Before the Direct Mail Advisory Board Universal Postal Union Berne, Switzerland Robert J. Muma United States Direct Mail – An Engine for Postal Growth A View from North America
The World of Direct Mail Is Changing
Direct Mail now competes against a broad variety of message delivery mechanisms including fax, e-mail, telemarketing and a host of other communications technologies.
In the United States, direct mail really began in during the American Civil War as a very limited medium but grew into its own in the 1950’s and boomed in the 1970s and 1980s.
Direct mail is now finding its place in a competitive communications marketplace and the medium continues to change to meet the new challenges place upon it.
The Challenges Faced By Direct Mail Include The Following:
Lack of customer awareness about features and benefits.
The need for better financial incentives for advertisers to use direct mail as a medium.
Limited or incomplete information on customer preferences.
Delivery efficiency or lack of reliability.
Privacy, Privacy and Privacy.
Postal policies that may impact the creativity of the mailpiece.
The focus of the posts: Are they in the delivery business, Global logistics business, electronics business or…?
USPS Mail Volume Actual and Forecast 2002-2008 Volume In Billions of Units
Direct Mail Trends
The EMA Foundation – Direct Mail Trends Study
We were looking at the current trends and directions in direct mail.
We wanted to find out what features of the mailpiece drove direct mail response.
We wanted to understand how customers reacted to direct mail.
We were looking at secondary data sources, not doing more research.
We wanted to create a benchmark for the future.
Direct Mail Overview
In 2001, American marketers spent nearly $197 billion on direct response advertising
For 2003-2008, direct marketing ad spending is expected to grow about 6.5% a year
Source: DMA, US and Direct Interactive Marketing Today 2002 and EMA estimates Total U.S. Employment 2.00% 1.30% Compound Annual Growth Rates Economic Growth Category 1996 - 2001 2002 - 2006 Direct Marketing Ad Expenditures 6.80% 6.50% Total U.S. Ad Expenditures 4.40% 5.50% Direct Marketing Sales Revenue 10.00% 8.30% Total U.S. Sales Revenue 5.50% 4.80% Direct Marketing Employment 5.70% 4.30%
Total Household Mail
In 2001, households sent an average of 4.2 pieces per week and received an average of 26 pieces per week. This is up from 3.7 and 20.5 respectively.
Total domestic mail received by households in PFY 2001 was 143.6 billion pieces, up from 140 billion in 2000.
1.6 2.1 18.5 0.4 22.6 1.4 2.9 23.4 0.4 28.5 1.4 2.8 23.9 0.4 28.8 0 5 10 15 20 25 30 35 Household to Household Household to Non Household Non Household to Household Government to Household TOTAL Domestic Mail Sectors Pieces per Households per week 1987 2000 2001 Pieces per HH per week, Total Domestic Mail by Sector
Advertising Mail by Postal Classification Base: Advertising Mail Pieces, PFY 2001 (82.4 billion) Source: The Household Diary Study, USPS, 2002 Total Advertising 82.4 15.02 100 Postal Classification Volume Totals (in billion) Pieces per HH per Week % of Total Advertising Domestic First Class Mail Pieces 19.5 3 .56 23 .7 Standard Mail 57.5 10.48 69.7 Unaddressed Material 5 .4 0.98 6 .6
Letter size envelopes now comprise a large portion of Standard A mail
Financial sector and social/non-profits use letter-sized envelopes most frequently
Merchants opt for unpacked catalogs; manufacturers and government prefer addressed circulars/fliers
Source: The Household Diary Study, USPS 2002
Households wishing they received less advertising mail have increased from 52.9% in 2000 to 59.6% in 2001.
The percentage of advertising mail that households find interesting and likely to read has fallen from 62.5% in 1987 to 33.3% in 2001.
47.1% of Standard A mail is read by at least one person in the household; 42.9% First Class Mail is read
Households respond more to Standard A ads versus First-Class ads
Adding a name increased response rates by 45%
Adding full color increased response rates by 45%
Adding a name and full color increased response rates by 135%
Applying database information in constructing the offer increased response rates by 500%
Adding a discount increased response rates by 1000%
Source: Digital Printing Council
Direct Marketers – Strategies and Key Trends Usage of Postal Mail and E-mail Source: DMA State of Postal & E-Mail Marketing 2002 Other 2.70% 1.50% Percentage of Current Mail Intended to: Postal Mail E-mail Generate orders 45.50% 32.70% Generate leads 27.80% 26.50% Build loyalty-retention (non-order generating) 10.70% 17.70% Drive retail traffic 7.20% 4.80% Drive site traffic 4.10% 12.00% Obtain e-mail addresses 2.00% 4.70%
Current Selling Strategies Applied by Postal Mailers
Improving customer retention = 57%
Re-activating customers = 41%
Improving customer purchase frequency = 46%
Future Usage of Postal Mail and E-Mail Source: DMA State of Postal & E-Mail Marketing 2002 Retail traffic generating mail volume (Citing Increase) 12% 16% Within the Next 2 Years, How Will You Change Your Usage: Postal Mail E-mail Order generating mail volume to customer file (Citing Increase) 39% 59% Order generating mail volume to prospects (Citing Increase) 38% 42% Loyalty/retention mail volume (Citing Increase) 34% 47% Lead generating mail volume (Citing Increase) 28% 47% Web site traffic (Citing Increase) 28% 40%
Some Concluding Thoughts
Direct Mail is becoming a more significant part of our mailstream in North America. In 2005, there will be more advertising mail than First-Class mail if present trends continue.
Response is always difficult to measure but the more a mailpiece stands out, the greater the response.
Direct mail and direct-email are challenging one another for the hearts and minds of the consumer. However, direct mail still has the advantage of touch and is promotes response. E-mail may be more difficult in achieving the same response per thousand but does have reach. Customer retention is still best achieved through direct mail.
Privacy is an important concern for all of us. Remember that targeted, tailored and timely communication is what the consumer wants. We will only be effective if we can deliver on these needs.
Thank You! And Don’t Forget The Envelope! For the Study I just mentioned: twmuse at envelope.org