Economic Impact: U.S. Direct Marketing Today

Telephone Marketing Excerpt from the DMA, 1996

http://www.the-dma.org

For the first time in U.S. business history, the size and scope of direct marketing in America -- of direct mail and catalogs, telephone marketing, and direct response print, broadcast, and other media -- has been measured as a result of an econometric study undertaken by the Direct Marketing Association.

According to the research, conducted by the econometric forecasting consulting firm The WEFA Group, in 1995 direct marketing generates an estimated $594.4 billion in consumer sales, and $498.1 billion in business to business sales. In 1995 employment, more than 19.1 million U.S. jobs are related to direct marketing activity -- nearly 10.8 million in consumer direct marketing and nearly 8.3 in business-to-business direct marketing.

Over a three year period from 1992 - 1995, The WEFA Group researched and developed an econometric model specific to direct marketing and integrated that model with WEFA’s other renowned models for U.S. economic activity, and for specific regional models. It verified the research with an extensive industry survey, many interviews with industry experts, and a thorough audit of newspapers, magazines, radio, and television advertisements.

For purposes of this study a media-based definition of direct marketing was applied: any direct communication to a consumer or business recipient that is intended to generate a response in the form of an order (direct order), a request for further information (lead generation), and/or a visit to a store or other place of business for purchase of a specific product(s) or service(s)(traffic generation). The following are definitions of these “intended purposes”:

Direct Order includes all direct response advertising communications -- through any medium --that are specifically designed to solicit and close a sale. All of the information necessary for the prospective buyer to make a decision to purchase and complete the transaction is conveniently provided in the advertisement.

Lead Generation includes all direct response advertising communications -- through any medium --that are designed to generate interest in a product or a service, and provide the prospective buyer with a means to request and receive additional information about the product or service.

Traffic Generation includes all direct response advertising communications conducted -- through any medium -- that are designed to motivate the prospective buyer to visit a store, restaurant, or other business establishment to buy an advertised product or service.

The following charts highlight top-line findings regarding telephone marketing advertising expenditures, sales, and employment.


TELEPHONE MARKETING FIGURES

Telephone Marketing Expenditures by Total & Market

								%Growth	%Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	

Telephone Marketing	40.5	50.6	54.1	58.0	78.9	 6.0	 7.8
  Consumer		14.5	17.3	18.2	19.4	25.2	 4.7	 6.7
  Business-to-Business	26.0	33.3	35.9	38.7	53.7	 6.7	 8.4

Total Telephone Marketing Expenditures By Intended Purpose

								%Growth	%Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	

 Direct Order		13.6	16.5	17.5	18.5	24.1	 5.2	 6.6
 Lead Generation	23.7	30.0	32.3	34.8	48.7	 6.4	 8.6
 Traffic Generation	 3.2	 4.1	 4.4	 4.7	 6.1	 6.6	 6.8

Consumer Telephone Marketing Expenditures By Intended Purpose

								%Growth %Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	

Telephone Marketing	14.5	17.3	18.2	19.4	25.2	 4.7	 6.7
  Direct Order		 5.2	 6.1	 6.5	 6.8	 8.8	 4.6	 6.2
  Lead Generation	 7.5	 9.0	 9.5	 10.1	13.6	 4.8	 7.4
  Traffic Generation	1.8	 2.1	 2.2	 2.4	 2.8	 4.1	 4.9

Business-to-Business Telephone Expenditures By Intended Purpose

								%Growth	%Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	

Telephone Marketing	26.0	33.3	35.9	38.7	53.7	 6.7	 8.4
  Direct Order		 8.3	10.3	11.0	11.7	15.4	 5.8	 7.0
  Lead Generation	16.2	21.0	22.8	24.7	35.1	 7.1	 9.0
  Traffic Generation	 1.5	 1.9	 2.1	 2.3	 3.2	 7.0	 8.8

1990 Telemarketing Expenditures
Compared to Total U.S. Advertising Expenditures

			DM Advertising		Total Advertising	DM Percent
			Expenditures		Expenditures		of Total
	
Telephone Marketing	   40.5			    60.4		   67.1

1995 Telemarketing Media Expenditures Compared to
Total U.S. Advertising Expenditures

		 	DM Advertising		Total Advertising	DM Percent
			Expenditures		Expenditures		of Total

 Telephone Marketing	   54.1	   		    82.7	 	   65.5

Telephone Marketing Sales By Total and Market
(Billions of Dollars)

								%Growth	%Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	
Telephone Marketing	272.8	356.1	385.6	421.4	599.1	 7.2	 9.2
  Consumer		117.2	150.2	159.3	171.0	230.7	 6.3	 7.7
  Business-to-Business	155.6	205.9	226.3	250.4	368.3	 7.8 	10.2

