Direct mail: has the golden goose run out of eggs? - news commentary by Andy McCourt

The quarter April - June 2005 revealed a 6.3 per cent drop in volume and a 5.9 per cent drop in expenditure, year-on-year. Banks and other financial institutions, according to DMIS, have drastically reduced the amount of printed direct mail and are moving towards internet models.

Barry Hibbert, CEO of print and fulfillment giant Polestar, confirmed that one of the reasons for a decline in direct mail volumes was down to increased internet marketing.
“What we will see is a shift to personalization, as the data (from internet marketing) gets more specific. Less mass produced direct mail and more personalised and targeted direct mail,” he said.

In the US, masses of direct mail issues forth from non-profit organizations in the form of charity fund raising and competitions. Here too, DM is experiencing a decline. Non-profits get a special rate from the US Postal Service (USPS) so it is easy to identify trends. 2004 saw a 5 per cent decline in volumes, down to 1.85 billion pieces. However, the blame is shared between the internet and USPS pricing and delivery capabilities.

Neal Denton, executive director of the Washington-based Alliance of Nonprofit Mailers commented; “Next year, we will be hit with a sledge hammer as the postal service increases its rates in the first quarter of 2006. It will have a dramatic impact on direct mail and the fundraising community.”

Mary Dale Walters, VP Global Marketing for Lexis Nexis recently noted: “We now own entire businesses that manage their entire relationship, from marketing to acquisition to customer support and service, electronically with their customers. We are seeing in many of our countries a shift from print direct mail to online campaign development, much tighter integration of print with electronic.”

Joseph A. Burgio, Business Development Director for US printer Mod-Pac said: “In our industry, commercial print, the movement has definitely been not only to e-marketing but e-sales. Everybody across the whole sector of providers-from the small mom-and-pop to the large print facility like ourselves, to print distributors or brokers-they're all in the game now, or a good portion of hundreds of them are in the game of doing marketing and sales over the Internet. Where it's going over the next couple of years is really finding ways to differentiate yourself. Being a printer, we're hoping that direct mail never goes away, and I think some of the things that have happened with regulation of Internet marketing are testament that that will never go away.”

Lois Geller of the GartnerG2 analysis company reckons; “E-mail can be a very cost-effective, high-response-rate vehicle. You can use it to acquire and retain consumers, sell and promote products, drive loyalty, offer exceptional customer service and reinforce branding efforts. And e-mail campaigns cost (USD) $30 to $90 per thousand. Compare that to direct mail costs of $500 to $700 per thousand or even more. Responses to a direct mail campaign start trickling in after a week and you won't get them all for about six weeks. E-mail responses start almost instantly and you get them all in a few days.”

MY CALL:

It could be a blip or it could be a trend, but my gut feel is that it is a trend. To some extent, the print-based DM industry is eating itself by narrowing DM pitches and adding personalization, versioning etc. This means fewer 'shotgun' mailings and a smaller quantity of targeted mailings. In any event, it means less print. DM has been a constant growth industry for 20 years and still represents a good revenue source for many printers, but the writing's on the wall - it will decline, aided and abetted by escalating postal costs.

What will not decline, however, is the raw material of DM - data about the customers. Holding and managing this data is a new opportunity for printers to spread their risk away from ink-on-paper.

Personalised, targeted printed DM is still a good bet and of course this means digital print. But don't count on a magical upsurge in the demand for mass-offset printed DM; overseas trends will hit Australia and New Zealand without fail.