The Top 5 Direct Mail Printers and Segment Outlook for 2019
Direct mail is having something of a Renaissance right now. A booming economy, coupled with ever more precise data sets — and the ability to make sense of them — has led to direct mail campaigns that are more targeted, and more effective, than ever before. Marketers and brands are returning to the medium, seeing the physical pieces as a premium tool they can use to cut through the digital clutter.
In fact, Bruce Mandell, president of Data-Mail Inc. in Newington, Conn., notes that his company has seen a massive increase in direct mail in the past 5-6 months, leading to the investment of four new digital presses — and they are already contemplating two more. He predicts, in fact, that this might be the best year for direct mail in the past decade.
“This fourth quarter will be the largest mailing quarter potentially since 2008. Everyone is just going gangbusters out there.”
Part of the revival of direct mail has been the maturing of digital technologies, which allows brands and marketers to not just target a group of consumers, but to target a large group of individuals.
“Personalized, relevant messaging is now a requirement for effective direct mail campaigns, especially when sent to millennial and Gen Z consumers, and as an element of omnichannel campaigns,” Jim Andersen, CEO of Chanhassen, Minn.-based IWCO Direct, notes.
Andersen believes dynamic content that bridges the divide between print and digital mediums will only continue to impact the space. He sees an increase in direct mail campaigns based not just on demographics or brick-and-mortar behavior, but tied to online browsing activities as well. Smart brands, he notes, will look for ways to bring these two worlds together further, with physical pieces that offer digital experiences.
“Direct mail is proven to connect prospects with digital experiences. The tangible, physical nature of direct mail captures a prospect’s attention, while QR codes, augmented reality and other technologies make that direct mail piece the springboard into a dynamic digital interaction between brands and prospects,” Andersen says.
Breaking Down the Trends
However, even as technology is driving more targeted, relevant pieces, there are a few things direct mail printers should be keeping an eye on.
SG360° created a direct mail campaign that appeals to all five senses. Each of the five inserts, which showcase its capabilities, engages the recipient in a sensory tour of Italy. See: A combination of varnishes. Feel: Textured and metallic coatings. Taste: A packet of Italian seasoning affixed to a picture of a charcuterie board enhanced with spot varnishes. Hear (pictured): When a recipient taps the NFC chip with their phone, they’re treated to a venetian opera. Smell: Lemon-scented varnish captures a fragrant lemon grove.
Julie Rinard, senior VP, Marketing & Product Management for SG360° in Wheeling, Ill., notes that two trends amongst many she is paying close attention to for 2019 are paper shortages and driver shortages in the freight industry. She says that as the availability of paper continues to be scarce, there’s an impact on not only the price, but the lead time for direct mail. The same holds true for the driver shortages, which impact the ability to move mail and packages efficiently.
That said, “these challenges are creating a sense of urgency and demand,” according to Rinard. In fact, the demand has increased so much that by mid-August, SG360° had sold out its entire production platform keeping up with it. That’s not a bad problem to have. “Our investment in a state-of-the art, highly-automated postal optimization facility helps our customers offset the impact of increasing costs.”
She also points out that while digital marketing has eroded direct mail volume, it has created new direct mail opportunities for those shops ready to take advantage of them. “There are a lot of opportunities that arise from digital marketing challenges,”
Rinard says. “It is forecast that 30% of consumers will be using an ad blocker by the end of 2018.”
For Mandell, one of the trends he is watching carefully is the overall economic picture. Right now, with the economy in an unprecedented stretch of growth, things are going great. But that could change. “This has been one of the longest expansions in American history,” he says, “but we all know the cycles have not gone away.”
Mandell remains very optimistic about 2019, but he isn’t willing to pretend things couldn’t change if the economy starts to stutter and customers start to pull back on their direct mail spending. To combat that, he says, his shop is taking advantage of the upswing to make investments across the board in equipment that is faster, more efficient and more automated so they will be ready to pivot if the situation calls for it.
“We have to be prepared for continued growth, but at the same time be looking over our shoulder at the reality of the typical nature of the economy,” Mandell adds.
Ups and Downs at the USPS
One major entity that will impact all direct marketing printers and mailers is the U.S. Postal Service (USPS). With initiatives already launched and more on the horizon, there is both good and bad news to keep an eye on.
First, the bad news: the proposed postal rate increase that is set to take effect in January 2019. The rate, points out Andersen, “targets some of the most efficient and cost-effective rates available for Marketing Mail letters, which will encourage marketers to make compensating reductions in direct mail volume.” In addition, he says there is some concern over how the USPS might limit the content options for marketing messages sent through the mail. If that happens, both brands and direct mail printers will need to adjust accordingly.
IWCO Direct’s investment in high-speed equipment for data-driven direct mail helped the company produce a record 4.1 billion pieces of mail in 2017.
That said, Mandell doesn’t believe the rate hike, at least, will have that much of an impact on direct mail overall. “Our clients plan for postal increases,” he says. “That’s part of doing business.” He went on to note that most of his clients have the expectation that with testing and strategy, they can create new direct mail pieces and packages that will increase the response rates enough to cover a 2-3% postal rate increase.
“As long as we continue down the line of controlled increases that are expected, I think we’ll be fine,” Mandell says.
On the flip side, the good news has been the creative and innovative approach that the USPS has taken with new initiatives, such as Informed Delivery, which Rinard believes is a service not enough marketers are taking advantage of just yet.
“If they take advantage of interactive campaign elements, they are getting more mileage for their direct mail spend,” she says. “It is essentially creating more touchpoints by allowing marketers to put an enhanced digital ad in the Informed Delivery email, allowing customers to click through to a website or landing page. For the price of that direct mail piece, you get multiple touchpoints in multiple channels.”
And the best part? At this time, the program is available to anyone who wants to take advantage of it, without any additional charges. It is, Rinard says, almost free money, and more brands and marketers should be taking advantage of it.
Mandell believes that “the USPS is being very innovative with this concept, and is allowing it to grow its own legs,” with slow growth as marketers figure out the best ways to use it. He sees Informed Delivery taking another 2-3 years before the true impact of the service is really understood, but reveals that all of his clients are starting to ask about it and how they can use it.
Andersen has seen the same thing, noting that IWCO Direct customers are starting to get more interested in the program, with the expectation that the platform will only continue to get better. “Several of our customers have already tested these enhanced campaigns, and we expect more will do so as the USPS builds out the tools needed to make Informed Delivery as targeted as direct mail itself.”
So what is the takeaway for direct mail’s outlook in 2019? Overall, the consensus is that 2019 will be a strong year, as demand for direct mail continues to increase. Mandell even notes that one of his customers commented to him that they have started giving talks to their people about how direct mail is a “disruptive” technology that is changing marketing. If that trend continues, direct mail printers will reap the benefits, especially those that embrace personalized campaigns and new technologies.
Direct mail is a tactile, low-key form of messaging that appeals to a generation who has grown up with all of their marketing messages delivered to them on a screen. Find unique and interesting ways to capture their attention, use bright colors or unusual stocks, experiment with new fold techniques — all of these things will help ensure direct mail’s place well into the future of the marketing landscape.
Toni McQuilken is the senior editor for the printing and packaging group.
