Direct mail loses ground to digital post-recovery

Direct marketers are beginning to see green shoots of economic recovery, but the media mix continues to shift and experts predict direct mail will never regain its dominance.

Forty-three percent of marketers expect to see profit improvements in Q1, and 51.2% said they’ll increase their total marketing spend in 2010, according to the Direct Marketing Association’s Quarterly Business Review (QBR), released earlier this month.

“After a very hard 2009, direct marketing budgets are no longer shrinking,” said Yoram Wurmser, research manager at the DMA. “This doesn’t mean that spending is returning to normal. It means a slight recovery from 2009 with a very different [marketing] mix.”

Industry experts agree. Ron Jacobs, president of direct marketing agency Jacobs & Clevenger, said his agency has not created any direct mail this year on behalf of clients.

“I didn’t have a direct mail package in-house in the first quarter,” he said. “The most efficient and effective ways to reach some of our clients’ customers isn’t through the mail; it’s through other channels like e-mail.”

David Williams, chairman and CEO of database agency Merkle, said the financial services sector is on hiatus from direct mail investment. “Our financial services clients aren’t spending any money,” he said. “I don’t think the credit card guys will ever go back to where they were.”

However, research shows direct mail is expected to remain a significant piece of the direct marketing pie. ZenithOptimedia’s Advertising Expenditure Forecast says the channel will grow 2.5% in 2010 and 3.1% in 2011. Direct mail represents the largest category of expenditure of all direct marketing media, at 39%.

Bruce Biegel, managing director of Winterberry Group, which partnered with the DMA on its Quarterly Business Report, said with the economy picking up, marketers are shifting back to a customer acquisition mindset. During the recession, many companies were focused on retention.

“Direct mail is coming back because marketers and agencies haven’t quite figured out how to do acquisition marketing at scale online,” he explained.

Seth Solomons, global CMO of Publicis-owned agency Digitas, agreed that direct mail is still important. “Some communications have migrated to e-mail, but there’s still a significant population of people who want to receive those communications through the mail.”

It’s no surprise that the Web is growing faster. ZenithOptimedia reports that online revenues will increase 15% in 2010. “With the exception of certain industries, we have seen that online advertisers do not pull back as much when the economy changes,” the report noted. “Instead, they change their messaging, creative, and/or mix of digital marketing strategies.”

Other digital channels are growing even more quickly. “We’re starting to see line items in marketing budgets for mobile and social marketing, whereas before, we weren’t,” Biegel said. ZenithOptimedia said social and mobile are the fastest growing channels, stating they increased 44.6% and 68.5%, respectively, in 2009. l

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