Direct Mail Outlook : Mail's Mixed Messages

Like a 1974 Ford Pinto with bald tires stuck in the swamp, the U.S. Postal Service (USPS) continues to spin its wheels, throwing mud everywhere while making zero progress of escaping from the quagmire. And of course, Mr. ZIP's financial situation is so precarious that it seems to remain one well-placed hit away from completely blowing up.

But as Pat Donahoe, exiting Postmaster General, fades into the sunset, the hope is that his replacement, Megan Brennan, can do a more effective job of rattling sabers and generally freaking out Congress with scheduled mail procesing facility closures. Not that this tactic worked so well for poor Pat.

The good news? There are no price increases on tap for January. The bad news? Not much else has changed. The opportunity? Align yourself even more effectively with direct marketing clientele, using a multitude of integrated channels, to keep direct mail fresh, vibrant and relevant. And we have three of the nation's top print producers of direct mail to elaborate on the subject.

One of the greatest challenges that has faced Chanhassen, MN-based IWCO Direct in 2014 has also provided a bounty of opportunities. That challenge is helping clients transition from traditional offset to a continuous-feed digital platform, while providing insight to the customer as to choosing the optimal platform for each campaign, notes Jim Andersen, company CEO. IWCO Direct certainly relishes being an educational tool for clients.

IWCO Direct also takes great care to provide customers with as many options as possible. The company's investment in high-speed inkjet printing, which began in 2011 when it became the first U.S. installation of the Canon Océ ColorStream 3500, was augmented in 2014 with the acquisition of two Océ ColorStream 3900s—one at its Chanhassen headquarters, the other at its Hamburg, PA, plant.

Remains a Capital-Intensive Industry

In addition to the presses, IWCO Direct recently installed an Inveloper wrap-based finishing system in Chanhassen. The Inveloper integrates with IWCO Direct's digital printing technology to produce more creative and personalized outer envelopes and to offer selective inserting. The new gear highlights a capex movement that has seen the company invest $15 million in each of the past two years.

"Our disciplined investment approach is focused on enhancing margins, which then provide more capital to invest as a percentage of sales as our sales increase," Andersen notes. "We work closely with the OEMs to develop solutions for the direct mail market, expanding the use of this platform far beyond its original intended use as a solution for transactional and transpromo printing."

In light of the USPS issues, IWCO Direct has worked closely with its clients to ensure maximum postal savings. One of the key elements in its toolbelt is its Proprietary Intelligence model, which helps customers do just that through improved data, strategy and analysis, along with effective creative and ongoing production efficiencies. Also, the single-stream optimization driven by IWCO's digital platform offers its customers lower postage costs through the ability to qualify for Saturation and High-Density Carrier Route postage rates.

"Our participation in USPS Intelligent Mail programs such as Seamless Acceptance helps the USPS optimize its mail verification and acceptance cost structure, and provides the data our customers need to manage their increasingly complex marketing programs," Andersen explains.

"We continue to work through industry associations and directly with our congressional representatives to advocate for comprehensive postal reform that will provide financial stability for the agency that is the hub of the $1 trillion mailing industry."

As the calendar turns to 2015, marketers will continue to challenge their agencies and production partners to develop campaigns that are relevant, responsible and real-time, according to Andersen. IWCO Direct's Proprietary Intelligence model for marketing services addresses the full life cycle for marketing campaigns, with what it feels are proven solutions for data, strategy, creative, execution and analysis.

The printer added ISO/IEC Information Security Management System (ISMS) certification from BSI Group America, which speaks to variable data printing security. Andersen notes that IWCO Direct is also working closely with its equipment and technology partners to develop solutions that make direct mail more targeted, more powerful and more efficient to produce.

"We anticipate an exciting announcement in 2015 regarding new technology that will advance both the front end and the printed product," he says.

Print Is Only Part of the Marketing Mix

The atmosphere continues to be challenging for direct mailers as marketers add other communication channels to their media mix, notes Steve Jaeger, executive vice president of direct marketing and chief information officer for Sussex, WI-based Quad/Graphics. Enhanced data analytics and targeting also contribute to the decline of volume. In addition, Jaeger notes that his company has seen an increase in the number of print and personalization versions as marketers strive to deliver more relevant content to their audiences.

