Direct Mail Market -- Market Share from Another Medium?
In terms of investments, IWCO sank $8 million into expanding its personalization capabilities. The company added a fourth commingling unit and a DBCS machine with 296 pockets.
The DNC registry has created a ripple effect in added business, "an uptick" for IWCO, according to Andersen. "Is it sustainable? We don't know the long-term impact, but certainly saw marketing dollars moved from telemarketing to direct mail in 2003. The Do Not Mail effort is somewhat of a threat in New York and California, but obviously direct mail is not as invasive. With personalized product, it's still highly targeted and relatively cost-effective."
Customer commitments and a strong backlog for the first quarter of 2004 has Andersen optimistic about the coming year. "We anticipate rather significant growth and expansion," he says. "Externally, there are dynamics of which we have to be mindful. Since there is a national election next year, I doubt there will be any action from the postal commission regarding postal reform. There are state budget shortfalls for various states, and we're mindful of other tax issues."
According to Hans Nielsen, president of Quebecor World commercial/direct and QueNet Media, the lingering softness of the economy continues to put pressure on the accountability of direct mail campaigns to generate revenue.
Personal Touch
"To that end, the appeal and importance of targeted, personalized mailings continues to grow," he says. "From a product standpoint, personalized direct mail packages and formats saw the most growth—15 percent—in 2003, while non-personalized product segments ran only slightly ahead of last year (about 3 percent), when measured in terms of total quantities of products produced. While the unit cost of personalization is higher than that of non-personalized products, the corresponding return in response rates justifies the expense."
Quebecor World leveraged its logistics and pre-media solutions in bringing added services to its direct mail clientele. "This is an area that truly distinguishes us from our competitors," Nielsen says. "Our ability to provide better postal penetration results in lowered postal costs for our customers. In addition, we helped them achieve a higher level of accuracy of data used in their mailings."
