Direct-Mail Spending Down in 2008 and Still Falling
He believes that shift, and a move toward more integrated multichannel direct marketing tactics, has benefitted a number of direct channels and service providers while crippling others. "If you talk to an agency that provides deep analytic services, they can't even serve all the orders they are getting," Mr. Ratan said. "But others, like list companies, are hurting because marketers are turning to their house files as opposed to list acquisition and renting."
Credit-card, loan cutbacks
Mr. Margulies said over 300 marketers, agencies and service providers were surveyed for the Winterberry report and that the decline in mail volume is due in large part to the cutbacks in two categories: credit card and mortgage and loans marketers. Mr. Margulies said credit card (-21.8%) and mortgage and loans (-38.8%) marketers, historically two of the biggest direct-mail practitioners, both had posted steep declines in the volume of direct mail they shipped in 2008.
"Financial-services companies don't have the need to market the way they did the last few years, and that's taking huge amounts of dollars out of the direct-mail application," he said. Mr. Margulies goes on to admit that the cutbacks in those two categories may actually "unfairly skew the picture against the whole medium."
Mr. Ratan also said stricter credit regulations for consumers meant less names to mail to, hence fewer mailings. "That got compounded with increasing expenditures like postage rates and paper costs cut volume," Mr. Ratan said. "In the last quarter of 2008 and the first quarter of 2009 there were some steep declines but I think the steepness of the decline will reduce and we will some moderation and balancing out going forward."
More declines on the way?
But if the situation in the credit and housing industries doesn't right itself that 12% number could climb even higher for 2009. "If things stabilize in those markets and marketers begin to reassess the way they do direct marketing there could be some stabilization and the numbers may not be as dire [in 2009]," Mr. Margulies said. "But right now there's no reason to believe that's going to happen."