Quad/Graphics made significant investments in its postal processing platform during 2014 with the addition of Siemens commingling sorters. Boasting a dozen sorters between its East Coast and Midwest direct mail processing centers—augmented by its massive logistics network—Quad/Graphics is able to compress its production schedules while delivering a lower cost per piece mailed, and meeting precise in-home delivery windows in the process.

Given that postal-related costs comprise as much as 70 percent of a direct marketer's campaign budget, Jaeger and marketers across the country were heartened by the news that the USPS would not be increasing rates in January. Unfortunately, as Congress continues to spin its wheels in the area of reform legislation, the threat of regular and exigent increases exists, leaving many marketers to ponder the possibility of reducing their direct mail reach.

"We're doing everything we can to optimize our customers' postal spend," Jaeger states. "Quad Postal Optimization starts with an in-depth analysis of campaign mail files to determine the most advantageous sortation scheme, resulting in the lowest cost per piece mailed. Mail is prepared according to the scheme—commingled and palletized for delivery to the 8,800-plus SCF destinations weekly. We've saved nearly $6 million in postage for our clients this year."

Moving forward, Jaeger believes digital content will continue to play a growing, more significant role in how marketers communicate with their target audience. Quad/Graphics is extremely confident in the sector's ability to play the leading role in direct marketing campaigns, even as it opens doors to mobile, Web and e-mail channels.

"With our wide and varied print and digital communication platforms, Quad/Graphics is uniquely positioned to deliver personalized and highly relevant content to the consumer that increases engagement and drives to action," Jaeger says.

Creating a 'Connected Experience'

The challenge confronting all businesses is bringing harmony via synchronized integrated marketing communications, be they print, digital, e-mail, text, video, Web or social media. All must work together in harmony and, for Chicago-based RR Donnelley, it is the printer's responsibility to help create that connected experience, notes Dan Thornton, president of Response Marketing Services.

RR Donnelley invests heavily in capabilities aimed at helping direct marketers generate the connected experiences. The printer achieves this end through: telling stories in words and images, backed by a robust digital asset management repository; segmenting and targeting audiences through advanced data analytics and list services; personalizing communications with highly relevant messaging that drives response; and leveraging digital channels such as e-mail, video, QR codes, NFC, search and mobile for multichannel campaigns.

"We are going beyond applying technology to assets normally used for printing, and transforming them for use in mobile applications on smart phones and tablets, translating them into multiple languages, augmenting print with e-mail communications, connecting the recipient to the Web through a PURL site and through QR codes, and printing the 'electronics' to engage via NFC," Thornton notes. "We tie these together via automated campaign management delivery systems to deliver a relevant message, via the appropriate channel at the optimum time."

As the USPS continues to work to find a path to profitability—a path it must now take under the new leadership—RR Donnelley continuously works to offer postal optimization programs that provide customers with the appropriate mix of drop-ship, co-palletization and commingled incentive discounts for each mailing. Using sophisticated analytics is one route RR Donnelley takes to ensure mailing "smarter."

For example, the company designs and implements customer and prospect segmentation systems using advanced analytic techniques that can direct mailings to those recipients showing a higher propensity to a particular type of offer. "The goal of this tactic is to refine the audience and improve campaign performance by capturing higher response rates," Thornton says. "This, in turn, helps to offset any postal increases that our customers confront."

Building engagement more effectively will be among the key tasks for marketers going forward. According to Thornton, they need to discern what are their best purchasing indicators and influencers, and decide how they use these to enhance buyer performance. Which customers are at risk for non-compliance and how do they minimize their risk of over investment? And, with limited resources, how do marketers simplify and automate their multichannel campaigns while impressing their customers?

He feels an organization's success in the marketplace depends on defining a strong communication strategy executed through effective campaign tactics across many customer touch points. RR Donnelley is cementing its relationship with marketers through savvy investments in areas such as advanced analytics and data management services.

"We couple this unbeatable data and analytic combination with effective strategy, knowledge and one of the largest communication distribution platforms in North America that has almost limitless personalization," Thornton remarks.

"I talk to clients every day and hear firsthand how our advanced analytics and smart, omnichannel delivery have helped them to engage buyers more effectively; understand key purchasing indicators and influencers; provide an integrated, comprehensive and flexible way to engage their audiences; create interest; and build relationships that deliver a higher return on investment." PI