Direct mail spending, including preparation, production and postage) reached $58.4 billion in 2007, and may pass $72 billion by 2011, according to a new study from the Winterberry Group.
Several factors during 2007 played a part in direct mail’s growth — for the most part stunting it. According to the Winterberry study:
* The May 2007 postage rate increase drove marketers to increase their scrutiny of both direct mail budgets and production methods in an attempt to enhance efficiency and maintain pre-increase volume levels
* In addition to supporting sales campaigns, direct mail reached a tipping point, shifting away from a “direct order” focus and toward one predominately aimed at generating prospective leads and driving traffic to other transaction channels
* Rising raw materials, production, transportation and postage costs placed a greater emphasis on the sophistication, quality and management of customer and prospect data, which Winterberry referred to as “the new lynchpin of successful campaign execution
* Internal marketer execution challenges — including understaffed and siloed marketing departments, limited channel expertise and declining CMO tenure — have negatively impacted campaign performance and long-term channel commitment.
Looking ahead, Winterberry anticipates the following influences on direct mail activity:
* Heightened political and societal pressure to “go green” will require both marketers and service providers to adopt — and publicize — significant environmentally-friendly process enhancements; competitive advantage will accrue to those companies that are able to substantiate their efforts with demonstrated positive impact
* Potential legislative threats — including “do-not-mail,” privacy protection and data-use restriction proposals — will increasingly impact strategic campaign execution and influence broader direct marketing spending decisions. (The study notes that nearly a dozen states have introduced or are considering do-not-mail legislation)
* Logistics and raw material costs will continue to impact budget allocation and drive marketers to focus on process efficiency.
* Marketers remain cautious in developing their direct mail spending plans for 2008 given a lukewarm U.S. economic outlook and volatility in certain segments of the financial services vertical
* Heightened demand for multichannel-enabled strategic development and campaign execution services is fostering competitive advantage for those service providers who understand and can efficiently manage marketing programs across multiple media
* Catalogers will continue to experiment with creative formats and postal optimization services in order to mitigate the enhanced price pressures brought about by recent and pending postal increases
* Marketing automation platforms are drawing increased attention from mid-market players — including both mailers and service providers
* Marketer consolidation (and concurrent expansion of product and service offerings) will increase the number of actionable consumer touchpoints and drive further demand for commerce-driven multichannel integration.
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