Better times ahead for DM?
Philip Chadwick, Print Week, 6 December 2007
Strikes, falling volumes, looming government interference, the rise of online marketing – at first glance it’s been a pretty grim year for direct mail (DM) printers. But that’s not the full story. DM is having to work a lot harder to get the attention of consumers and many printers and marketers have turned these negative events into positives.
For falling volumes read more personalised mailings and a growing ‘transpromo’ market – that is using proactive marketing on transactional print such as statements, invoices and other business forms. Looming government interference means that more DM printers are getting their environmental house in order. Online marketing is leading many to go down the cross-media route. As for the postal strikes, they proved to be a real headache – sadly nothing positive there.
This year was a tough year for print full stop and DM wasn’t spared from the bouts of consolidation and ever dwindling margins. Add the other ingredients above and it’s little surprise that there was a lot of negative feedback from printers when asked how the past 12 months had gone. Surprisingly, however, not all of them believe that 2007 has been a bad year.
Solid year
“This year has been a fantastic one for us and has vindicated our decision to go down the path of one-to-one marketing,” says Wesley Dowding, client services director at Inc Direct. Howard Hunt marketing director Lucy Edwards adds: “It has been a solid year. We have seen an upturn in DM and campaigns are becoming smarter.”
But Howitt managing director Gurdev Singh says that not everything is rosy in the DM garden. “The general market has been tough and it remains tough,” he says.
“It was a tough summer, particularly in July and August,” agrees Dsi CMM chief executive Yolanda Noble.
Consolidation in the sector has been epitomised by the merger this year of her company, Corporate Mailing Matters, with Direct Solutions International to create a group that is aiming to reach a turnover of £85m.
Chris Hallett, business development manager at DPS, says that the company has experienced a slightly reduced turnover, but DPS, which is part of the Stralfors Group, has still managed to maintain a profit. “We are quite financially secure and that gives us good stability,” he explains.
Despite these contrasting views, the antics of Royal Mail postal workers was an indisputable low point in the year. In October, the dispute between management and the union came to a head and strikes took place over three weeks.
Door-drop deliveries were cancelled by Royal Mail and piles of undelivered mail mounted. “The strike didn’t help,” says Singh. “Customers did not know when their campaigns were going out. We lost a bit of business because of it, but Royal Mail gets a bad rap and they are in a difficult position. The unions are not helping the management.”
“It had a huge effect on our business,” adds GI Direct sales director Patrick Headley. “The fear is that the subject will come up in media planning meetings next year. A marketing director will talk about mailings, but a financial director will warn about potential postal strikes and look more towards the internet.”
New opportunities
This is a real concern for the DM market and printers will be praying that there’s no repeat of recent industrial action next year. But new technology also means new opportunities with cross media campaigns finally becoming a reality.
“We have seen a migration of sorts to alternative media,” explains Adare sales director Steve Williams. “But there are cross-media opportunities. The key is to roll out more pertinent and relevant messages across all forms of media.”
And with more print firms buying cross-media software, this sort of work is on the rise. But there is more to it than the right kit. The key to getting this sort of campaign right, according to Williams, is understanding the data: “We are looking to get greater insights into databases,” he explains.
While cross-media may be a new discipline to some, it is not a new opportunity for companies such as the newly merged Dsi CMM. “This is already a big area for us,” says Noble. “We have been doing this for the past two years – you have to offer it.”
“If you set your business up right, then you can capitalise on digital media,” adds Howitt’s Singh. “It is complementary to print. We are helping our clients to optimise other media channels and this has been our strategy for a while. Some cross-media campaigns are in their early stages, but I think clients will ramp them up.”
Bill Parker, managing director of software provider GMC, argues that the use of alternative media can be a very powerful tool for marketers. If, for example, a DM drive links to a personalised website, marketers can monitor exactly how many people have responded to a campaign.
“You can see the results instantly,” says Parker. “All the information is there for a marketer to see and track a campaign. It also allows a brand to tweak a campaign while it is running.”
The good news is that print will have a huge part to play in multimedia campaigns, according to Parker, who points out that consumers tend to be suspicious of unsolicited emails and often prefer to delete them straight away. A personalised mailing, however, can be just the trigger to get a person on to the internet and view a personalised web address. From there the campaign could switch to email, SMS or even back to good old-fashioned print.
Many believe these types of campaign can help to restore the battered reputation of DM. “We are seeing a better use of data with response rates improving and an upturn in return on investment,” observes Howard Hunt’s Edwards. “Communications are becoming are more relevant, targeted and timely. It is a valuable medium and we are doing all we can to get away from the ‘junk mail’ label.”
But industry commentators warn that printers need to get in on the act now. DST International Output sales and marketing director Malcolm Webb explains: “If you are not getting into the technology that complements print then you need to find a partner. The Royal Mail strikes will have been a wake-up call. With high volume work likely to reduce, you t need to replace it with something.” DPS’s Hallett adds: “It is really just a case of keeping up with the times. You have to keep moving forward to stay ahead of the game.”
And with traditional print on the wane, DM printers need more in their armoury. This could extend into data management capabilities and investment in technology that enables them to undertake more targeted SMS and email messaging.
Struggle for work
As volumes continue to decline, particularly in the financial sector, those that merely focus on winning large-volume mailings are going to struggle to find work. Just last month Capital One, which produces the second largest volume of DM in the UK, pledged to cut the number of units it produces and invest more heavily in the internet instead.
But that doesn’t mean that all companies are giving up on DM just yet. Postcomm’s 2007 Competitive Market Review showed that some sectors are increasing their use of DM. One sector with great potential for DM is transpromo mail. In the US, the transpromo market is rapidly maturing although it hasn’t completely taken off in the UK just yet. But it is a growing market and provides a ray of light for many printers in the DM sector.
DST International specialises in such documents and Webb says that, while some customers have not yet taken the leap into bills and statements incorporating marketing messages, they are looking more at full-colour variable mailings. “Full-colour, variable work is a stepping stone,” he explains. “For now they have more confidence with that kind of document than transpromo.”
While some industry pundits believe that there will always be a place for mass print communication, the signs are that next year there will be a more concerted effort to produce better targeted, highly personalised mailings. And, despite some gloom about 2007, there is a growing sense that better times could be just around the corner.
