Direct mail marketing is considered to be the most effective form of promotional tool which allows the company to provide sufficient product information and sometimes product demo as well. Direct mails are highly effective at getting customer response and brand engagement. However, if the mailers don’t provide results the cost per customer can be significantly higher. Marketers use postcards, self-mailers, lead letters, mailing list, dimensional letters, and catalogs. At a time when the majority of the traditional marketing mediums are slowly fading away, direct mail still remains a preferable BTL tool which lets marketers create personalized campaigns. Companies have been able to develop innovative direct mailers that depict the product strengths with advancements in printing and production technologies. SpendEdge’s procurement market intelligence report on the global direct mail market estimates the total market value to be worth $42 billion as of 2017. The report also outlines that the direct mail market is growing in APAC, MEA, and South American regions due to low internet penetration.
Transition towards digitalization
In the age of digitization, marketers are more inclined to use digital platforms such as e-mail, social media, and banner advertisements to target end-consumers on a global scale. Such online platforms allow brands to incorporate creative strategies such as animation and gamification thereby increasing the levels of customer engagement. Since digital mediums will enable companies to modify content as per the buyers’ needs at a low cost, the direct mail industry will struggle to keep pace. The digitization factor is already affecting direct mailing companies in North America and Europe.
Rising cost of direct mail
The cost of direct mail per customer is already high for many companies. Add to that the growing worldwide paper prices, the production cost in relation to direct mailers will rise significantly. For instance, the global paper prices saw a 3% increase in price every month, between May 2016 to August 2016. Additionally, the rising cost of input materials such as inks, cartridges, manpower, and electricity will also increase the printing costs. Since suppliers are maintaining their selling price in order to sustain in the market, this increasing cost will eat away their profit margin hindering the overall market growth.
The printing industry is mostly associated with environmental pollution as waste materials from the production process such as solvents, inks, chlorine, plate coatings, acids and alcohol are highly toxic to humans. Additionally, the large amount of papers required for direct mail also results in widespread deforestation. As a result, government worldwide have incorporated regulations to control pollutants from the printing industry. Such acts thereby increase the operational cost for the suppliers affecting their profit margin. The increasing cost directly impacts on the growth prospect of the global direct mail market.
High logistics cost
Unlike other promotional tools, direct mailers incur a high amount of logistics cost as the mail has to be delivered to each person individually, spread across vast geographies. The fluctuating prices of crude oil and gasoline also destabilize the logistics cost. Additionally, suppliers also have to account for the cost of postal stamps, transport, import, and export duties and taxes. Considering all such costs, the price of direct mail rises significantly.
Read more about the challenges in the direct mail market along with direct marketing, direct mail services, direct mail campaign, mailing services, sourcing strategies, procurement best practices, and pricing insights in SpendEdge’s upcoming report on the global oil and gas storage market.