segment
· Consumer Marketers posted a Revenue vs. SQLY index of 46, on par with the index recorded for Q1.
· Profitability stayed strong in Q2, with an index of 61.
· In Q2, the weighted average revenue change was -2.8 percent for the B-to-C segment.
· B-to-C Marketers anticipate a small drop in revenue in Q3 2008, with a projected revenue index of 48.
Direct Marketing Breakout: Catalog Segment
· The Revenue vs. SQLY index for Catalog Marketers was 44, marking a decline in revenue compared with the same quarter in 2007.
· Profitability was robust in Q2, with an index of 66.
· In Q2, the weighted average revenue change was -6.3 percent for the Catalog segment.
· Catalogers anticipate a decline in revenue in Q3 2008, with a projected revenue index of 45.
About DMA’s Quarterly Business Review
DMA’s Quarterly Business Review (QBR) for the second quarter of 2008 is based on three online surveys of marketer, agency, and supplier companies. The surveys were conducted by DMA’s Research and Market Intelligence department from July 16, 2008 through August 1, 2008. Altogether DMA received 294 survey responses.
DMA members can download the report, for free, and non-members can purchase a copy from DMA’s Bookstore by clicking here.
# # #
back to top