Death of Direct Mail: An Alternate Perspective

It’s ruffled quite a few feathers—the coverage of the Borrell Associates report “Direct Mail Doomed, Long Live Email.” According to the report, direct mail has begun a precipitous decline from which it will never fully recover. Borrell is projecting a 39% decline for direct mail over the next five years, from $49.7 billion in annual ad spending in 2008 to $29.8 billion by the end of 2013.

I understand the point here, and certainly, such trends are ominous. But I learned something by cutting my teeth in industry analysis and research by working with TrendWatch GA / The Industry Measure from its inception. That is that all of these reports are snapshots in time, and they must be looked at that way.

What was unique about TrendWatch GA is that it asked the same questions in every marketplace every year or twice per year. This gave us trend lines to watch, and my perspective on the industry was formed by watching these trend lines evolve in the creative, printing, publishing, and Internet marketplaces over more than a decade. Such perspective gives you quite a different take on things than when you focus on “once in time” snapshots.

When it comes to these direct mail numbers, I think what people should focus on is that, while TRADITIONAL direct mail and direct mail strategies may be in permanent decline, this doesn’t mean that direct mail itself will continue to decline permanently. Maybe it will. But it is also entirely possible that we are simply watching an ebb and flow as the direct mail industry adjusts to new market conditions. Like everything else, direct mail will need to find its new place in today’s media mix. While it’s pretty safe to say that traditional direct mail is facing considerable challenges, we still have to wait and see what direct mail at large looks like down the road.

As industry watchers hawk and fret about the future of direct mail, the point must be made that, like a bundle of sticks, campaigns utilizing multiple media are far stronger than campaigns utilizing single media. Direct mail cannot disappear entirely—not just because it works, but because without it other media would not be as strong.

In the “Marketer’s Primer Series” of educational and training reports on digital printing, 1:1 (personalized) printing, Web-to-print, and personalized URLs, every one of the best practices sections lasers in on the need to incorporate multi-channel strategies in order to be utilizing these technologies/techniques in a best practices way. But it’s not just multi-channel. Part of the best practices of all media, including print, is the incorporation of personalization and relevance-based strategies. Even billboards are going “personalized” in the sense that many are now sending visitors to different landing pages based on geography or demographics of the people who travel within eyeball-shot.

If printers and marketers are going to have a good, healthy perspective on the future of direct mail, they need to have a good, healthy perspective on the best practices for all of the various marketing strategies today, because the future of direct mail is tied to them on a long-term — not just a snapshot — basis. They must be smart about these trends and look beyond the “snapshot in time” perspective to understand the long-range implications, and those might look quite different in a year, two years, and five years than they do today. The question is, how do you prepare yourself to get there?

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18 thoughts on “Death of Direct Mail: An Alternate Perspective

  1. Gordon Borrell

    Excellent points, Heidi. I think traditional media’s approach to “sell” is being replaced — slowly but surely — by consultative sales that allows them to understand the appropriate media mix for their customer. It’s absolutely clear that a mix, rather than placing bets on a single medium, multiplies the effect of any one buy. And direct mail may be part of that mix. As a $49 billion industry, the beneficiaries are not likely to allow it to die. Rather, they will find a way to preserve as much of that revenue as possible by recreating themselves and making their offerings — which may include e-mail or some other form of digital media — more powerful. We’re living through an amazing time of media transformation, and a terrific time for printers and marketers to take advantage, get smart, and learn how to thrive on these trends.

  2. Frank Verrill

    “The reports of my death are greatly exaggerated”, Mark Twain. The arrogance of the email community has been around for years and is certainly not the only answer. Mail, e-mail, SEO, SEM, etc. all fiingers on the hand of marketing.

  3. Lithoman

    Your direct mail insights are spot on. Direct mail has a very strong future but not as it exists today. Credit card packages, Valasis inserts, etc. are not very effective. They are similar to the “new Email”. They jam up your mail box and are sent to the recycling bin and are never read. Specifically targeted innovative printed pieces will be read. Direct mail is a very good way of reaching people to direct them to one’s web site.

    In the mean time the print industry must refer to email advertising as, spam, spam light, mail box cloggers, junk email etc. Some Unsolicited emails come with viruses. The vast majority are deleted without every being read. Everyone gets all excited about the low cost of junk emails but how effective are they? How do you reach people who don’t give out their email address? I stopped giving out my email address years ago because I know I will be bombarded with spam. One airline must send 30 a month. They are instantly deleted. If they want to reach me they will have to send me something by mail and not the usual stuffed envelope that’s too fat to go through the paper shredder.

