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Looking for work? Go into database marketing.

That's just one of the many gleanings to be found in Direct's 2005 database survey.

More than a fourth of all respondents have added personnel to their database and relationship departments, up from one in five last year. And far fewer firms have reduced their staffs.

Leading the pack in hiring were B-to-B companies and small businesses. The latter includes some start-ups.

But hiring doesn't necessarily mean greater database investment. Just over 33% plan to allocate more dollars to developing or maintaining their databases, down from 50% in 2004.

What do those firms intend to buy? The top item was expanded data mining capabilities. Others were likely to invest in outsourcing their databases, or bringing them in house.

The best news in Direct's 2005 database marketing survey is in the employment numbers: More than a fourth of all respondents have added personnel to their database and relationship management departments, up from one in five last year.

And far fewer firms have reduced their staffs. Most were either holding steady or adding workers.

Leading the pack on hiring were B-to-B companies and small businesses. Companies with less than $10 million in annual revenue were the second most likely to have staffed up, trailing only firms grossing more than $100 million a year.

Why are the small businesses hiring? In some cases, because they are start-ups.

“I am getting an increasing number of calls from newer companies being put together by industry experts,” says Jerry Bernhart, president of Bernhart Associates Executive Search LLC in Owatonna, MN. “A lot of those making less than $10 million are attracting senior-level players in the industry. Those senior-level folks were laid off during the lean times, or due to mergers and acquisitions. There has been a lot of M and A activity in the last year or two.”

But hiring doesn't necessarily mean greater database investment. Just over 33% plan to allocate more dollars to developing or maintaining their databases, down from 50% in 2004.

Indeed, most firms expected their development and maintenance expenses to hold steady: Conversely, the number forecasting budget decreases, which was in the high single digits last year, fell to the low single digits. And this pattern held true regardless of market segment.

How much should you spend on your system? Across all categories, marketers expected to earmark around 11% of their direct marketing budgets for database upkeep. And almost 25% of those surveyed planned to invest in their systems within the next 12 months.

And what did those firms intend to buy? The top item was expanded data mining capabilities. Others planned to invest in outsourcing their databases, or bringing them in house. And some expected to combine departmental systems into a central location, incorporate a CRM system, buy new software, refresh data from an outside source or append e-mail addresses.

Of course, the amounts varied. Nearly 50% anticipated shelling out $50,000 or less for their efforts, but the average investment cited was $167,000 thanks to a few large-ticket upgrades.

It may be money well spent. Only 40% now calculate lifetime value — the same as last year, with consumer DMers doing it at twice the rate of their B-to-B brethren.

But almost 66% use customer data to personalize their offerings or solicitations. And 60% vary the level of personalization they offer based on the customer's value, while 40% likely will increase their personalization budgets during 2005.

One consumer DMer that's upped its spending on technology is apparel marketer J. Jill Group Inc. It has begun an $8 million operational systems overhaul, and has decided add more departments into its central data warehouse, along with product life cycle and inventory control systems. Implementation will take from two to four years.

J. Jill's previous database maintained catalog, Internet and retail transaction data within a single file. But the firm needed additional functions, including greater cross-channel marketing capabilities.

There's little question that system investments can pay off. Gift marketer RedEnvelope attributed boosts during its fiscal third quarter, a period that includes the December holidays, partly to new warehouse management software it installed during the second quarter.

That software incorporated inventory and fulfillment management programs. RedEnvelope's revenue jumped from $36 million during third quarter 2004 to just under $48 million in third quarter 2005, and its ability to anticipate demand and manage inventory played a significant role, according to company financial statements.

Regardless of what capabilities they choose, chances are good that any firm making database investments is relying on a single vendor for all its hardware. A year ago, 29% of respondents said they used one source for their platforms. In 2005, this jumped to 35%.

If the B-to-B firms are most inclined to spend on systems, consumer marketers are more prone to throw money into marketing. Overall, few companies anticipated cuts in their marketing budgets this year, and 50% expected them to increase.

Last year's fourth quarter results may have convinced these firms of the need for investment. Many respondents said their fourth quarter revenue was identical to what it was during the previous three quarters than did those in last year's study. Fewer reported increases.

As for direct marketing in general, 37% reported an increase in their DM budgets, compared with 50% last year. That falloff may be attributed to firms turning to less expensive media or smaller postal pieces.

For example, Coldwater Creek has cut back its catalog volume from nearly 118 million pieces a year ago to just under 108 million. At the same time, online marketing has been ramped up and 200,000 names have been added to its e-mail file. The company regularly sends customized messages, reflecting shopping preferences and merchandise tastes, to 2.4 million who have opted in to receive them.

How do marketers feel about the rest of 2005?

Well, sales projections for data-driven marketing are flat. Compared with last year, fewer respondents believe revenue will grow, and fewer feel it'll drop. But their faith in hardware continues unabated: Just as last year, 75% expect investments in technology to pay for themselves.

Direct also found the following:

• At 60% of the companies surveyed, marketing departments played a role in overseeing database implementation. Forty percent gave IS/IT departments a role in setting them up, and 29% said that sales had a hand in it.

• Small companies allocated the largest percentage (16%) of their DM budgets to database maintenance, compared with 9% for midsize firms and 8% for those with revenue above $100 million annually.

• Accounting/accounts payable departments keep their data in separate databases at 45% of the companies surveyed. That percentage drops to 36% for sales forces.

• E-mail data is maintained in separate databases by 29% of the responding firms, and online/Web data at 25%.

This survey was conducted for Direct by Primedia Business Market Research, an in-house research firm. It was e-mailed to 4,495 Direct subscribers with responsibilities in sales, marketing or telemarketing management, fulfillment and data processing. They were chosen on an nth-name basis (a representative sample of all subscribers).

Three copies of the survey, offering recipients a chance to win one of four $50 Amazon.com gift certificates, were sent out between April 20 and May 10.

Results are based on surveys returned by 288 qualified participants.

Respondents were sales, marketing or telemarketing managers (45%); circulation, list or media professionals (13%); advertising or promotion managers (5%) and corporate or general managers (3%). The remaining 34% were fulfillment and data processing managers, production and creative supervisors, or worked in editorial, copywriting, and information technology.

The mean annual revenue specified was $211.4 million. Participants reported current-year revenue as follows: under $1 million (5%); $1 million to $2.5 million (8%); $2.5 million to $5 million (10%); $5 million to $10 million (15%); $10 million to $25 million (16%); $25 million to $100 million (15%); $100 million to $500 million (12%); $500 million to $1 billion (5%); and more than $1 billion (14%).