The entire direct mail industry is <I>stinko</I>.
Yep….that's the right word. Here's why -- and notice that I'm not pulling any punches.
To start, the money that's spent on direct mail in 2009 will fall about 10% under 2008 levels. That's a real wow, isn't it? And, it's not restricted to the financial giants. But they sure are the biggest losers. The mortgage lenders and finance companies were off almost 40%. The credit card companies dropped their volume by 22%. The tech guys, automotive, hospitality and travel, plus the investment companies combined for an additional 56% volume decrease.
Just talk to the printers, the data processing companies and lettershops. Then talk to the list companies, the direct mail agencies and the marketing companies. They're all crying the blues. The envelope firms have raised their prices. Paper prices have increased but there is less volume…The U.S. Postal Service increased its rates by almost 3% less than a year ago to offset the reduced volume of mail. We'll probably see another postal increase before long. Maybe the Federal Reserve Bank will kick in some billions rather than forego the Saturday delivery. The USPS is the nation's second largest employer. Maybe the postal service should deliver only three or four days a week. Look at the fuel savings and payroll reductions.
The suppliers are trying to stay afloat. It's difficult for most and impossible for others. Prices are dropping for all service industries. List prices are no exception. The answer is more layoffs and that includes the USPS. They are offering early retirement to 150,000 employees and significant facility closings.
Merger and acquisition activity is virtually at a standstill. No one wants to sell cheap even though the acquirers in the last decade have always looked for bargains. The sellers don't want to sell now if the recession will be over in a year or two.
The business brokers can't find buyers for the vendors who are on the auction block. There's no money around to buy businesses that are suffering. Some vendors have closed their doors after many years in business. Most all the vendors are cutting their payroll. It's singularly the most aggressive way to reduce the cost of doing business…certainly the fastest.
The marketers are being more selective. The growth of e-mail is phenomenal. But its success is tied to the really sensible offers directed to an accurate list of opt-in prospects who match the direct response models. Great analytics and pinpointed demographics and psychographics of their prospects and customers will reduce the waste of printing and postage.
You can find mailing lists on sale at prices up to 50% less than retail. List owners that claimed their net profit for the year was represented solely from their list rental income are also suffering. E-mail list prices of opt-in business to consumer categories dropped 10% last year and more this year.
When the recession ends and direct mail or e-mail volumes increase the users of the mail will have developed more precise, targeted and less costly ways of doing business. Perhaps the large volume mass mailers are a thing of the past.
Robert Dunhill is president of Dunhill International List Co., Boca Raton, FL.