    Again, our print trade associations have to stop being complacent and start being proactive. They need to challenge the statistics on Internet advertising. One can make any ROI look good. The industry needs to wake up and challenge the new media and offer new and innovative print solutions. If our trade associations don’t start fighting for this industry they will not have to plan anymore golf outings.

  4. Harvey Halperin

    not even close to the end, with the advent of trans promo, and new technology, DM will most like expand, as soon as tech catches up.

  5. MichaelJ

    Nice post. I think the same problem exists with alot of the “End of Print” stuff we’ve been subject to for the last five or so years. Just a normal ebb and flow of new uses for Print. it may well be the end of some kinds of business organizations, but not the end of Print itself.

  6. Todd Butler

    This is the first time I have seen the direct mail industry protest misinformation from the on-line community as a whole and email vendors specifically. On-line advertising’s claim to fame is that it is cheap, easy, and in emails case, has a fantastic ROI.

    I’m not sure what these people are smoking but to measure Return-On-Investment you have to sell something and traditionally only direct mail has used “a sale or other significant activity” as the definition of a response. The fact is that a response on-line is a click. A click is defined as “opening an ad for more information”!

    ROI for an email campaign is really a cost per click measurement with a belief that these clicks lead to future sales and are therefore equivalent to direct mail responses. The fact is clicks are clicks and sales are sales. Our industry’s failing over the years has been that we never redefined responses in direct mail to align a customer’s activity with the definitions used in the on-line world.

    If a click on-line is opening an ad for more information then a click in direct mail would be the same thing. As measured by the USPS in their yearly “Household Diary Study”, direct mail has an 84% click rate. The study for years has shown that 84% of recipients read, partially read, or scan their mail. Isn’t reading a physical mail piece more valuable to an advertiser than an inadvertent click on-line or in an email?

    I am currently working on a B to B email blast for a customer and have been quoted these costs and response rates form my supplier. The supplier provides the opt-in email list and sends the creative I design. So these costs are inclusive. For 10,000 addresses the retail cost is $350/m with an average response rate from 0.5% to 4%, depending on how well the sender or their brand is known to the recipients.

    Assuming a 4% click rate my customer should receive 400 clicks. The campaign will cost $3,500. The cost per click will be $8.75 each. Each click will connect a POTENTIAL customer to an interactive multimedia experience that directs them to web locations designated by the advertiser.

    Obviously direct mail can’t compete! Unless we ad digital media (CDs) to our direct mail package. This inclusion provides the same interactive multimedia experience on-line advertisers provide. This multimedia direct mail package can be put in the mail stream for less than $1.00 each, postage included. If we divide the in mail cost of $1.00 by direct mail’s click rate of 84% our click cost for this package is $1.19.

    If a customer wants 400 clicks from a marketing campaign they need to mail 475 multimedia mail packages. At $1.00 each, the campaign will cost $475, not $3,500. On a per piece basis, you would have to spend $7.35 per piece on a multimedia mail campaign to equal email’s $8.75 click cost.

    So again, why as an industry do we put up with the misinformation and drivel coming from on-line advertisers? And why doesn’t the Postal Service promote its ability to deliver digital advertising.

  7. Larry Bauer

    Good perspective, and one that we all need to keep in mind. While there may be some long-term declines in direct mail, the jury is still very much out on how much and in which segments. For example, the big declines in credit card mailings had a major impact on direct mail volume, but I think it’s difficult to say how that will play out over the long term. I also think email advocates overlook the effect taht ultra-high rates of email will have on consumer behavior (as in “delete, delete, delete”), and the fact that anti-spam legislation could become even more restrictive. Take a look at the proposed legislation in Canada, for example, where you would have to have permission to send a commercial email if you don’t have a pre-existing relationship.

  8. david_bdml

    Good Post. Correlation to the Down Economy from the report?

    Buyers have different buying behaviors. Utilize all or the best marketing methods to match those buying habits and trends.

    “Death of Direct Mail” is great news to me. Less clutter (competition) in the mail box, the message stands out more.

    Direct mail rocks with all other marketing methods.

  9. Joe Rickard

    Great and thoughtful discussion. Don’t forget (according to the Radicati Group) to add into the dialogue that the average corporate incoming email account (not including attachments) is projected to increase by 35% by 2011. There are legions of IT and software developers right now working hard to avoid and/or limit the potential crushing impact on business and personal productivity.

    Regardless of the media and the mix, it will continue to be very challenging to get consumer and business people’s attention. Like most people, I am not sure how persoanized, cross media and static direct mail will settle in the mix but I am certain it will have a substantial role.

  10. Ryan Lou

    Very interesting discussion.

