Direct Mail Doomed, Long Live Email

After making quick work of print newspapers, and the Yellow Pages industry, "The kudzu-like creep of the Internet is about to claim its third analog victim," warns a new report from research firm Borrell Associates. The victim? "The largest and least-read of all print media: Direct mail."

"Direct mail has begun spiraling into what we believe is a precipitous decline from which it will never fully recover," Borrell predicts. More specifically, it is projecting a 39% decline for direct mail 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 Borrell is correct, direct mail will fall from the premiere placeholder for ad revenue to the fourth -- behind the Web, broadcast TV, and newspapers.

The downturn is being caused by a perfect storm of worsening economics for printing and delivery and conversely improving economics for competing media, particularly the Internet. In turn, the research firm sees email largely filling the void being left by direct mail.



"Email advertising is indeed skyrocketing while its traditional counterpart plummets," Borrell notes. "In fact, last year, email advertising quietly moved to the No. 1 online ad category spot, surpassing all other forms of interactive advertising." Last year, advertisers spent $12.1 billion on email marketing, more than they spent on display/banner advertising or search advertising.

Borrell is predicting that email will continue to distance itself from other online advertising formats over the next five years, growing to $15.7 billion and remaining the preferred channel among many marketers. In particular, most of the growth in email marketing will be local, the report forecasts.

"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 orders and turn to a more measurable and less costly medium, e-mail."

Still, the report goes on to warn opportunists that email marketing is not without its risks. "Managing large e-mail marketing campaigns require database marketing expertise, a savvy sales force, adequate e-mail management software, familiarity with the rules and regulations and a lot of patience."

The declines in direct mail have already begun to register at companies such as Valassis, which owns one of the nation's largest direct-mail businesses.

In the first quarter of this year, Valassis' "shared mail" revenue declined 12.7% year-over-year, according to Borrell. Two other direct mailers, meanwhile -- IWCO Direct and Transcontinental USA -- have announced layoffs and facility closings. Of particular note, Borrell credits the rise of coupons online with the demise of direct mail.

Last year, for one, 36% of adults picked up a coupon inside a store and used it, compared with 28% just two years ago. About 8% of all adults now report using coupons delivered via email or the broader Web.

Email Forecast Chart

7 comments about "Direct Mail Doomed, Long Live Email ".
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  1. Am D from AMD Research & Marketing LLC, May 21, 2009 at 11:11 a.m.

    When this article came across this morning and I found it to be both disturbing and one sided. I am not saying the facts in this article are untrue (e-mail is here to stay) – many aspects are insightful. However, when discussing advertising with clients it is important for both you and them to understand each media campaign should support and carry the same messaging as the other. It is true advertisers are changing the amounts of money allocated for each media, and that will continue to change as technology evolves! Until then each media has to work together and not against each other to address an advertiser’s best interests.

    Recently the newspaper delivered to our home has gone online, except for the Sunday paper. Why did the Sunday remain? If you think about it – for many reasons.

    -FSI accounts generate a chunk of revenues for the newspaper

    - Not everyone enjoys getting on the computer 24/7 – often times on the weekend they simply need a break

    -Consumers like to take a cup-o-joe and relax on Sunday to read the paper

    -The paper can be taken to the beach, park or on a boat and enjoyed everywhere.

    So whatever the reason – the Sunday paper remains. So where am I going with that? Think about the mailbox and the mail received daily. Although we have continued to experience rate hikes and there is talk about reducing the number of days the mail is delivered, I for one enjoy my daily trip to the mailbox and so do many consumers. Often times we hear people discuss the “clutter” well let me ask you – what does your e-mail look like if you have not performed “your daily ritual” and cleaned it out? I know I tend to sort by sender and start deleting and can tell you the ones to be deleted first are the advertisements from “opt in” senders such as retailers, services and other product based e-mail blasts.

    In the meantime, the mailbox is continuing with messaging from local retail establishments, right in my own neighborhood, from whom I WANT to hear – and this includes direct mail co-op envelopes, advertorial magazines and solo pieces. I do not have the time to go online and look for each of these advertisers individually, print “one” coupon on a piece of paper (and let’s not forget the ink) and take it into the store. The argument there is “Well there is mobile marketing” to which I answer – nice, but I have yet to patronize ANY business in my area using it (okay so I do not go or send out for pizza – I like mine homemade). So revisit the “Why of Direct Mail” and share it with our past, current and future clients as well as how Direct Mail can supplement and direct their message to other marketing medias they currently use as well as any technology forecast!

    Let's be smart about this - there is enough advertising dollars for everyone. Let's get a good balance of advertisers in our client portfolio so everyone can win!

  2. Kevin Horne from Lairig Marketing, May 21, 2009 at 2:43 p.m.

    Not mentioned in the article but shown in the bar graph is Borell also forecasting banner ad/display to drop by 67% by 2013.

    Hope someone remembers to repost this in five years to show how wrong Borrell was on both the direct mail and display ad front.

  3. Scott Gerschwer from Topstone Marketing, May 21, 2009 at 6:44 p.m.

    The fact is, the USPS blew it. The rise of social media should have signaled to them that they could play a role--allow kids to send each other snail mail too, for example. Because let's face it--everyone likes to get mail (personal mail, not bills and junk). It's sending mail we hate--the hassle with folding paper and affixing stamps and licking envelopes and remembering to mail it.

