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dma-direct-digital-marketing-spend-q1-2012-may2012.jpg2 in 5 marketers and service providers say their direct and digitally-driven spending grew in Q1 2012 when compared to Q4 2011, almost double the 22.2% who reported decreases over the same period, according to a study released in May 2012 by the Direct Marketing Association (DMA) in partnership with Winterberry Group. Spending growth has slowed over the past quarter, though: the weighted average of spending growth between Q4 2011 and Q1 2012 was noticeably lower than the weighted average of spending growth between Q3 and Q4 2011 (3.2 vs. 3.5, respectively on a 5-point scale, with 1 representing a significant decrease and 5 representing a significant increase). Respondents do not appear any more optimistic about the coming quarter: although they were more than twice as likely to forecast a rise in spending this quarter as to expect a decrease (35.5% vs. 14%), the weighted average of their expected spending growth remains at 3.2.

Social, Mobile, Email Fastest-Growing Channels

dma-direct-digital-mktg-spend-by-channel-q12012-may2012.jpgLooking at spending growth by channel in Q1 2012, social media tops the list with a weighted average of 3.6, followed by mobile and email (both at 3.4), and search (SEO/content optimization) at 3.3. Despite remaining atop the list with its weighted average of 3.6, social media’s spending growth decreased from a leading 3.8 in both Q1 2011 and Q1 2010. Similarly, email’s score of 3.4 continued a decline from 3.7 in Q1 2011 and 3.8 in Q1 2010. This may be a reflection of the channel’s maturity more than its effectiveness: a recent survey from the CMO Council revealed that marketers believe email is their most effective digital marketing channel.

Revenue Forecasts More Aggressive

Meanwhile, data from the DMA and Winterberry Group’s “Quarterly Business Review” indicates that respondents have upbeat projections about future revenue driven by their direct and digital marketing (DDM) activities. While 43.4% reported an increase in revenues driven by DDM in the past quarter, a healthy 60% predict an increase in Q2. This compares to just 8.6% who expect a decrease of any magnitude.

In fact, the weighted average of revenue growth is significantly higher for the Q2 expectations (3.6) than for the Q1 estimates (3.3).

Other Findings:

  • According to the report, marketers will spend $168.5 billion on direct marketing this year, or 52.7% of all US ad expenditures.
  • Drivers of DDM activity reported by the survey respondents included the availability of data (3.2 on a 5-point scale, with 5 representing a significant driver, and 1 a significant inhibitor), general economic conditions (3.1), and general demand for DDM media and solutions (3.1). Regulatory concerns (2.8) and budgets (2.9) were seen as inhibiting factors.
  • 61.7% of DDM budgets and activities were targeted towards customer acquisition, with the remaining 38.7% targeted to customer retention. The proportion allocated to customer acquisition represents a 4.8% point jump from 56.9% in Q1 2011.
  • 84.7% of the respondents said the profitability of their DDM initiatives either grew (37%) or remained constant (47.7%) compared to last quarter. Almost 9 in 10 believe their profitability will either grow (45.4%) or stay steady (43.1%) this quarter.

About the Data: The Quarterly Business Review’s conclusions are based on an online survey of DMA members, deployed in April 2012 and focused respectively on marketers and the marketing service providers that work with them to develop, launch and optimize campaigns. Altogether, the DMA received 234 usable survey replies, which included 128 marketer respondents and 106 service providers.

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