    It really depends on how direct mail is used. If it is a single static postcard, sales letter without integration with other marketing channels. Then very soon even large corporations (and credit card companies) will realize that the poor ROI does not justify the costs.

    However, when direct mail is an integral part of an email, online and print multi-touch campaign then direct mail is definitely here to stay.

    As marketer adjust to the trend Heidi mentioned, then personalized direct mail will play the role of closer in the marketing campaign. Leads will first be warmed up by email, personalized URLs, sales calls… before receiving a direct mail piece. Perhaps that’s the way it should have been all along.

  11. Todd Thompson

    It’s very clear that the ones who “get it” have a future and ones that “don’t” do not. It’s the same song just a different verse for our industry…drum scanning & table stripping to flatbeds and macs, digital photography and CTP, now digital technologies offer the ability to be highly targeted and relevant, incorporate multiple response outlets, campaign measurement and ROI. The smart ones are still here and ready to climb the next hill the others will fade away as in years past.

  12. Gene Gable

    The wild card in all of this is if any of the many movements by environmental groups to establish a “do-not mail list” (one more effective than what the DMA provides) takes off (which I think they will). Many consumers do not consider unsolicited direct mail to be “non-invasive” as it contributes to the carbon excesses we are so guilty of as a country.

    In many countries it is against the law to send unsolicited direct mail as it is considered an invasion of privacy (especially as it takes on one-to-one qualities using past purchasing data). Soon companies that are known for massive direct mail campaigns may suffer a backlash as consumers look to greener companies.

    If anything, I personally think the Borrell figures are low. One bill through Congress prohibiting unsolicited direct mail and the industry is pretty much dead. Ask the telemarketing industry. Even with all the exceptions to the do-not-call list, that industry has suffered greatly.

    Consumers are tired of being unwilling participants in excess marketing, no matter what form it takes. Look for regulations of all industries — direct mail, email, telemarketing, etc. The only media you can truly say is “opt-in” is of the broadcast variety.

  13. Lou Berceli

    A collection of thought provoking topics from several direct marketing colleagues. Compiled by Lou Berceli.

    Can you add any additions with your e-media overloads and / or leading edge Direct Mail solutions?

    Today’s e-media overload has created a B to B & B to C marketing challenge.

    ● We will each receive 6,390 unwanted e-mails a year by 2008 on average. per Jupiter Research August 2007

    ● Most are blocking, filtering and / or deleting far more e-mails at our home, office and on mobile PDAs than we are reading!

    ● Yahoo Mail, G Mail, AOL block or filter Billions of SPAM e-mails daily. 75% to 80% of business e-mail is Spam per Postini

    ● 49% of American adults change at least one e-mail address yearly? Wonder why? The Center for Media Research

    ● 145 million or 73% of American consumers are on 2007 National Do-Not-Call Registry. Canada started in Oct. 2008

    ● By 2009, TIVO and DVRs allow consumers to easily avoid commercials in over 40% of U.S. homes per Ad Age

    ● Consumers surf hundreds of TV channels, Web and Social Networking sites each month adding to e-media overload.

    ● iPod / MP3 players, Internet Radio are eroding broadcast radio’s commercial ad power in consumers’ cars, homes, mobile.

    ● Technology advances will accelerate e-Media Overload via Mobile TV / Cell Phone targeted direct marketing. Now Free Hulu TV online 24 x 7 ?!?

    ● U.S. Cell phone text message SPAM dramatically increased to 1.5 Billion messages in 2008 per Ferris Research

    ● By 2009, over 20 million subscribers will enjoy commercial free Sirius XM Radio in cars, home & office. Media Daily News

    ● 70% of Consumers say they receive too many e-mail promotions. Averaging 110 / week. Forrester

    ● Many e-promos / e-newsletters we originally signed up for are unread, deleted or filtered into overloaded e-mail in-boxes.

    ● Video monitors deliver ads to us at the grocery store cash register, gas station pumps, in elevators, fast food restaurants.

    ● The average American is exposed to as many as 3000 advertising messages per day. InfoTrends

    Direct Mail is evolving as a multi-channel direct marketing media.
    Direct Mail NEVER interrupts your favorite TV show / movie or enjoyment of radio music. You decide when to read DM !

    USPS study concluded that 76% of American homes average 25 minutes a day reading direct mail.

    Direct Marketing Association study shows over 35% prefer to respond to direct mail by going on-line.

    Highly targeted direct mail lists help increase response rates for retail and e-commerce traffic and B to B sales.

    Database driven direct mail marketing cuts through some of the e-media overload for most multi-channel marketers.

