MediaPost just published a story entitled "Direct Mail Doomed, Long Live Email" which covers research by Borrell Associates entitled "Direct Mail Falls, E-mail Soars (May '09)". As you might guess from the title, the story spells the demise of direct mail:
After making quick work of print newspapers, and the Yellow Pages industry, "The kudzu-like creep of the Internet is about to claim its third analog victim," warns a new report from research firm Borrell Associates. The victim? "The largest and least-read of all print media: Direct mail."
"Direct mail has begun spiraling into what we believe is a precipitous decline from which it will never fully recover," Borrell predicts. More specifically, it is projecting a 39% decline for direct mail over the next five years, from $49.7 billion in annual ad spending in 2008 to $29.8 billion by the end of 2013.
If Borrell is correct, direct mail will fall from the premiere placeholder for ad revenue to the fourth -- behind the Web, broadcast TV, and newspapers.
Is direct mail really doomed?
The financial situation of the USPS is certainly a recipe for disaster: they seem to be in a "death spiral" where their cost burdens drive up postage which drives down direct mail ROI which reduces revenue and profit which drives postage higher (repeat...). Electronic bill presentment and bill paying is taking a big chunk out of the USPS pocketbook. Credit card mailers have pulled back significantly because of their own problems. The USPS' list of financial problems is long and getting longer every day.
Cross-selling, up-selling, and retention programs (i.e. marketing to current customers) can be very effective through email if done right. This reduces demand for direct mail.
However, prospecting for new customers through email often fails miserably (particularly when the wrong mailing lists are chosen). This is where direct mail still shines despite the all the economic challenges of getting direct mail to the mail box. Response rates, average order, and ROI are higher with direct mail prospecting programs. With good mailing lists, results are even better.
What do you think? Can prospecting save direct mail? Or will spiraling postage and other cost increases eventually make direct mail inviable?