IWCO Direct, American Litho and Darwill Share Direct Mail Outlook for 2017

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A changing digital landscape and a market flooded with stimuli — both print and digital — have marketers and printers reevaluating their direct mail strategies. Recipients are faced with a barrage of product information, promotions and advertisements from every available platform, making it challenging to stand out from all of the noise. Price changes, evolving demands from customers and an explosive digital atmosphere also present new challenges, which make the direct mail marketing space one of the most exciting printing industry segments.

“Today’s marketers face the challenge of pinpointing consumers on the right channels, in real-time, while the channels are evolving,” explains Michael Fontana, president of Carol Stream, Ill.-based American Litho.

The direct marketing landscape is a dynamic segment in the printing industry that has necessitated printers, marketers and brand managers to respond to digital innovations quickly and efficiently. “Brands and marketing teams have to be faster and more flexible than ever before,” Fontana adds.

Maximizing a Customer’s Reach
The challenge now though is that printers have to wear many different hats to be able to meet customers’ needs. Mark DeBoer, director of customer experience at Hillside, Ill.-based Darwill, explains that one of the biggest challenges is making sure clients know that the direct marketing and communications company is more than just a printer; it’s deserving of a seat at the marketing table.

“Printers have the equipment to do the job, but in terms of investments, we’re putting time and money into understanding how to prove direct mail’s ROI by looking at the response rates of the efforts,” he says. “That’s really expanding beyond what a traditional printer looks like.”

Maximizing a customer’s opportunity to reach its clientele with a relevant message is also challenging, DeBoer explains, but the message can be based on data, such as past purchases.

“For us, that means we’re having a lot of in-depth conversations about data, tracking ROI and how to bring in other omnichannel facets, such as Facebook redirects,” he says. “Whatever makes sense for our customer to reach their customers.”

Fontana explains that the effectiveness of printed marketing communications still surpasses their digital counterparts, and that there is data to prove the lasting effects of direct mail on consumer engagement and ROI. The challenge, though, is determining how to make the most of print within an omnichannel marketing campaign.

Not only does digital innovation have an impact on direct mail, changes from outside groups influence the atmosphere in the industry.

“The announcement last month from the Direct Marketing Association that DMA now stands for Data & Marketing Association has many talking about whether direct marketing — or direct mail — is now considered old school,” says Jim Andersen, CEO of Chanhassen, Minn.-based IWCO Direct.

Similar to Fontana’s sentiments about the inherent strengths of direct mail, Andersen says that when it comes to acquisition marketing for IWCO Direct customers, direct mail has proven to still be the most effective channel, especially when used as part of an integrated marketing campaign.

However, it’s not just how direct mail is perceived that will impact the industry; just as important is its reliance that the U.S. Postal Service (USPS) can be reformed in the coming year.

“In order for direct mail to remain a key component of an integrated marketing strategy, the financial stability of the USPS must be assured and postal reform legislation must finally be enacted,” Andersen contends.

Going one step further, he says that environmental and sustainability concerns will also be a major influence over decisions made in the direct mail space. Customers are on the lookout for recyclable and biodegradable substrates, and Andersen reveals that IWCO Direct is working with business partners to bring these solutions to market.

Another concern facing direct mail printers is commodity pricing strategies by some players which, in turn, hurts all printers competing in that space.

“As consolidation continues, some providers are offering irresponsible and unsustainable pricing to gain market share,” he says. “This ends up hurting everyone.”

To overcome what Andersen considers inappropriate pricing from some competitors, IWCO Direct is expanding its marketing services offerings and providing value that goes far beyond cost per piece.

According to Andersen, IWCO Direct worked with OEMs to “transform its continuous-feed inkjet platform from a tool for producing transpromo statements to a game-changing solution for data-driven marketers to acquire new customers with highly targeted offers.”

American Litho is also working to expand its offerings in what Fontana describes as a “full circle of services.” Expertise in data management, print form analysis and optimization, postal optimization and print production capabilities round out the company’s strategy for more comprehensive customer engagement and sales.

It’s no longer an option to sit back and expect customer loyalty; companies must innovate, even if the customers are not sure what they need.

Andersen says that IWCO Direct is continuing to expand its production inkjet printing platform, as well as its promotional card printing capabilities and proprietary solutions to drive
efficient and effective direct mail that provides the return on marketing investment that clients have come to expect from the company.

It is also important to get involved in the design, marketing and printing processes earlier.

“Try not to talk strictly how to produce something,” Darwill’s DeBoer advises. “Talk about results and data. Ask a different set of questions.”

He says it’s good to come in from a marketing angle and offer suggestions, rather than just take printing specs from a customer and produce a finished product. Many times, customers are not aware of a company’s capabilities in producing direct mail, DeBoer adds.

In addition to offering more than ink on paper, it’s crucial to work toward greater efficiencies. American Litho, for example, added to its digital platform to increase efficiency. One area of focus for the company was to work in a hybrid approach to increase personalization at high speeds. It has invested heavily in Kodak Prosper printheads and HP C-800 four-color printheads, allowing it to imprint variable data with 600x600 dpi quality quickly and efficiently. The company also recently added a third digital printer to further expand its continuous-form production capabilities.

It’s no wonder that variable data printing (VDP) and big data have become a mainstay in the direct mail space. Personalization and targeted messaging drive perceived value and encourage customer engagement with a brand.

“VDP and big data have increased marketers’ appetite for production inkjet capabilities that allow marketers to use the data for variable and dynamic content to drive relevance in their offers and communications,” Andersen says. “The combination of VDP and big data is driving a shift from ‘versions and personalization’ to highly targeted, 1:1 messaging.”

“As people gain a better understanding and a better handle on the data they do have and how to use it … they’re getting a more relevant response because they’re sending a more relevant message,” DeBoer says.

It’s not enough to simply present customers with raw data, though. DeBoer explains that Darwill takes the data it collects and helps them “slice and dice” the data to their benefit, which may include giving customers a graphical view to encourage exploration into Darwill’s different capabilities in the direct mail space.

The key, however, is knowing what to do with the data once it’s gathered and using it in a beneficial way. Rather than using it as a gimmick, it must add value in some way.

Fontana adds that another key to 1:1 marketing is having accurate data. “This is why we have built significant in-house data management capabilities,” he says, “so that messages can be refined and targeted at the individual customer level with accuracy and impact.”

With testing, measurement and refinements, American Litho’s clients have seen up to a 30% improvement in customer loyalty and significant gains in their bottom lines, highlighting the advantages of using VDP and big data in sophisticated ways.

Postage Still the Biggest Cost
As for the impending USPS rate hikes coming in 2017, Andersen believes that the changes should not significantly impact the direct marketing segment. The price change, he says, is modest because of the consumer price index (CPI) rate cap and, with proper monitoring, should not pose a serious threat.

“Our industry-leading digital print platform uses a single-stream workflow to deliver the lowest postage rates available,” according to Andersen. “We will also be closely monitoring the Postal Regulatory Commission rate review process to ensure the CPI rate cap that has provided stable postage rates for nearly a decade remains in place.”

Although it may or may not affect direct marketing too much initially, postage remains the biggest cost in direct mail and DeBoer says that companies need to control postage expenditures in the smartest way possible through postal optimization and delivering mail with a relevant message.

In all, DeBoer maintains an optimistic outlook for direct marketing. “This is the most exciting time in the space because there is so much that we can do, in terms of capabilities, to produce something that is going to deliver an impact. … It’s a more holistic approach on how to help our customers; it’s more than just print on paper,” he concludes.

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