    Several companies now offer very high speed roll-fed digital color inkjet variable printing systems. These new generation inkjet printing systems offer cost saving inline finishing. This has greatly lowered the cost per copy for high quality 1-to-1 personalized direct mail that has proven to deliver higher response rates than traditional static printed Direct Mail.

    Adding variable imaged Personal URLs or PURLs to a direct mailer is a growing trend proven to increase response rates.

    PURLs can include relevant offers for prospect or loyal customer with discounts via online coupons with POS measuring.

    Cross-media PURLs offers real time response reporting, measurable ROI and can include rich audio/video media content.

    Many have added to this list, now your turn. Thanks,

  14. Skip Henk

    This certainly is an interesting and informative thread of thoughts and ideas. I agree with many points. For me, but I am getting old, I enjoy the trip to the mailbox.

    A direct marketer told me a long time ago “If you want a 100% response rate that all it takes is the right offer, to the right person at the right time.”

    If we apply technology and demographics effectively and we reduce mail out by 50% but go from a 2% to 10,20,30% response rate (or whatever numbers you want to use) it would seem the reduction in mail would be a win, unless you print mail for a living.

    But in the same light, as a print provider, if you implement effective methodolgies that takes your customers 2% response rate up to 10,20,30% or higher, the sell would be to convince your customer to pay a lot more for the piece. For every letter they don’t mail, they save money. For every letter mailed they receive a higher rate of return.

    Go one step further and price the job on a per piece basis and a % of response. Throw in multi-media as discussed above and it becomes a real motivator for both sides … and a different business model.

  15. Kevin Trye

    Agree with most of the commentary. Only time will tell if the Borrel report is wrong. To me, it’s not an us vs them (print vs online) issue.

    We know that advertisers generally is under pressure. Companies are under pressure to do more with less. It’s not that direct mail can’t be more effective or efficient, it’s whether we’re telling our client that story. eMail has it’s own issues in terms of poor deliverability and response rates.
    Is it an educational issue? Do they know the response rates possible with expertly planned, targeted direct mail. Rresponse rates of over 4%, some loyalty marketers regularly manage 15% or more.

    I read a report recently on what’s happening in online advertising that Borrel are likely not factoring in since it wasn’t in their brief as a factor.

    Internet advertising itself is under pressure both from people ignoring ads on web pages as well as free plugins for browsers that can do turn off any advertising on a website, including all and any GoogleAds. I use one myself. It’s amazing and people love it with over 500,000 of these tools are downloaded each week. They say that within a couple years the majority of users worldwide will have these ‘anti-ad’ tools installed – Will GoogleAds and email marketing then be as attractive and give a viable return on investment?

    The bigger lesson here is that if digital ad communications appearing in both email and websites can be easily trashed or filtered out by smart software in this way, it starts to eliminate the talked-of benefits of advertising online, especially for lead generation where ‘traditional’ still works best.

    So, what’s left? TV, Radio, Magazines and Print I guess…

  16. Mike Taberner

    Good post, effectively though signaling that one needs to move into a dialogue with the client and not a single direct shot. Equally the focus must be to employ a multi-channel approach as opposed to just one channel.

    The goal of any direct marketer must be to enter a dialogue with the customer, thereby getting the client to request information as opposed to competing for attention.

  17. Perry Wilson

    Excellent posts and viewpoints. I think we can all agree; the industry is changing dramatically.

    The key to success is embracing new technologies and marketing channels without prejudice while engaging prospects/consumers with a higher level of personalization – and here’s an important statement; very QUICKLY with quantifiable results, reporting and delivery receipt information that can be leveraged for greater and continued customer relationship development.

  18. Noel Ward

    As all here are apparent lovers of print and possibly even direct mail, how about some honest answers? My answers to each of these quex are in parens. I will be the first to admit I’m not a typical consumer. But I bet there are lots of people who act more or less as I do. What do you do…..?

    How much of your direct mail do you toss unopened? (I easily exceeds 70% if it’s in an envelope. I glance at postcards, but 95%+ wind up trashed. They go to mixed paper recycling at the dump every Saturday.)

    Do you TiVo? (I don’t, but I’m not a big TV watcher. But I mute all the ads when I watch TV.)

    Do you change stations in your car when ads come on? (Yes.)

    How many of the ads in magazines do you actually read? (maybe 15%–guess)
    How many of them do you follow up on? (damn few)

    Do you clip coupons? (about 5 a year)

    DM is going to have to change, and I don’t think email or online is the answer either. My email filters are set on “kill” and I get very little junk in.

    Trans-whatever may help replace some of direct mail but printed marketing is in deep doo-doo unless it can be made a lot more interesting, relevant, not have a laser-like focus on the recycle bin.

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