Direct Mail Outlook -- Meeting the ChallengeDecember 2008 By Erik Cagle
At the danger of mixing metaphors, we have to wonder whether the storm clouds of 2008 will drift into 2009, and, if so, for how long? Even the most conservative of economists would suggest that we have been in a recession since 2007 and (hopefully) reached rock bottom in October of 2008, en route to recovery. Should President-elect Obama infuse more than a little optimism in government and spark consumer confidence—and lending institutions provide more than enough money to go around...
Let’s not get ahead of ourselves. In an environment where the president isn’t viewed so unfavorably, when the economy is not foundering and the banking system doesn’t live week to week, the condition of the direct mail industry is still challenging. For example:
• Alternative (usually electronic) marketing sources are growing with each passing year, drawing away mind and channel share.
• Mail volume is decreasing on the whole for the U.S. Postal Service. Postage rates increase as a result, and volume decreases again.
• Greening initiatives, including the Do Not Mail (DNM) movement, can be viewed as a threat, no matter how seemingly minor it is currently. Never mind that paper is already recycled, or that it is grown in managed timberlands. If people are led to believe that the Land’s End catalog comes at the expense of Bambi’s mother, the masses will protest.
• Guilt by association is particularly painful in this regard. The mailing of credit card offers, for example, is a gateway to identity theft, as thieves can steal your mail and open fraudulent accounts in your name. Who needs actual statistics when anecdotal information sounds so plausible...and threatening.
Even the most optimistic of observers would concede the direct mail marketing space is under intense pressures. Vertis Communications falls under that category. The Baltimore-based company, which merged with American Color Graphics, filed a prepackaged Chapter 11 plan this summer. The merger has been completed, and the newly formed company has emerged from bankruptcy with a stronger balance sheet.