A lot of attention has been placed recently on the demise of the newspaper as an advertising channel and what that means for marketers. At this point in time, the general consensus seems to be that this is now more a question of when, not if.
So let’s talk about something else.
I think that the $60 billion direct mail industry will soon undergo a similar shift.
Reasoning: direct mail is/will be under assault in two directions – cost and effectiveness.
I don’t know about you, but the amount of snail mail that I send has fallen to virtually nothing over the past few years. If you think about it, I’ll bet you’ll notice a similar decrease of your own. Personal correspondence is now almost exclusively via email (wedding invitations and holiday cards being the minor exception), and virtually all of my bills are now sent via email, and paid electronically.
This has two effects.
One, as mail volume continues to drop, the fixed costs of the postal system are spread out amongst the remaining participants. It’s a safe bet that this has played a huge part in the seemingly endless hikes in stamp prices over the past few years. Each time postage prices go up, it’s an irritation for the average consumer, but I’ll bet it’s a big problem for direct mailers, who have probably been pummeled by repeated increases in what has to be a major cost center. (I think I remember seeing that postage is about 40% of direct mail expenditure – someone correct me if that’s off.)
Two, as the amount of ‘good’ mail plummets, the ratio of junk mail goes up. In the real world, this means that I check my physical mailbox maybe once a week now. Why? Because there’s almost never anything of value in it. Result: direct mail is less effective than before because it’s not delivered amongst the mail that I actually do wish to receive.
Taken together, this means that direct mail returns are under siege on both the numerator and the denominator of the ROI equation.
As I said before, with costs going up and effectiveness going down, it’s only a matter of time until we start to see major shifts in spend. My bet is that the vast majority of that spend comes online.
Hope everyone had a great weekend!