Sunday, May 31, 2009

Does Direct Mail Have Five Years to Live?

Borrell Associates -- a research and consulting firm that tracks local ad spending across all media channels -- slammed the direct mail industry hard when they released tidbits from their $995 report predicting imminent direct mail disaster. Says, Borrell, “We’re predicting a 39 percent decline for this Goliath over the next five years, from $49.7 billion in annual ad spending in 2008 to $29.8 billion by the end of 2013. If that occurs, direct mail will fall from
the No. 1 placeholder for ad revenue to No. 4, behind the Internet, broadcast TV and newspapers.”

For those scoffing at Borrell’s conclusion, the research company points out that it accurately predicted the decline of newspaper advertising in 2001, as well as the accelerated decline [38% ad revenue drop over five years] for the Yellow Pages last August. “By the end of the year, the bottom seemed to have dropped out, hurtling the Idearc into bankruptcy and causing it to tell investors that a 40 percent drop in revenues over the next five years was likely.”

Borrell isn’t alone it predicting curtains for mail,either. Last week, EMarketer reported on results of a 2008 joint study by MarketingProfs and Forrester Research showing that -- back in 2008 when they were surveyed -- marketers expected to spend the same amount on marketing in 2009. Notably, though, decision makers also were planning to shift a fair chunk of the marketing budget to online activities: the company website, search marketing, online video, webinars, email, social networking, etc. The big losers in this study were print and TV advertising, outdoor media advertising, sponsorships, in-person and virtual trade shows, and radio. Yes, direct mail was in for a 34% decline in budget expenditures, but it trailed print and TV advertising, radio, outdoor media, sponsorships, and both in-person and virtual trade shows and conferences.

So does direct mail really have just five years to live? No doubt the patient needs a heart transplant and its fate is closely tied to that of the U.S. Postal Service, which continues to stamp on the envelope parade. In early April, a friend who owns a successful mailshop in the D.C. area told me that her shop couldn’t keep up with the workload. “We’re crazy busy. There’s just one problem: after the May 11 postal increase goes into effect we don’t have a single job in the house—not one.” How does this successful mailshop entrepreneur cope? By wearing a night-time dental guard to control the tooth grinding.

The big aggressors against direct mail? Coupon and promotion-driven email, says Borrell. “Most of the growth in e-mail marketing will be local. We’re expecting local e-mail advertising to grow from $848 million in 2008, to $2 billion in 2013, as more small businesses abandon direct mail couponing and promotional offers and turn to a more measurable and less costly medium, e-mail.”

But let’s not get ahead of ourselves here, folks. Email marketing—including enewsletters -- has its detractors, too. Some gurus make a living telling people how to manage “e-mail overload.” At my office, a great deal of what comes in goes straight to some folder on my desktop -- the digital version of the notorious "round file" -- never to be seen again. It isn't that the content is lacking; I just don't have time. Moreover -- as mobile marketing becomes more prevalent and direct mail slows -- I expect the anti-email outcry to grow.

The real problem right now is too many channels and too much marketing, period. We just haven't figured out yet how to control it for maximum effect. So I think I’m going to disagree with Borrell – not that direct mail is faltering, which it may be right now -- but that email marketing is going to replace it.

So, without direct mail and e-mail marketing, then what? I don't know exactly [surprise!], but: Rather than arguing among ourselves about which marketing method is better than another, the solution probably is nature’s favorite: the hybrid -- and that means, personalized, integrated marketing, at least for the short term. Moral of the tale: He who integrates best, wins.

-- scrubbed by Marketing Brillo


Unknown said...

I think this article was very informative, especially to someone who works in direct mail marketing. One point I especially agree with is "the solution probably is nature’s favorite: the hybrid -- and that means, personalized, integrated marketing, at least for the short term. Moral of the tale: He who integrates best, wins."

Integration seems to be the answer. The fact is that people will filter out information they do not find useful, so the key is to reach your customers with useful and relevant marketing and direct mail can still be used for this purpose.

Female Flight said...

My question is what direct marketing is being compared. As a DM professional, I draw a distinction between true targeted mail and the other stuff. Are credit card offers the same as a subscription offer to Gourmet for someone who already subscribes to Saveur? Or, when I give to the Humane Society I should expect mailings from similar groups. Frankly, I have not seen a decline in volume in my mail box. Email is great but it still isn't generating the ROI that mail gets. And, I agree that folks are getting more and more reluctant to getting more emails. Of course, time will tell but I think the decision maker is always the dollar and as long as users of DM are profitable, mail isn't going any where.