New Customers Major Objective of Direct Marketers

by Jack Loechner, Oct 27, 2005, 3:00 AM

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New Customers Major Objective of Direct Marketers

According to a white paper by the Winterberry Group, and a summary report by the Direct Marketing Association, acquisition mailing made up 70% of the $52.5 billion marketers spent on direct mail during 2004. The overall trend in direct mail use is growth, though sources disagree about the rate of increase. The Direct Marketing Association anticipates a conservative 5.2% growth rate, while the Winterberry Group, which sponsored the study, predicts 7.5% growth in direct mail, all direct response advertising through the mail, including postcards, catalogs and letters, which represents over 23 percent of total United States direct response advertising spending.

Among vertical industries, insurance financial marketers are seen as leading mail uses growth between 2002 and 2007, with an anticipated 8.4% compound annual growth rate, followed by hospitality marketers at 7.6%. In addition to the improvement in CRM targeting, mail's effectiveness has been boosted by cross-channel efforts, which engage the target through a variety of mediums, and through continued acceleration of digital print technology capacities.

Marketers continue to see faster turnaround times for their campaigns, especially as they integrate their mail efforts with channels that offer faster results, such as online, direct response TV, e-mail and other mediums. Segments are getting smaller, as marketers become more adept at targeting and variable printing allows for cost-effective short-run customization. According to Winterberry, nearly 60% of mail is now anticipated as falling into the "non-envelope" category, which includes postcards, fliers and self mailers. and nearly 17 percent of packages now include some form of promotional premium, according to the Target Marketing Group.

The growing emphasis on personalization and one-to-one marketing methods has positioned database management and analytics services as the fastest growing segment of the marketing services value chain, projected to grow nearly 11 percent in 2005. Marketers are aggressively bolstering both their internal database marketing staff as well as outsourcing efforts; the result is a breakdown in traditional data silos, making way for databases that allow for segmentation based on demographic, behavioral and transaction data.

Projected Direct Mail Annual Growth Rates, By Vertical Market (2002-2007)
Financial Services/Insurance	8.4%
Hospitality	7.6%
Not-for-Profit	7.3%
Healthcare/Pharmaceuticals	6.6%
Publishing	6.1%
Automotive	5.1%
Telecommunications	4.8%
Financial Services/ Banking & Credit Cards	3.7%
Technology	3.0%
Retail (Non-Catalog)	2.7%
Source: Direct Marketing Association, Winterberry Group analysis

2005 Direct Mail Growth Forecasts
Direct Marketing Association	5.2%
Universal McCann	8.5%
Veronis Suhler Stevenson	5.5%
Winterberry Group	7.5%
Source: DMA, September 2005

For more details in the report, go here.

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