Direct Mail Outlook — Better Days Ahead

December 2007 By Erik Cagle
Senior Editor

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BY ALL rights, the 2007 direct mail year in review should have been one lined with unbridled glee in the wake of postal reform legislation that squeaked through Congress at the 11th hour of last December’s lame duck session. At long last, future rates would be tied into the Consumer Price Index, providing mailers with a degree of cost certainty.

Then came the May rate increase and a reminder that every silver lining is attached to a dark cloud.

The crippling increase for flat-shaped mail pieces was particularly harmful for catalogers and their printers but, on the whole, the direct mail community enjoyed success in adjusting campaigns to meet the now-cheaper letter rate standards. It’s come at a price, as mailers have once again needed to become more finicky in their frequency and size, while ratcheting up the customization and personalization levels to a higher degree.

One thing’s certain: When all of the calculations are complete, direct mail remains the most viable and highest-returning option for marketers to spread their message.

The Internet has played a large role in the growth of direct mail response rates, according to Cliff Hollingsworth, vice president of digital solutions for Consolidated Graphics’ CGXSolutions in Houston. While the “Do Not Call” list placed great restrictions on telemarketing, the Internet has become the preferred method of shopping. Not surprisingly, marketers are directing end users to their Websites with mailed incentives.

Invest $1, Get $11 ROI

Hollingsworth, citing the DMA’s “2007 Power of Direct Marketing” report, notes that for every dollar invested in direct mail, the average yield is $11.69, an extremely high rate of return. Even so, he adds that increases in raw material costs and postage have forced clients to be more discerning in their target audience and cognizant of the more automated sizes for preferable postal rates.

“More and more direct mail is tied to some sort of offer or call to action that requires the response to be more personalized,” Hollingsworth says. “The need to eliminate the obsolescence of printed materials, improve the efficiencies of inventory and warehouse management related to all types of printed collateral—while at the same time reducing the overall costs of these processes—are huge factors in how direct mail and digital printing are applied today.”

From the standpoint of Chicago-based RR Donnelley, customer acquisition is fueling direct mail growth. George Zengo, president of Global Print Solutions, notes that the postal increases of 2007 impacted the timing of mail drops as the U.S. Postal Service (USPS) endured a soft quarter between May and July. The increases caused many customers to test new campaigns in search of optimal rates.