The study, Cyclical Analysis of the Direct Mail Market, says direct mail spending will increase 6.5 percent for 2001, drop to 5% growth next year and at or above 7% for 2003 to 2005. There will be an estimated growth of 6.6% compounded annually, an improvement over the 6.4R increase of the last five years.
The growth is held back by rising postage and paper costs. Postal rates rose 8.8% early this year, with an additional increase in July of one-half to three-quarters of a cent per unit. Paper costs increased last year and are expected to rise again this year.
Direct mail growth is also tied into general economic growth. The report says the economy is expanding at a rate of 2.6% this year, the slowest increase since 1991. Q4 growth is projected at 4.8%. Growth should increase to 3.5% for the next two years and 4% for 2004 and 2005.
"Direct mail will be affected by a weaker economy, although much less so than other media, and by rising postal and paper costs, which have led to higher than average spending levels in the past," the report says.
The report spans 50 years, saying direct mail is the only major medium to have expanded each year, despite a variety of economic downturns. What the report doesn't say is whether the industry will be able to continue to expand after the anthrax scare, which has caused a widespread consumer fear of mail. The report was prepared before the anthrax scare. Since then, the industry has asserted that no commercial mail has been tainted with anthrax and reports that business remains steady so far, with some minor losses reported.
The industry hopes the anthrax scare will be a temporary blip in a stellar record that won't hinder the spending gains projected through 2005.