The direct mail industry in the United Kingdom has more than doubled in size and value in the past decade, with spending up by more than $2.8 billion and volume climbing by more than 3 billion items. The harsher economy has forced marketers to show stronger return on investment and greater measurability. Consequently, more businesses are choosing direct mail as their marketing medium.
In tandem with this trend, advancements in digital printing technology are set to transform the printing and DM industries, facilitating true direct mail on demand.
The mailing industry is at a crossroads. We have seen a flurry of legislative initiatives to clamp down on untargeted prospect communications in the UK. First, the industry’s ability to use electoral roll information for marketing has been severely restricted with the addition of an opt-out box on the electoral registration form. Some local councils even pre-ticked the opt-out box to further curb its use for direct marketing.
Then came more stringent opt-in regulations for consumer e-mail, making it illegal under the European Directive on Privacy and Electronic Communications to send prospects unsolicited e-mail offers. Finally, since last summer, businesses have been able to register with the Telephone Preference Service, which stipulates that marketers must not make sales calls to businesses registered with the service. Companies that use telemarketing to promote goods and services to businesses now risk fines of more than $9,300 if they call a registered number.
Marketers face pressure to refine their targeting and create more personalized mailings to offset the new legislation, boost response rates and keep within tight budgets. In a bid to obtain a single customer view, many invested in customer relationship management and database marketing systems. But recent research points to a gulf between the sophisticated customer segmentation carried out by database marketers and the physical delivery of personalized messages. Digital printing is set to close this gap.
First and foremost, digital printing is letting marketers achieve the one-to-one ideal. Unlike traditional lithographic printing, digital print enables cost-effective production of just a few highly personalized mail shots. Images designed to appeal to the recipient can be added to maximize response, based on preference or transactional data.
Imagine the response uplift that could be achieved by a computer retailer following up a customer’s purchase of a laptop PC with a mail piece featuring the recipient’s purchase – the model, brand, color and exact specification – along with matching accessories and peripherals such as printers and scanners.
Variable printing arguably has an even greater effect on existing customers because they will have higher expectations. This is particularly interesting given the recent restrictions on prospect mailings, as existing customers are being targeted over prospects to reduce churn.
Another advantage of digital print-on-demand is the lack of waste. With an average price of about 80 cents per consumer mailing, this represents substantial cost savings. It also has obvious environmental advantages. The British DM industry has been roundly criticized for its contribution to environmental damage. Only 13 percent of direct mail is recycled. This must rise to 50 percent this year and 73 percent by 2013.
However, many of the finishes, varnishes, inks and adhesives used in DM packs cannot be recycled. With nearly 550,000 tons of paper used in direct mail and promotions yearly, the industry must reduce the amount of waste in landfills or face harsher legislation and financial penalties. There are many ways to make direct mail packs suitable for recycling, from using different glues to changing the way the pack is put together.
More than 150 DMA UK members offer mailing and print services, so competition in the industry is fierce. Those that can offer viable, cost-effective, environmentally friendly solutions will prosper. Those that can’t, won’t.
Digital technology’s full potential is yet to be realized. With margins being forced down, many printing houses have been unwilling or unable to invest in the technology. It’s a vicious circle, with a lack of investment perpetuating the problem of retaining a competitive edge.
But direct marketing has reached a stage where it is necessary to become more targeted. With tighter legislation governing consumer privacy, greater emphasis on customer development and pressure to conform to environmental legislation, digital printing couldn’t have reached this tipping point at a better time.
Printers and direct marketers must realize that it really is a case of do or die: Times are a-changing, and data-driven printing is poised to meet these new demands.