By: Melissa Campanelli, Senior Editor, DM NewsDate Submitted: 9/30/2005

Companies will spend more than $161 billion on direct marketing in the United States in 2005, according to a study commissioned by the Direct Marketing Association and released yesterday.

The study, "U.S. Direct Marketing Today: Economic Impact 2005," reports results from the DMA/Global Insight econometric model of U.S. DM activity for the nation as a whole, the BTC and BTB markets, the major DM media and for the economy's 52 industry groups.

"In recent years, the dramatic growth of the Internet and the increasing sophistication of database technologies have contributed to an extraordinary expansion of direct marketing and a seismic shift in what it is, how it's used and who uses it," DMA president/CEO John A. Greco Jr. said. "Direct marketing today is best described as a sophisticated, multichannel process that spans virtually all media and is used by most industries. Its contribution continues to be substantial in absolute terms, and its impact is growing over time and relative to other economic activity, including mass advertising."

The $161 billion in DM advertising expenditures is expected to generate $1.85 trillion in sales in 2005, or 7 percent of the $26 trillion in total sales in the U.S. economy. Direct marketing will account for 10.3 percent of total U.S. GDP in 2005.

Other findings:

Forecast for continued growth: Sales driven by direct marketing are forecast at 6.4 percent compound annual growth through 2009, up from 5.3 percent in the period from 1999 to 2004. By comparison, overall U.S. sales are growing more slowly (4.8 percent for 2004-09, as compared with 4.5 percent for 1999-2004).

Strong jobs outlook: In 2005, DM ad expenditures will directly support 10.6 million jobs. These include not only direct marketers but also other workers whose employment is required to fulfill increased orders generated by direct marketing. DM-driven employment is expected to grow 2 percent annually through 2009.

High ROI: For 2005, an investment of $1 in DM ad expenditures will return, on average, $11.49 in incremental revenue across all industries.

Significant part of ad mix: DM ad expenditures accounted for 47.9 percent of total advertising in 2004, up from 46.9 percent in 1999.

Solid performance for traditional channels: The most popular channels in 2005 remain direct mail ($49.8 billion in ad sales for catalog and non-catalog direct mail combined) and telephone marketing ($47 billion), or 31 percent and 29 percent of the total mix of DM ad dollars, respectively.

Rapid growth for interactive: DM is poised to become even more Internet-oriented in the next five years, as expenditures in Internet marketing and commercial e-mail are to grow at least three times faster -- 18 percent and 19 percent compound annual growth, respectively -- than expenditures in other media (5 percent growth forecast for other DM media on average).

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