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DIRECT & INTERACTIVE MARKETERS REPORT LOSSES IN FIRST FOUR WEEKS OF WAR ON IRAQ
ORLANDO, FL, OCTOBER 11, 2003 -- A new report from the Direct Marketing Association's (The DMA) Strategic Information Unit confirms, with survey evidence, that brief but intense wars, like the March 2003 war on Iraq, reduce sales over a four-week period by about 5% per firm, relative to the same period the previous year.
"With this study, the DMA’s Strategic Information Unit analyzed the spring 2003 War in Iraq to provide guidance to direct and interactive marketers in the future, should similar crises present themselves," said Peter Johnson, PH.D., director, Strategic Information Unit, The DMA. "The report found, that with respect to the use of different media, direct mail is especially vulnerable, and that paying close attention to timing can make a crucial difference."
According to The DMA's Impact of War on Direct and Interactive Marketing white paper, respondents reported an average sales decline for the four-week period of the war on Iraq of 5.4 percent. Roughly one-half of respondents experienced revenue declines, while about one-sixth experienced sales increases. Most of the effect of the war was felt in the first week. Losses were generally milder in the second and third weeks. By the fourth week of the war, member companies began to experience increased sales volume.
Analysis of war impact by member segment revealed that while both business-to-business and business-to-consumer markets were hurt, the nonprofit segment appeared to have actually gained sales. Significantly, if the positive performance of the nonprofit segment is excluded from the overall results, the average loss for the duration of the war increases proportionately. Small businesses were most insulated from the negative effects of the war, while large businesses suffered losses twice as large as the industry average.
Business-to-Business: Sales changes reported by the very small number of business-to-business (B-to-B) members revealed net sales decreases of 6.25 percent. Marketers should not assume that the B-to-B segment is immune from the effects of crises.
Non-Profits: Although nonprofit organizations reported decreases of 5.13 percent on a weekly basis, the net effect of the war, once monthly respondents are included, reveal increases of 8.42 percent.
Consumer Marketers (including the Catalog, Publishing, and Financial industries): Sales changes reported by consumer marketers revealed net sales decreases of 6.97 percent.
Company Size: Results indicated that larger firms that experienced the greater losses (9.63 percent decrease), while smaller and medium-sized firms were largely insulated from the negative effects of the war (2.04 percent and 1.91 percent decrease respectively).
The long and highly visible build-up to the war allowed some marketers to devise and execute war-related marketing strategies and even whole campaigns. Direct and interactive marketers who delayed or staggered their campaigns to spread out the risk appeared to have minimized their losses, or even performed well, while those who launched campaigns just as the ultimatum was delivered to the Iraq regime felt the full brunt of the war’s effect. In addition, marketers who acknowledged the war coverage (for non-profits) and incorporated patriotic messages achieved the best results.
WAR IMPACT ON DIRECT MARKETING CHANNELS*
*1 = NOT AFFECTED; 5 = VERY AFFECTED.
Based on responses, some strategies marketers found most successful during the beginning months of the war on Iraq include:
The DMA's Impact of War on Direct and Interactive Marketing provides the first industry-wide assessment of the extent and nature of the Spring 2003 War in Iraq. Results were compiled from online surveys and analyzed by The DMA’s Strategic Information Unit during the summer of 2003. Respondents were given the opportunity to report war-related sales changes on either a weekly or monthly basis. Respondents were further asked to evaluate the sensitivity of various direct and interactive marketing media to disturbance from the war, and to evaluate any strategies that did or did not work well.
The DMA is the leading trade association for businesses interested in interactive and database marketing, with nearly 4,700 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. According to a DMA-commissioned study, direct and interactive marketing sales in the United States are projected to have surpassed $2 trillion in 2002, including $126 billion in catalog sales and $34 billion in sales generated by the Internet. The DMA's Web site iswww.the-dma.org, and its consumer Web site is www.shopthenet.org.