Editorial: Adjusting to the Times
That's the analysis from Merrill Lynch as it projects advertising outlays falling 4 percent this year in the United States and increasing just 1 percent next year. Nontraditional advertising -- with direct mail included -- drops only 2.6 percent this year, and next year's projections would increase it 1.7 percent.
A forecast by Zenith Media mirrors Merrill's findings, with overall ad spending dropping 4.7 percent in the United States, Britain, France, Germany, Italy, Japan and Spain. Focusing on direct mail, however, the forecast sees growth of 5 percent this year.
So why do companies rely more on DM in the lean years and less in the fat ones?
Let's just hope the U.S. Postal Service doesn't screw things up so that direct mail can keep churning out. The agency ended its fiscal year $1.6 billion in the red last week, though a better estimate may be announced at this week's Board of Governors' meeting. Word of another rate increase should be coming any day now as well, and, as we've warned, this will be a double-digit rise larger than the two that occurred this year for most mail classes.
There's no relief in sight, either. Former postmaster general William J. Henderson called for privatization of the postal service in The Washington Post last week, but his arguments were vague. To privatize would be a monumental undertaking, and specifics must be laid out. Until then, the talk won't be taken seriously.
Congress is debating a bill that could abolish the penny. Introduced by Rep. Jim Kolbe, R-AZ, the Legal Tender Modernization Act would make businesses round up or down the price on products and services to a nickel. At least one group -- Americans for Common Cents -- says Kolbe's plan would hurt consumers because firms would tend to round their prices up. This might not be the case. If a company can't price a product at $19.99, it most likely will favor $19.95 over the less-attractive $20. The bigger question is what to do with those hordes of pennies in everyone's closets.