The Prospects for Direct Mail: Q&A

Chief Marketer recently spoke with Kevin Culbert, senior analyst at marketing research firm Ibisworld Inc. to get his take on the changing role of direct mail in the fact of rising postal costs and an ever evolving communications landscape.

CM:Overall, how did direct mail fare during the economic downturn?

Culbert: The recession caused demand for direct mail to fall as businesses cut costs to maintain profit levels. Clients reduced marketing budgets, causing overall direct mail-generated revenue to decline at an average annual rate of 1.6% during the five years between 2007 and 2012, to atotal $12.9 billion.

CM: How did direct mail perform relative to other media?

Culbert: The decline in direct mail-generated revenue was fairly mild in thecontext of the broader advertising services sector. Direct mail suffered less because many businesses substituted direct mail for their traditional advertising methods like television and print,billboards and promotional products.

CM: What are the prospects for direct mail going forward?

Culbert: During the five years leading up to 2017, direct mail industry revenue is expected to increase to $13.8 billion,1.4% a year. Competition will continue to hinder its growth as consumers increasingly turn to daily deal sites and elsewhere on the Internet to find bargains and coupons. We seelimited opportunities for growth in the direct mail industry. Consequently, more industry operators are likely to develop online platforms and mobile apps.

CM:What impact do you think the U.S. Postal Service's troubles will have on the industry?

Culbert: It's hard to know, but the postal service does keep offering the mailing industry discounts like the second ounce free for first class mail which began earlier this year. It’s too early to have any statistics on this yet. However, this program will allow companies to send larger packages, which will likely encourage companies to send a greater volume of packages.