    But hybrid mail technology allows an electronic message to be printed, processed and posted--at the touch of a button. For some reason the USPS hides hybrid mail on their site. And brandowners need not fear--print on demand tech would have allowed their logos, look and feel and brand to be sent via hybrid mail. And the real beauty is, hybrid mail can be sent electronically to a near-site location for processing, which is greener by far than the huge fleet of 18 wheelers that carry mail today. And the USPS can deploy their workers to get it that "last mile" which is their self-stated mission.

    But NO> And so mail is relegated to undifferentiated marketing--junk--or bills, which we still get offline and pay online.

    With regard to email, if it was the channel but the message was not SPAM but useful information--such as you get on social media--it would serve a purpose.

    The USPS blew the opp. They gave up at a time when they could have started the next new cool thing. They are in a death spiral now. In pace requiesat.

  4. Amy Fanter from Odds On Promotions, May 22, 2009 at 12:31 p.m.

    When was the last time you received a letter, a card, a personalized piece of mail - that you could touch and feel? There is power in that ...

    I belive marketers who can master the right mix of offer and touch, will actually find DM to be more effective in the future.

  5. Heidi Tolliver-Walker from Digital Printing Reports, May 28, 2009 at 1:16 p.m.

    understand the point here, and certainly, the current trends cannot be ignored. But I learned something by cutting my teeth in industry analysis and research by working with TrendWatch GA / The Industry Measure from its inception. That is that all of these reports are snapshots in time, and they must be looked at that way.

    What was unique about TrendWatch GA is that it asked the same questions in every marketplace every year or twice per year. This gave us trend lines to watch, and my perspective on the industry was formed by watching these trend lines evolve in the creative, printing, publishing, and Internet marketplaces over more than a decade. It gives you quite a different perspective on things than just a "once in time" snapshot.

    (TrendWatch GA/The Industry Measure closed its doors last year, and boy, do I miss that data!)

    I think the important point here is that, while TRADITIONAL direct mail and direct mail strategies may be in permanent decline, this doesn't mean that direct mail itself will continue to decline permanently. It is entirely possible that we are simply watching an ebb and flow as the direct mail industry adjusts to new market conditions. Like everything else, direct mail will need to find its new place in today's media mix. While it's pretty safe to say that traditional direct mail is facing considerable challenges, we still have to wait and see what direct mail at large looks like down the road.

    The point must be made that, like a bundle of sticks, campaigns utilizing multiple media are far stronger than campaigns utilizing single media. Direct mail cannot disappear entirely—not just because it works, but because without it other media would not be as strong.

    I write the "Marketer's Primer Series" of educational and training reports on digital printing, 1:1 (personalized) printing, Web-to-print, and personalized URLs, and in every one of the reports, the best practices section lasers in on the need to incorporate multi-channel strategies in order to be utilizing these technologies/techniques in a best practices way. But it's not just multi-channel. Part of the best practices of all media, including print, is the incorporation of personalization and relevance-based strategies. Even billboards are going "personalized" in the sense that many are now sending visitors to different landing pages based on geography or demographics of the people who travel within eyeball-shot.

    If printers and marketers are going to have a good, healthy perspective on the future of direct mail, they need to have a good, healthy perspective on the best practices for various marketing strategies today, because the future of direct mail is tied to them on a long-term — not just a snapshot — basis. They must be smart about these trends and look beyond the "snapshot in time" perspective to understand the long-range implications, and those might look quite different in a year, two years, five years than they do today. The question is, how do you prepare yourself to get there?

  6. Patrick Fultz from DM Creative Group, LLC, February 23, 2010 at 6:44 a.m.

    "Cost per action"—you've got to be kidding me. What are we back to cost per click days?

    The only thing that counts at the end of the day is cost per sale/order. How much did it cost to acquire the customer, how much did they or do they spend. The last statistic I read was for every dollar spent in direct mail $15.22 comes back. Meanwhile eMail brings back $43.62. But, eMail drives fewer sales than all other media and has proven to be a poor prospecting tool. (stats from the 2009 DMA

    Now I'm not saying one media over the other, I'm just tired of the eMail folks trying so hard to kill DM. The fact of the matter is when you combine eMail, mail and landing pages together you can see 19%-35% (per a recent InfoTrends study).

    So stop touting one over the other and see how you can better integrate these media to drive real ROI for your clients/customer/business.

  7. Amber Boone from National RV Trader, February 23, 2010 at 6:36 p.m.

    Television killed radio advertising, web-based adverting killed radio and television and print, and email killed direct mail. Wow- there are a LOT of ghosts out there.

    While newspapers aren't making money, and radio and TV (especially broadcast) are having a heckuva time, I would put forth the very simple hypothesis that mismanagement and lack of forward thinking is killing the "dinosaurs". (I had never even heard of hybrid mail, Scott, and I agree- wow, what schmucks the USPS is for not marketing that nugget more aggressively.)

    A friend of mine told me that one of their most successful, for lack of a better word (I am truly sorry) "blasts" was conducted recently via fax. insert 80's nostalgia reference here.

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