SNAPSHOT OF CANADA 2010

The Political Scene

In 2010, the Conservative Party’s minority government continued to hold power.  In the summer, Canada played host to the G20 and G8 summits, sparking controversy over the significant expense of hosting the meetings in a still recovering economy.  In addition, the meetings were marked by ugly protests and the subsequent police crackdown in response. 

Despite this and other controversies such as the elimination of the long-form census, the Conservative government continued to gain strength over 2010 by focusing attention on the success of their economic recovery plan and the introduction of several “tough on crime” laws.  Polls taken at the beginning of 2011 suggest that the Conservatives could win a majority government in a 2011 election.

The Economy

The Canadian economy and stock market continued to recover during the year, better than most of its G8 partners.  Consumer confidence increased and remained stable, at a level of 82.8%. By the end of 2010, Canada’s unemployment rate had dropped to 7.6% versus a high of 8.5% in the previous year.  Jobs that were lost during the recession were largely regained in 2010.  And, despite the introduction of a $40 billion stimulus spending package, Canada’s deficit was only 3% of GDP and declined throughout 2010.

One of the biggest economic developments in 2010 was the introduction of the HST (Harmonized Sales Tax) in Ontario and British Columbia.  Unpopular with residents of those provinces, the HST had a negative impact on the economies of these most populated provinces by adding additional taxes to the purchase of goods and services. 

Direct Response Marketing

The landscape of the Direct Marketing Industry has changed dramatically.  The down turn in the global economy continued to trickle its way down to each industry sector in 2010, resulting in significant cut backs and cancelled mail plans.  The analyzing and dissecting of each marketing initiative was the norm for most mailers.  Aggressive cost break requests combined with the tightening of selects and preferences to pull from larger deduped database environments by Financial Institutions has had an impact.

On the vertical list rental side, Not-for-Profit mailers continue to be the dominant mailing category, representing 37% of the total number of names ordered via Cornerstone List Management Services in 2010.   Although many fundraising organizations have opted to concentrate exclusively on the trading environment, other organizations continue to turn to the list rental market due to volume requirements and low net retention rates.   Their need to maintain the same level of active donors year-over-year is crucial.  Direct Mail continues to be an effective and popular donor acquisition medium for these Fundraising organizations.  It is expected that this trend will continue into 2011 and 2012.

With tightened budgets in 2010, Canadian businesses were forced to cutback on many value-added services and/or training sessions that were previously offered to their employees.  Seminars, workshops and other offsite events were either dramatically reduced or dropped completely.  As a result, B2B direct mail usage continued to decline in 2010.  

Financial Institutions continue to be dominant mailers in Canada.  However, database usage has increasingly become the preferred source of data due to its unique record environment and flexible multi-usage license agreements.  

What's Ahead in 2011 and Beyond

Canada's financial foundation is strong and its budget is under control. With employment numbers and consumer confidence in a good position, it's likely that Canada will move from a recovering economy to an expanding economy in 2011.

For direct marketing, Fundraising organizations are predicted to keep the same levels as 2010. Financial Services marketers are expected to turn to the database environment exclusively and B2B will continue to show restraint in terms of their direct marketing efforts. Overall, 2011 is likely to show modest growth while businesses fine-tune their approach.