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Ken Magill

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Finally, the DMA Spells Out Industry's Economic Benefits

10/15/13

By Ken Magill

Well, that only took 100 years.

Okay, to be fair, more like 50—the number of years direct marketing has been under attack by ignoramuses who don’t understand its benefits to society.

For the first time in its history, the Direct Marketing Association has published a major study pointing out the economic benefits of data-driven marketing—specifically, the benefits of being able to share consumer data.

The study aims to, among other things, illustrate to lawmakers such as Sen. Jay Rockefeller (D-W. Va.) just exactly what it is they threaten when they take aim at so-called data brokers.

Last year, Rockefeller launched an investigation by sending letters to nine so-called data brokers asking about their business practices. He has since expanded the investigation, clearly in an effort to more strictly regulate the collection and transfer of individual-level consumer marketing information.

According to the DMA’s study conducted by Professors John Deighton of Harvard Business School and Peter Johnson of Columbia University, the so-called data-driven marketing economy added $156 billion in revenue to the American economy and created more than 675,000 American jobs in 2012 alone.

What is more, according to the study, 71 percent, or $110 billion and 475,000 jobs depend directly on individual-level data exchanged among firms.

“In other words, if individual-level data could not be transferred among firms, it would cost more than $110 billion more to match buyers and sellers and maintain current levels of economic output,” the study said.

“As public-policy makers consider legislation in this area, we really, really hope they will take this study into consideration and not do anything that will stifle innovation and growth,” said DMA CEO Linda Woolley at a press conference in Chicago yesterday.

Added Rachel Thomas, vice president of government affairs for the DMA: “This is a first-ever study. Never before have we quantified something called the data-driven marketing economy.”

Also, according to the DMA, the study is purposely conservative, “summing what firms spent on data and data services, not the benefits that they received in exchange.

“Thus, the reported size of the DDME [data-driven marketing economy] likely understates its true size, as the report does not take into account:

“Benefits that firms received in exchange for spending on data and data services, which commonly exceed data costs by 20 percent to 60 percent;

“Spending on capital goods like server hardware and data storage systems, which is normally a multiple of revenues;

“Funding of firms by venture investors, even when it was done in anticipation of future revenues; or

“Benefits to end consumers of free-to-user Internet services.”

The authors of the study concluded: “[P]roducers of goods and services pay $156 billion a year for marketing services that could not be provided without individual-level consumer data. We infer that the U.S. economy benefits by more, and probably substantially more, than this outlay, else the outlay would not be made.”

The question, of course, is if Jay Rockefeller—who seems to already have his mind made up—and his ilk will pay any attention to this study.

Access the full report here.

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