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DMA/Winterberry 2015 Q4 Quarterly Business Review Reveals Economic Concerns in American Marketing Industry
February 25, 2016 – While marketers favor the prospects for data-driven marketing to drive growth in their business, they also harbor lingering concerns about a potential economic downturn, according to DMA/Winterberry Group’s Quarterly Business Review (QBR) survey. The Q4 2015 QBR revealed that only 52.1% of data-driven marketing (DDM) practitioners said they began 2016 feeling confident in the state of the U.S. economy, with a plurality of respondents (45.2%) describing themselves as just “somewhat confident.” Economic insecurity hasn’t impacted marketer sentiment toward marketing practices, with 72.9% of respondents remaining confident in DDM and its prospects for growth, compared to 72.8% in the previous quarter.
Hedging their bets against a potential economic downturn, fewer marketers and service providers said they will focus on new customer acquisition in the coming months (62.7%) than last quarter when 72.2% said new customer growth was a top priority. “Preparing for a negative economic outlook, we are seeing marketers shift from customer acquisition but maintaining customer retention efforts,” said Neil O’Keefe, DMA’s Senior Vice President, CRM and Member Engagement. “However, economic insecurity has not caused marketers to sour on the technologies and strategies propelling the growth of their businesses today, and they’re relying on marketing efforts fueled by data to hedge against a downturn.”
Marketers are backing up their confidence in marketing practices, with 33% of respondents reporting increased DDM spend in Q4 of 2015 and 43.5% predicting an increase in spend in the first quarter of 2016. Earlier this month, DMA released “The Value of Data 2015,” which shows that the Data-Driven Marketing Economy contributed nearly 1 million jobs to the United States in 2014, and added $202 billion in revenue to the U.S. economy, a 49% increase in jobs and 35% growth in revenue between 2012 and 2014.
“This quarter’s research shows that marketers continue to invest in data-driven technologies, consistent with DMA’s recent 2015 Value of Data report, but the anxieties of a potential economic downturn threaten to cloud the rosy outlook,” added O’Keefe. “The shift from customer acquisition to customer retention is traditional marketing behavior during grim economic times, as lower consumer spending generates fewer quality prospects for new customers.”
“Our QBR research confirms two contrasting dynamics that we’ve seen take hold in the market for several years: Marketers are bullish about the prospects for growth of their own businesses, while feeling real concern about whether the economy will provide the conditions necessary to support that growth,” said Jonathan Margulies, Managing Director at Winterberry Group. “As always, that’s an important reminder that no industry—and no marketing practice—exists in a vacuum.”
The following chart is taken from the Q4 2015 QBR and shows how an economic downturn/recession would impact investment plans and strategies for marketers:
Other Report Highlights:
- Potentially reflecting insecurity about the general economy and what may lay ahead, panelists indicated they also expect to cut back on hiring marketing staff in the months ahead, with only 31.4% responding that hiring additional marketing staff is a priority in the coming year, compared to 37.7% in Q3.
- Spending on direct mail grew sharply in the final months of 2015, rising to 3.13 in Q4, up from 2.91 in the previous period (with 5 indicating spending increased “significantly”). Other channels which saw increased investment included email, teleservices and place-based media.
- Overall, DDMers experienced more substantial revenue growth in 2015 than the year before—the average revenue growth rate (using the same 1-to-5 scale) for 2015 was 3.46, higher than the average pace of growth throughout 2014 (3.30)
About DMA’s Quarterly Business Review
The Quarterly Business Review is published by the Direct Marketing Association (DMA), with research and analysis provided by Winterberry Group, a New York-based strategic consulting firm serving the advertising, marketing services, media and information industries. The QBR’s conclusions are based on results from an online survey of DMA members, deployed in January 2016. Q4 QBR survey data is comprised of the responses of 467 survey respondents, including 282 marketers and 185 marketing services (including agency services) and technology providers.
About Winterberry Group
Winterberry Group is a unique strategic consulting firm that supports the growth of advertising, marketing, media and information organizations. Affiliated with Petsky Prunier LLC — a leading investment bank providing merger and acquisition advisory services to companies in the same sectors—the Firm offers its clients strategic perspective that is unparalleled in its addressable industries, while PPLLC maintains exceptional relationships with industry executives and business owners. This combination of market intelligence, research and strategic operating experience (as well as the ongoing dialogue among buyers and sellers of marketing businesses) provides an educated outside perspective that we bring to each engagement. For more information, visit: www.winterberrygroup.com
About Direct Marketing Association (DMA)
The Direct Marketing Association (www.thedma.org), founded in 1917, is the world’s largest trade association dedicated to advancing and protecting responsible data-driven marketing. DMA represents thousands of companies and nonprofit organizations across the entire ecosystem of data-driven marketing – including supply and demand sides. As such, DMA is uniquely positioned to bring together all industry participants to address the most significant challenges and advance solutions that benefit the marketplace. DMA’s solutions bring forward INNOVATION that accelerates business growth, EDUCATION that develops talent and ensures compliance with ethical and best practices, and ADVOCACY that advances policies that support innovation and data-inspired creativity in marketing. DMA’s signature event, &THEN, is the largest global event for data-driven marketing and attracts the industry’s top leaders and practitioners from around the world.