Total Telephone Marketing Sales by Intended Purpose
(Billions of Dollars)

								%Growth	%Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	
Telephone Marketing	272.8	356.1	385.6	421.4	599.1	 7.2	 9.2
  Direct Order		 83.8	106.3	114.3	124.1	171.5	 6.4	 8.5
  Lead Generation	164.3	220.2	239.5	263.0	383.4	 7.8	 9.9
  Traffic Generation	 24.7	 29.6	 31.8	 34.3	 44.2	 5.2	 6.8

Consumer Telephone Marketing Sales By Intended Purpose
(Billions of Dollars)

								%Growth	%Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	
Telephone Marketing	117.2	150.2	159.3	171.0	230.7	 6.3	 7.7
  Direct Order		 38.9	 48.4	 51.3	 55.0	 73.2	 5.7	 7.4
  Lead Generation	 62.6	 83.4	 88.5	 95.2	131.7	 7.2	 8.3
  Traffic Generation	 15.7	 18.3	 19.5	 20.9	 25.8	 4.4	 5.8

Business-to-Business Telephone Marketing Sales By Intended Purpose
(Billions of Dollars)

								%Growth %Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	
Telephone Marketing	155.6	205.9	226.3	250.4	368.3	 7.8	 10.2
  Direct Order 	 	 44.9	 57.8	 63.0	 69.1	 98.3	 7.0	  9.3
  Lead Generation	101.7	136.8	151.0	167.9	251.6	 8.2	 10.8
  Traffic Generation	  9.0	 11.3	 12.3	 13.4	 18.4	 6.4	  8.4

Telephone Marketing Employment By Total and Market
(Thousands of Workers)

								%Growth	%Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	
Telephone Marketing	869.7	955.5	984.0	1007.9	1128.4	 2.5	 2.8
  Consumer		309.0	324.0	331.0	 337.2	 364.2	 1.4	 1.9
  Business-to-Business	560.7	631.5	653.0	 670.7	 764.2	 3.1	 3.2

Total Telephone Marketing Employment By Intended Purpose
(Thousands of Workers)

								%Growth %Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	
Telephone Marketing	869.7	955.5	984.0	1007.9	1128.4	 2.5	 2.8
  Direct Order		292.1	312.3	317.4	 321.3	 342.2	 1.7	 1.5
  Lead Generation	505.2	566.5	587.4	 605.5	 698.1	 3.1	 3.5
  Traffic Generation	 72.4	 76.6	 79.1	  81.1	  88.0	 1.8	 2.2

Consumer Telephone Marketing Employment By Intended Purpose
(Thousands of Workers)

								%Growth %Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000
	
Telephone Marketing	1,306.5	1,550.2	1,601.9	1,664.0	1,903.0	 4.2	 3.5
  Direct Order		  375.6	  424.1	  436.0	  450.6	  502.6	 3.0	 2.9
  Lead Generation	  798.5	  992.7	1,028.3	1,071.1	1,248.4	 5.2	 4.0
  Traffic Generation	  132.4	  133.4	  137.6	  142.3	  152.0	 0.8	 2.0

Business-to-Business Telephone Marketing Employment By Intended Purpose
(Thousands of Workers)

								%Growth %Growth
								1990-	1995-
			1990	1994	1995	1996	2000	1995	2000

Telephone Marketing	1,378.1	1,625.9	1,713.0	1,813.7	2,211.2	 4.4	 5.2
  Direct Order		  389.1	  437.0	  454.5	  475.9	  556.0	 3.2	 4.1
  Lead Generation	  925.4	1,119.6	1,186.0	1,261.6	1,568.4	 5.1	 5.7
  Traffic Generation	   63.5	   69.3	   72.6    76.1	   86.8	 2.7	 3.6

Ratio of Ad Expenditures to DM Sales by Market
(Share)

			1990	1994	1995	1996	2000

Telephone Marketing	0.149	0.142	0.140	0.138	0.132
  Consumer		0.124	0.115	0.114	0.113	0.109
  Business-to-Business	0.167	0.162	0.159	0.154	0.146

Ratio Ad Expenditures to Sales by "Intended Purpose"
(Share)

	
			1990	1994	1995	1996	2000
	
Telephone Marketing	0.149	0.142	0.140	0.138	0.132
  Direct Order		0.162	0.155	0.153	0.149	0.141
  Lead Generation	0.144	0.136	0.135	0.132	0.127
  Traffic Generation	0.131	0.137	0.137	0.136	0.137

 

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