Direct Mail Outlook : Rolling with the PunchesDecember 2009 By Erik Cagle
WANT TO know the state of direct mail volume in the United States? Just ask the U.S. Postal Service (USPS), which recently announced a net loss of $3.8 billion for 2009 amid a volume reduction of 28 billion pieces.
How badly was the USPS impacted? About 375 retail stations and branches remain under consideration for consolidation. Six district offices were closed, roughly 150,000 employees were offered early retirement and another 1,400-plus mail processing, supervisory and managerial positions were lopped off.
Those were just the symptoms of what is wrong with the patient, namely advertising mail. The economy has devastated two of the nation's top direct mail marketers, namely the financial and automotive industries, resulting in fewer mailings for Chase credit cards, Toyota Tundra ads, home refinancing loans and the like.
Snail Mail vs. e-Mail
Indeed, it has become fashionable to view hard-copy communications as an antiquated method of doing business. Many people now turn to the Internet for business formerly conducted by mail. The Bay Area, meanwhile, sprouted a pair of Do Not Mail initiatives as the general public—in the name of "going green"—remains ignorant of the connection between advertising mail and its impact on the ongoing viability of neighborhood post offices.
Mail volume reduction and the movement of marketing dollars toward digital media—two key elements that threaten to send the USPS into a so-called "death spiral"—have prompted Montreal-based Worldcolor to focus on developing new products and services for marketers. According to Barry Bogle, vice president of business development for Worldcolor, it has prompted the company to seek out market segments where growth is occurring.
To leverage that movement toward digital media, Worldcolor formed Integrated Multichannel Solutions (IMCS) in 2008. It enables customers to integrate marketing messages across multiple channels, including print, according to Bogle.
"The creation of IMCS has led to new revenue streams and enhanced relationships with both current clients and prospects," he remarks. "Worldcolor's ability to integrate marketing messages across multiple channels into cohesive programs has not only built new print opportunities, but also provided new income streams. The IMCS program has introduced new products to the marketplace at a rapid pace, including such popular solutions as net.driver and store.driver."
Worldcolor has worked closely with its clients to optimize postage savings, as well as maximize the relevance and return on investment for each marketing campaign. Bogle notes Worldcolor's ability to track the results of each campaign as a core value.
Though the recession was more arduous in 2009 than in the preceding year, Bogle sees many of the same challenges confronting the direct mail sector as the calendar turns to 2010. "The pressures and challenges of rapidly changing market conditions and a difficult economy mean that market intelligence and fresh ideas are assets that our customers value more than ever," he says.
Windy City printing giant RR Donnelley has enjoyed much success through its CustomPoint Web portal, some modules of which are aimed at multi-agent, multi-branch companies that seek to generate highly customized trigger direct mail programs. The portal enables users to access and select mailing lists; upload and use their own lists; select appropriate formats, copy, offers and design elements; and launch automated on-demand production of these targeted campaigns.
According to Dan Thornton, president of RR Donnelley's Response Marketing Services, the CustomPoint suite removes the burden of assembling all of the resources required to create and execute direct mail, while accelerating the marketing initiative.
To augment the multi-channel efforts, RR Donnelley also offers personalized URL (PURL) marketing as part of the CustomPoint suite of services.
"This gives our clients the ability to offer personalized Websites as an option, allowing responders to update their profiles and respond to the mailings," Thornton notes. "We have seen dramatic results when mail works in concert with PURLs."
Thornton notes that the one constant in direct marketing's value proposition is an intense focus on generating measurably improved ROI. To that end, the company holds seminars, Webinars and other events to demonstrate ways in which customers can maximize their postal discounts, understand Intelligent Mail Barcodes, track their mail through Donnelley's OneSite portal, leverage the best creative ideas and mine the most productive lists.
Providing conceptual guidance is another asset from RR Donnelley's tool belt. Developing responsive mailing lists, conjuring compelling incentives and offers, and selecting effective formats that merchandise and communicate meaningful messages, are three such examples.
"We have always measured our success in terms of delivering outstanding financial results to clients through our broad and comprehensive services platform," Thornton adds. "Regardless of the economic environment, we assist them in testing new formats, creative and offers so that they can find the most economical and productive solutions to generate more revenue."
Looking ahead, Thornton fully expects the economy, postal costs, alternative media and consumer confidence to play major roles in how 2010 shakes out. For its part, RR Donnelley plans to continue to develop and commercialize enhanced imaging technology that reduces costs and heightens consumer acceptance, he adds.
The decline in mail volume had a particularly tough impact on the financial services sector, notes Jim Andersen, president and CEO of IWCO Direct in Chanhassen, MN. He points out that credit card offers declined by an alarming 67 percent in the second quarter of 2009 compared to the same period in 2008. According to Andersen, it was a "reaction to both market conditions and the holding pattern that many marketing programs entered as then-proposed legislation to further regulate the financial services industry prompted consideration of new ways to market."
Andersen has seen a further shift from traditional, higher-volume new customer acquisition mailings to lower-volume, highly targeted customer retention and loyalty programs. IWCO Direct has strengthened its capabilities in this realm and expanded its automated marketing platform (AMP), which focuses on trigger-based, loyalty and retention programs for all industry segments, including financial services.
The company invested more than $2 million in 2009 to bolster its variable digital production capabilities. The move came in light of IWCO's success with streamlined, zero- inventory solutions for complex direct mail and member communications programs.
"Essentially, we built upon our 40-year foundation of acquisition direct mail, adding equipment, technology and subject matter experts to ensure that we have the right workflow for the right marketing message as an extension of our 'total package' platform," Andersen remarks. "We are uniquely positioned to help clients acquire customers, retain customers, and engage customers through both paper-based and digital marketing solutions."
The Total Package
IWCO Direct further underscores its value via its Creative Services team, which provides package design and production services for large clients across various market segments, including insurance, retail, healthcare, travel and financial services. Andersen points out that in each case, formats and copy developed by IWCO Direct have consistently beaten existing control packages.
"Clients tell us that we make it easy because we 'get' direct mail," he adds. "We understand what gets the envelope opened, how to incorporate the right call to action and how to use our dynamic messaging capabilities to drive responses to call centers, Websites or return mail."
IWCO Direct also utilizes other programs to solidify the bond it has earned with clients, including its Customer Spotlight program for educating employees about customer programs and needs; and the Direct Marketing Academy, which provides basic and advanced training for customers on all facets of direct mail.
As for what 2010 will hold, IWCO is focusing on two areas: building on existing relationships through measures such as lean manufacturing and securing new clients. The latter goal may entail acquisitions, according to Andersen.
"We are actively investigating opportunities to bring new channels, products and services—and new customers—to IWCO Direct through niche businesses that 'bolt on' to our existing model along with new technologies, including workflow," he says. PI