Before the Direct Mail Advisory Board

1
Direct Mail An Engine for Postal Growth A View
from North America

• Before the Direct Mail Advisory Board
• Universal Postal Union
• Berne, Switzerland
• Robert J. Muma
• United States

2
The World of Direct Mail Is Changing

• Direct Mail now competes against a broad variety
  of message delivery mechanisms including fax,
  e-mail, telemarketing and a host of other
  communications technologies.
• In the United States, direct mail really began in
  during the American Civil War as a very limited
  medium but grew into its own in the 1950s and
  boomed in the 1970s and 1980s.
• Direct mail is now finding its place in a
  competitive communications marketplace and the
  medium continues to change to meet the new
  challenges place upon it.

3
The Challenges Faced By Direct Mail Include The
Following

• Lack of customer awareness about features and
  benefits.
• The need for better financial incentives for
  advertisers to use direct mail as a medium.
• Limited or incomplete information on customer
  preferences.
• Delivery efficiency or lack of reliability.
• Privacy, Privacy and Privacy.
• Postal policies that may impact the creativity of
  the mailpiece.
• The focus of the posts Are they in the delivery
  business, Global logistics business, electronics
  business or?

4
USPS Mail Volume Actual and Forecast2002-2008Vol
ume In Billions of Units
5
Direct Mail Trends
6
The EMA Foundation Direct Mail Trends Study

• We were looking at the current trends and
  directions in direct mail.
• We wanted to find out what features of the
  mailpiece drove direct mail response.
• We wanted to understand how customers reacted to
  direct mail.
• We were looking at secondary data sources, not
  doing more research.
• We wanted to create a benchmark for the future.

7
Direct Mail Overview
 

• In 2001, American marketers spent nearly 197
  billion on direct response advertising
• For 2003-2008, direct marketing ad spending is
  expected to grow about 6.5 a year 

Source DMA, US and Direct Interactive Marketing
Today 2002 and EMA estimates
8
Total Household Mail

• In 2001, households sent an average of 4.2
  pieces per week and received an average of 26
  pieces per week. This is up from 3.7 and 20.5
  respectively.
• Total domestic mail received by households in
  PFY 2001 was 143.6 billion pieces, up from 140
  billion in 2000.

Pieces per HH per week, Total Domestic Mail by
Sector
1987
2000
2001
35
30
28.8
28.5
25
23.9
23.4
22.6
20
Pieces per Households per week
18.5
15
10
5
2.9
2.8
2.1
1.6
1.4
1.4
0.4
0.4
0.4
0
Household to Household
Non Household to
Government to Household
TOTAL
Household to Non
Household
Household
Domestic Mail Sectors
9
Advertising Mail by Postal Classification
Base Advertising Mail Pieces, PFY 2001 (82.4
billion) Source The Household Diary Study,
USPS, 2002  
10
Shape-Based Mail

• Letter size envelopes now comprise a large
  portion of Standard A mail
• Financial sector and social/non-profits use
  letter-sized envelopes most frequently
• Merchants opt for unpacked catalogs
  manufacturers and government prefer addressed
  circulars/fliers

Source The Household Diary Study, USPS 2002
11
Consumers Views

• Households wishing they received less
  advertising mail have increased from 52.9 in
  2000 to 59.6 in 2001.
• The percentage of advertising mail that
  households find interesting and likely to read
  has fallen from 62.5 in 1987 to 33.3 in 2001.
• 47.1 of Standard A mail is read by at least one
  person in the household 42.9 First Class Mail
  is read
• Households respond more to Standard A ads versus
  First-Class ads

12
Response Rates

• Adding a name increased response rates by 45
• Adding full color increased response rates by
  45
• Adding a name and full color increased response
  rates by 135
• Applying database information in constructing the
  offer increased response rates by 500
• Adding a discount increased response rates by
  1000

Source Digital Printing Council
13
Direct Marketers Strategies and Key Trends
Usage of Postal Mail and E-mail
Source DMA State of Postal E-Mail Marketing
2002
14
Current Selling Strategies Applied by Postal
Mailers

• Improving customer retention 57
• Re-activating customers 41
• Improving customer purchase frequency 46

15
Future Usage of Postal Mail and E-Mail
Source DMA State of Postal E-Mail Marketing
2002
16
Some Concluding Thoughts

• Direct Mail is becoming a more significant part
  of our mailstream in North America. In 2005,
  there will be more advertising mail than
  First-Class mail if present trends continue.
• Response is always difficult to measure but the
  more a mailpiece stands out, the greater the
  response.
• Direct mail and direct-email are challenging one
  another for the hearts and minds of the consumer.
  However, direct mail still has the advantage of
  touch and is promotes response. E-mail may be
  more difficult in achieving the same response per
  thousand but does have reach. Customer retention
  is still best achieved through direct mail.
• Privacy is an important concern for all of us.
  Remember that targeted, tailored and timely
  communication is what the consumer wants. We will
  only be effective if we can deliver on these
  needs.

17
Thank You! And Dont Forget The Envelope!
For the Study I just mentioned twmuse at
envelope.org