March 16, 2009 — The Direct Marketing Association (DMA) today released its Quarterly Business Review (QBR) for the fourth quarter of 2008.
The QBR Revenue Index vs. Same Quarter Last Year (SQLY) for Q4 2008 was 39. 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.
Despite the fourth quarter of soft revenue performance, overall profitability points to marginal growth with an index of 59. Each of the three segments that QBR benchmarks (Marketers, Agencies, and Suppliers) remain generally healthy, posting indices in the high 50’s to low 60’s.
“Similar to last quarter, findings indicate that the fourth quarter of 2008 saw soft revenue performance that mirrored the general economy,” said Ramesh Lakshmi-Ratan, DMA executive vice president and chief operating officer. “The direct marketing community is not immune to what is happening, but there are a few, small, encouraging factors. Despite the negative Revenue vs. SQLY (same quarter last year) metric, Profitability results, once again, remained positive.”
Published every quarter, 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. Marketer data is broken out for B-to-B, B-to-C, and Catalog segments.
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QBR HIGHLIGHTS FOR 2008 QUARTER IV
Direct Marketing Community: An Overview
Q4’s Revenue vs. SQLY reflects the general economic malaise with an index of 39, marking the fourth consecutive quarter with an index in negative territory. However, even with these poor Revenue findings, Profitability points to small incremental growth with an index of 59.
The profitability index was still healthy for all three segments, with Marketers and Agencies outperforming the Supplier segment. Agencies again had the strongest index at 61; followed by Marketers with an index of 60; and Suppliers with an index of 58.
Projected revenue for Q1 2009 points to a decline, with an index of 38, as Direct Marketers do not expect to see improvements in their revenue performance. All three segments have similar Revenue projection indices for Q1 2009: a Supplier index of 36, an Agency index of 39, and a Marketer index of 40.
Issues of Concern to Marketers
Client Budgets moved into overall first place in terms of factors most likely to impact revenue for Q1 2009, with 71 percent citing it as a concern.
“Now that the US is finally recognized as being in a recession, it is par for the course that marketers are expressing concern and weak revenue expectations for Q1 2009,” continued Ratan. “Slightly comforting, however, is the fact that decreases on the direct marketing advertising budget are smaller than cuts for the total advertising budget.”
When Marketers were asked about their expectations that the economic situation will improve in the next 12 months, 26 percent cited it as being ‘Somewhat Unlikely’.
Sixty-one (61) percent of respondents cited General Economic Conditions as also impacting their revenue for the next quarter, followed by consumer confidence with 37 percent. In the list of factors likely to affect business expenditures in Q1 2009, Corporate Growth/Decline (57 percent) and Overall Marketing Budget/Plan (54 percent) took the top two places.
QBR Highlights Relating to Direct Marketers
· Q4’s Revenue vs. SQLY index of 39 reflects the current state of the economy.
· Profitability, although down from Q3’s 64, is still positive with an index of 59.
· Even in the current economic climate, spending on online channels grew faster than on offline media. Compared with one year ago, Marketers most often increased expenditures on Email (index of 60), Search (index of 59), Other Internet Marketing (index of 56), and New Media (index of 54).
· Marketers’ revenue projections for Q1 2009 fell to 40.
· While Marketers expect to make reductions in both their Total Advertising and DM Budgets for Q1 2009, the drop planned for their DM budget is not quite as severe as that planned for their total budget, with indices of 43 and 39, respectively.
QBR Highlights Regarding Direct Marketing Agencies
· Revenue vs. SQLY was negative at 43.
· Profitability, with an index of 61, was positive although down five index points from Q3’s 66.
· Agencies are somewhat pessimistic about their revenue for Q1 2009, with a forecast of 39.
QBR Highlights Regarding Direct Marketing Suppliers
· Revenue vs. SQLY registered a decline in Q4, dropping to 37.
· Profitability remained positive with an index of 58, matching the index for Q3 2008.
· Suppliers expect their revenue to be lower in Q1 2009 than in past quarters, with an index of 36.
Direct Marketing Breakout: B-to-B Segment
· The Revenue vs. SQLY index, again reflecting the sluggish economy, dropped to 37.
· Profitability was positive with an index of 60.
· In Q4, the weighted average revenue change for the B-to-B Segment was -6.6 percent. This segment experienced a larger overall weighted revenue decline partly because companies in the largest revenue tier typically recorded larger decreases.
· B-to-B Marketers anticipate lower revenues in Q1 2009, with a projected revenue index of 38.
Direct Marketing Breakout: B-to-C Segment
· Consumer Marketers posted a Revenue vs. SQLY index of 41 — somewhat better than B-to-B and Catalog Marketers.
· Performing the best out of all three segments, B-to-C Marketers posted a Profitability index of 61.
· The weighted average revenue change for the B-to-C segment was -4.4 percent.
· B-to-C Marketers forecast further erosion in their revenue in Q1 2009, with a projected revenue index of 41.
Direct Marketing Breakout: Catalog Segment
· The Revenue vs. SQLY index for Catalog Marketers was 33.
· Catalog Marketers posted a positive index of 58 in terms of Profitability.
· In Q4, the weighted average revenue change was smallest for the Catalog segment at -4.1 percent.
· Most pessimistic, the Catalog segment forecasted revenue for Q1 2009 with an index of 34.
About DMA’s Quarterly Business Review
DMA’s Quarterly Business Review (QBR) for the fourth 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 January 22, 2008 through January 30, 2009. Altogether DMA received 413 survey responses.
DMA members can download the report, for free, and non-members can purchase a copy for $49.95 from DMA’s Bookstore by clicking here.
About Direct Marketing Association (DMA)
The Direct Marketing Association (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents more than 3,400 companies from dozens of vertical industries in the US and 48 other nations, including half of the Fortune 100 companies, as well as nonprofit organizations.
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