This article was written as a rebuttal to the April 13 List Talk piece, Direct Marketing Industry is in Major Jeopardy, by Robert Dunhill.
The direct marketing industry is not immune from market forces. Times are tough.
In the list business, we have our share of "insiders" who have prognosticated the demise of our industry for over 10 straight years. Our industry survived "The Great Depression." As conditions get worse on the ground, which is characteristic of a recession, their focus is on a hasty exit strategy. Some vertical markets are down while others are ascending, such as healthcare, Hispanic markets, packaged goods and "infrastructure."
The volume of direct mail from digital presses is expected to grow this year, and in the future. Now that's a trend to look forward to—whether you are the post office, a printer or a list broker. While it is true that overall mail volume is down, some direct marketers have found that response rates have improved this year compared to the first quarter of 2008. This is due to the fact that when you have less mailbox clutter, recipients will pay greater attention to their mail. Thus, response rates will be higher for certain well crafted and highly personalized offers.
Not all list suppliers are singing the blues. For example, if the last quarter is indicative of what we can expect through the end of this year, we'll actually be more profitable in 2009. According to American Business Media, firms which maintain or increase their advertising budgets during a recessionary period could boast an average sales growth of 275% over the preceding five years.
We receive calls monthly from companies who want to invest in our brand. This activity has remained unchanged the past couple of years, as our company has become more ubiquitous. Stale old brands are yesterday's news. Their failed "shopkeeper" business models will go the way of the dinosaurs. Other savvy list and multichannel marketing companies that offer consulting to clients remain viable, even in tough times. Those who survive this recession will increase their market share. That's a no brainer.
Direct marketers favor various forms of media for prospecting and customer relationship management. For prospecting, e-mail is not a substitute for a well conceived direct mail program. E-mail open rates are declining. If truth be told, direct mail may actually cost less than e-mail, and generate a superior return on investment (ROI). E-mail is great for maintaining relationships with customers. If you rely on e-mail for prospecting, you will probably be out of business, whether in a good or bad economy.
The concept of retail vs. wholesale pricing for generic compiled lists is practically obsolete. The playing field has leveled and become more predatory. Since the dotcom meltdown in 2000, prices for generic compiled lists of all stripes have declined or remained unchanged. Back then, sellers of e-mail lists used their so-called "double opt-in" data to offset losses from branding failed companies. Today, there is an unprecedented amount of generic e-mail lists on the market. Most of them are poorly sourced and do not work. Co-branded e-mail from well established brands is a different story.
We may see less direct mail in coming years. Those who continue to rely on it for sales will not be disappointed. As list prices stabilize, lower rental fees will offset postage rate increases, which will actually improve ROI for experienced mailers who know a good thing when they see it, and may actually do more postal mail in the long run. Long live direct mail and integrated direct marketing!
David Kanter (david@acculistusa.com) is president and CEO of AccuList USA, Ventura, CA.
