Before IT happened

Few months ago, particularly in September, experts were making forecast for glowing perspectives of DM branch development. We observed the world tendencies of market share increase in favor of direct marketing, we observed as well that DM market increase in Ukraine is moving ahead the most optimistic experts’ forecast. Than happened everyone knows what, and we’ll resist from naming it in order not to frighten the public. By the end of the year many companies have announced about freezing of their DM campaigns and some of them even cancelled those, which were already started. Some distance trade companies have announced that their entering into Ukrainian market is being postponed. Some more have decided to leave Ukrainian market. And that is despite of the fact that distance trade companies are the drivers of Ukrainian direct marketing: namely these very companies conduct the major number of dispatches and are the biggest clients of call-centers and list-broking companies.

2009. Period of changes

Nevertheless 2008 ended rather happily for DM branch: instead of expected ?120mln. market volume compounded ?130,6mln. (940,0 mln. in hryvna equivalent).

So what’s next? Strange as it may seem but the experts do not expect DM market indexes to become worse even in terms of current financial instability. Generally DM market volume in 2009 will not change essentially in hryvna equivalent and will comprise around UAH 940mln. It will happen first of all due to Ukrainian Post rates increase (new postal rates are partially put in from 31.12.08 and some are planned to be put during 2009). Total number of letters sent by the companies will not change essentially (some segments will conduct more dispatches, some less). Cost of the mailing package production will also influence on the market volume (as well as any other printing product) which will cost 1,5 times more (with the same volume – around 180mln. mailing packages). In other DM branches (non-addressed mail, insertion, call-center work, DB market, management and creative) there won’t be any considerable changes in hryvna cost as the prices increase driver here was always salaries’ increase and that is unlikely to happen in current situation. In terms of offers reduction (reduction is expected to 30%) the companies will be actively reducing prices in fight for the offers. However having got used to new realities the clients will increase their budgets for direct marketing again.

Growth rate of our DM market considerably exceed the one in Western Europe. Growth rate in Western Europe comes up to 2-3% per year while in Eastern Europe we observe two-digit active growth. When in Western Europe 80 addressed direct-mails are sent for each person per year and 10-20 – in Eastern Europe the number of these letters in Ukraine comes up to 6 addressed direct-mails.

Certainly the crisis will bring certain changes but it is obvious that our DM market growth perspectives are very attractive.

In the nearest years we expect the following tendencies of DM market development:

- Appearance of large letter-shops and fulfillments;

- Bulk purchase of specialized equipment and construction of in-house structures (letter-shops, call-centers) especially in telecommunication and financial spheres. And later on equally bulk passing of such works for outsourcing;

- Transition to non-postal communications (internet, telephone, SMS);

- Active usage of internet, WAP and other digital technologies in DM;

- Occurrence of social networks and their usage for the dialogue with customers;

- Active transition from printed catalogues to on-line ones in distance trade sphere, testing of new collections on-line with follow-up printed catalogue issue.

DM market volume* by separate DM industry branches in 2008 and forecast for 2009

* Research was made by Ukrainian Direct Marketing Association and OS-Direct Marketing Group. In the course of research there was made market volume analyses of addressed and non-addressed direct-mail, insert market, addressed DB, direct-mail materials production, consulting and advertising creative services in 2008, etc. Other than that there were studied allied markets in details and in particular, distance trade market.

According to analysts’ forecast we’re expecting the following mail order market volume in 2009:

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Kalashnyk Valentyn,
President of Ukrainian Direct Marketing Association
Director of OS-Direct Marketing Group