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That faint glow of recovery detected by some direct marketers is coming from one source: consumers. They are spending more, and DMers are spending more to reach them.

In contrast, things are flat in the B-to-B sector, where firms are trimming their spending in response to revenue drop-offs.

Those are among the findings of Direct's annual industry survey.

As with last year, companies that sell primarily to consumers were at the forefront, generating 54% of their revenue from DM, compared with 48% for both business-to-business and mixed-focus firms.

And that revenue has risen. Over 60% of the consumer-oriented companies said their sales had gone up, compared with less than one-third in 2002. On the B-to-B side, only 27% reported increases, a slight decline from last year.

This is in line with other studies showing that consumers are supporting the economy more strongly than businesses. It's unclear if individuals are responding to increased marketing activity, or if they are spending more simply because they want to.

Either way, consumer marketers also had a more profitable year than anyone else. Forty-three percent reported margin jumps, compared with 28% for their B-to-B colleagues.

And their spending rose apace. In general, respondents allocated an average of 38% of their budgets to DM, but consumer firms spent 64%, a 5% increase over 2002. Meanwhile, DM spending rose by 2% — to 43% — among firms in the B-to-B space. Mixed-focus spending was stagnant at 45%.

What are they spending it on? Direct mail was the single largest expense category regardless of company focus. But three-fourths of all B-to-B marketers said they use paper mail for prospecting or retention, compared with under two-thirds for consumer firms.

And B-to-B companies are much more likely to use e-mail. There they outpull consumer marketers by 70% to 43%. And 55% use e-mail for prospecting.

Web development and maintenance was the fourth most-cited expenditure among consumer and mixed-focus firms, but it failed to make the top five for B-to-B companies. On the other hand, B-to-B marketers were more likely to use card packs.

The lookout for next year?

Consumer firms will continue to lead the pack. Almost two-thirds plan to spend more on DM, compared with 44% last year. But only 42% of all B-to-B and mixed-focus respondents foresee increases — down from half in 2002.

Companies in the consumer sector are also investing more heavily in prospecting. This year, they devoted 63% of their direct marketing budgets to it, compared with 56% a year ago. B-to-B firms' spending on mail prospecting fell from two-thirds of the total budget to 57%, while mixed-focus companies held steady at 54%.

And 71% of all the firms surveyed plan to mail more to their house files next year (up from 59% in 2002). The leaders? Mixed-focus firms, 84% of which foresee an increase (vs. 63% in 2002). Consumer marketers are next at 69% (up from 58%). And 62% of all B-to-B firms will mail more, compared with 59% a year ago.

List brokers can rejoice: Over two-thirds of the consumer DMers plan to mail more to outside lists, vs. one-third for B-to-B companies. The bad news is that only 51% of all organizations mail to rented lists — roughly the same as last year. Consumer companies are again in the forefront. Two-thirds use rented lists, compared with 45% for B-to-B mailers.

Exactly what outfits pull the highest response? Mixed-focus firms, which draw an average of 2.9%. They are followed by business-to-business marketers, with 2.2%, and consumer companies, with 1.5%.

As marketers focus on their customers, it's fair to ask about their privacy practices. Half of all B-to-B marketers reported offering an opt-in on their e-mail lists and an opt-out on their house postal files. Only 10% offer only an opt-in for their e-mail lists, and 8% have opt-out options on their house mail lists.

Forty-two percent of consumer companies offer both, while 12% provide only opt-in on e-mail and 23% an opt-out on house postal lists.

And now for the biggest question of all: How many firms belong to the Direct Marketing Association? At 32%, the total was flat with last year's. One indicator of whether a company was likely to belong was its revenue: Nearly half of all firms with revenue in excess of $10 million belong to the DMA, compared with just 22% of those under this level.

And, as you might expect, members devote more of their marketing budgets to DM than non-members — 59% to 43%.

Does membership produce benefits? Forty percent of all DMA members reported increases in their margin levels — exactly 10 percentage points higher than the non-DMA members.

This survey was conducted for Direct by Primedia Business Marketing Research, an in-house research firm. It was e-mailed to 4,670 Direct subscribers chosen on an nth-name basis (a representative sample of all subscribers).

An initial copy of the survey, offering a chance to win one of four $50 Amazon.com gift certificates for participating, was e-mailed Sept. 11, A follow-up e-mail, along with another sweepstakes offering, was sent to non-respondents Sept. 17, with a third mailed Sept. 23.

Results are based on surveys returned by 213 qualified participants.

Respondents identified themselves as advertising, sales, promotion, direct marketing agency or consulting executives (28%); retailers, catalogers, wholesalers or distributors (18%); manufacturers (12%); publishers (12%); healthcare, public administrative, social services or other service administrators (8%); or list brokers, compilers or managers (6%). The remaining 16% came from such sectors as communications, transportation, utilities, associations, financial services and nonprofit organizations.

The mean annual revenue specified was $99.4 million. Current year revenue reported by survey participants was as follows: Under $1 million (36%); $1 million to $2.5 million (10%); $2.5 million to $5 million (11%); $5 million to $10 million (10%); $10 million to $25 million (8%); $25 million to $100 million (10%); $100 million to $500 million (8%); $500 million to $1 billion ($3%); and more than $1 billion (5%).