WOA Offset and Beyond -- Challenges, Opportunities
JIM ANDERSEN is arguably the most well-known figure in the direct mail printing realm. The president and CEO of Chanhassen, MN-based IWCO Direct was a key advocate in the decade-long struggle to enact postal reform, which was finally achieved at the end of 2006. He met with politicians and sat down with key leaders of other industries to protect the interest of their common goal: a viable, enduring U.S. Postal Service (USPS).
Andersen took the helm at IWCO Direct in April of 1999. As an equity partner, Andersen tapped his wide-ranging business experiences in guiding IWCO Direct--experiences that include more than 20 years in the manufacturing industry. He spent 13 years with the former Banta Corp., serving three years as president of Banta Information Services Group and Global Turnkey. Andersen had oversight of 13 manufacturing facilities, including five overseas operations, with gross sales exceeding $330 million.
He also spent eight years with Banta Direct Marketing Group as executive vice president, sales and marketing.
Andersen is one of the keynote speakers scheduled for the upcoming Offset and Beyond conference in suburban Chicago. Below, he discusses IWCO Direct's outlook and what we can expect for the direct mail sector with Erik Cagle of Printing Impressions.
PI: With the U.S. economy pointing toward a recession and the USPS reporting declines in volume, what is the general mood in the direct mail printing community as we speak?
ANDERSEN: If history repeats itself, the mood in the direct mail printing community should be one of (very) cautious optimism. During times of economic slowdown, direct mail is typically impacted less than other segments because its effectiveness is easily measured and return on investment is a simple calculation. We conducted a survey of our top customers and prospects late last year, and the results were encouraging. Eighty-eight percent of those surveyed said their volume would grow in 2008 or remain the same as 2007.
The impact of postal reform has been very positive; the recently announced price adjustment averages 2.9 percent and marketers seem to have planned for it when they prepared their 2008 budgets. While no one is being extravagant in their spending, we are seeing a number of opportunities for new programs that use direct mail for customer retention.
PI: With postal reform at last a reality, what are now the greatest challenges confronting direct mail printers?
ANDERSEN: Direct mail printers are facing potential legislative threats that could present major challenges for printers and marketers alike. Legislation that addresses privacy, do not mail, and data use restriction is being developed in response to data breeches and concerns about identity theft.
In addition, direct mail printers must recognize the increasing focus on environmental issues. A recent study by DM News and Pitney Bowes shows that 48 percent of consumers think that advertising mail accounts for half of the content in the nation's landfills. According to the Environmental Protection Agency, mail actually makes up 2.4 percent of municipal waste.
In addition, graphic arts courses and vocational training in general is disappearing from our high schools, making it increasingly difficult to staff our pressrooms and supporting departments with qualified individuals interested in pursuing careers in the graphic arts.
PI: Despite a host of seemingly negative influences that are impacting the printing industry in general, and direct mail printers in particular, what are some of the positive influences you've seen recently?
ANDERSEN: Marketers continue to see value in direct mail. Direct mail continues to work better than e-mail for acquisition campaigns, and there has been a double-digit increase in the use of direct mail for retention programs. The focus on sustainability is causing us to take a hard look at our processes and do a better job with resources and materials.
As marketers create campaigns that are more relevant and require faster speed to market, there is opportunity to add "non-commodity" products and services to support these needs.
PI: Where does the industry stand in the battle with "Do Not Mail" advocates? Has the movement gained any traction, and what is being done to counter this campaign?
ANDERSEN: The industry has been extremely effective in the battle with "Do Not Mail" advocates. In 2007, 15 states proposed the creation of state Do Not Mail registries, similar to the national "Do Not Call" registry. None of these attempts was successful, thanks in part to the efforts of the printing and mailing community and the Mail Moves America coalition.
Twenty-five associations and 25 companies formed the Mail Moves America coalition (MMA) in late 2006 as a broad-based coalition to achieve two purposes: defend against Do Not Mail legislation and develop a more positive message and image for advertising mail. The coalition includes in its membership, associations and companies in the paper, printing, mailing, marketing, publishing and advertising industries, as well as users of mail advertising.
The printing and mailing community recognizes that consumers want choice in how they manage their mail, are more environmentally conscious and want to secure their personal information. On all three fronts, marketers, printers and mailers, and our trade organizations are taking steps to educate consumers on available tools and steps businesses are taking to address these concerns. Importantly, this effort also involves correcting the misconceptions and misstatements that surround mailing issues.
PI: From IWCO Direct's perspective, where do the best growth opportunities lie within the various vertical markets?
ANDERSEN: The best growth opportunities for direct mail service providers lie within vertical markets that are striving to make their campaigns more relevant. Timing, relevance and personalization are driving response rate. Products and services that address response rate will provide additional revenue opportunities for service providers. Data processing services such as "householding" are gaining importance in fund-raising and loyalty campaigns, as well as insurance and retail sectors. Marketing automation services offer tremendous growth opportunities in the financial services market, particularly for companies that use field agents and advisors.
PI: Going forward, what attributes will enable printers to differentiate themselves in an increasingly challenging direct mail printing marketplace?
ANDERSEN: According to our survey, service remains one of the key differentiators for direct mail printers and service providers. As marketing campaigns become more complex, attributes including responsiveness, flexibility and subject matter expertise gain importance. The ability to understand and influence campaign strategy to make campaign execution more effective and efficient is also a primary differentiator.
Seamless implementation of new programs through established on-boarding processes, training and documentation is also key. PI