Secrets of the Catalog Master
Vol. MMVI No. 6 December 2006
(Continued--page 2)
The 2007 Economic Outlook
2007 overall looks like it will deliver almost 3 percent gross national product growth, 3 percent inflation, 4.5 percent unemployment and, essentially, stable interest rates. Imports will far outpace exports and the dollar will continue weak and—indeed—enter a struggle for world monetary dominance with the Euro and the Yuan. Our deficit and national debt are having a deleterious influence on our standing in a now global economy. A prolonged and costly Afghanistan war brought the Soviet Union to its economic knees in the 1990s; the parallels are concerning. So much of our future economic outlook and growth hinges on these developing shifts in the global monetary balance.
Direct marketing (and here I include all known channels and those yet to be invented) looks to be poised for an overall 8 percent growth. The online growth will continue apace and over 50 percent of most business-to-business orders will be received online (at least for those companies who advanced their online channels steadily and conservatively over the past 5-10 years). List usage, particularly response lists with valued segmentations, will increase by likely 10 percent. The membership co-op (Abacus and others) usage will continue, although perhaps at a slower rate until there are definitive answers on long term profitability and performance. The list-specific co-ops (MeritBase and others) will continue to gain usage, particularly as the list rental income advantage takes on new importance in what some see as a slowing profitability cycle. I feel that compiled list usage will see declines as the prospecting quest for quality begins to look at performance instead of simply cost.
The first quarter outlook is somewhat hazy. The Christmas season has started earlier than ever, but the results remain shrouded. Time will tell, but my prediction is for a somewhat subdued finish to 2006 and a moderate-growth first quarter 2007. The leading indicators signal a continuing decline in confidence and I believe we may have some slowing due to a combination of fundamental economic influences (the slowing of the housing market engine) and psychological influences (intensely growing and frustrating dissatisfactions).
Economic growth, however, has continued through November 2006 in all regions and that keeps the outlook reasonably positive for continuing growth. First quarter mailing plans to customers and prospects should be maintained at a growth level. On a generic basis, we see a 10-12 percent circulation growth for 2007 as being in line with economic expectations. We would also draw your attention to the six-month decline in consumer confidence.
Economic growth remains a bit subdued in about half of the twelve regions, but still not enough to move those regions to a slow outlook. None of the twelve regions have dipped enough in economic performance to be moved to the slower column; all continue relatively flat to slight progress. The drop in housing sales, however, is having an effect.
For multichannel marketers, the fourth quarter of 2006 appears to be relatively positive with modest increases in sales and marketing performance in most sectors in business-to-business and in consumer cataloging.
Hiring in the industry remains particularly active. At the beginning of December, despite some reports of future slowing in hiring, Libey Incorporated was conducting searches for 8 senior multichannel direct marketing executives. That indicates a positive outlook for 2007 and builds on the continuation of a positive outlook for direct marketing in general.
Signs of Regional Stability or Status Quo
Region One (CT, ME, MA, NH, RI, VT)
Region Two (NY, NJ, CT, PR, VI)
Region Three (PA, NJ, DE)
Region Four (OH, KY, PA, WV)
Region Five (KY, MD, TN, VA, NC, SC)
Region Six (GA, AL, FL, LA, MS, TN)
Region Seven (IL, IN, MI, WI, IA)
Region Eight (MO, IL, IN, KY, TN, LA, AR)
Region Nine (MN, WI, ND, SD, MT, MI)
Region Ten (KS, CO, MO, NE, NM, OK, WY)
Region Eleven (TX, LA, NM)
Region Twelve (CA, UT, AZ, NM, OR, WA)
Slower (Individual states)
Louisiana
Mississippi
The First Quarter 2007
Circulation and Prospecting Outlook and Recommendations
Synopsis
The short-term economic outlook for the catalog industry continues positive. The intermediate-term outlook remains positive for the fourth quarter of 2006 and the first quarter of 2007, and the long-term outlook through 2007 remains positive.
Continue Prospecting
Continue with normal strategies for circulation and prospecting plans. There are no compelling economic reasons for reductions in either prospecting or customer circulation. Keep mailing, emailing, telephoning and searching at normal to slightly increased levels.
Nation At A Glance
Until the final fourth quarter performance is known, there are no substantive changes to the state-by-state circulation strategies for the first quarter 2007.
