Direct Mail Advertising

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 2,100 direct mail advertisers in the US distribute coupons, flyers, and other marketing materials through the mail on behalf of customers. Primary sources of revenue include full direct mail services, letter shop services, printing services, and fulfillment services. Direct mail includes letters, postcards, brochures, catalogs, and free samples. Large companies may offer integrated marketing services and also offer digital marketing, traditional media, or public relations services.

Industry Contraction

Direct mail volume fell dramatically during the 2008/2009 recession, and the industry has struggled to generate growth ever since due to the rise of digital communication.

Competition from Alternative Sources of Advertising

Direct mail competes with other advertising vehicles, including digital advertising (social media, email, internet ads) and traditional advertising (newspapers, TV, radio, print).

Industry size & Structure

The average direct mail advertiser works out of a single location employs about 17 workers and generates about $4-5 million annually.

    • The direct mail advertising industry consists of about 2,100 firms that employ about 36,400 workers and generate almost $10 billion annually.
    • The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for 50% of industry revenue.
    • Large firms with direct mail operations include Valpak (Cox Target Media), Valassis (Harland Clarke), and Mspark (MailSouth)
    • In 2020, the US Postal Service delivered more than 64 billion pieces of marketing mail, which accounted for nearly half of all US mail volume.
                                    Industry Forecast
                                    Direct Mail Advertising Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Coronavirus Update

                                    May 15, 2022 - Mid-term Election Ad Spending Under Way
                                    • The Democratic Senatorial Campaign Committee has reserved $33 million to be used this fall ahead of the mid-term elections. The initial reservation of funds is likely to be added to and modified as the election season progresses. The announcement is the first of several expected for the 2022 mid-term elections. The National Republican Senatorial Committee (NRSC) is expected to announce its campaign ad reservations in May. Spending by both groups will be a fraction of what will be spent by Political Action Committees (PACs). Politico says that The Mitch McConnell-aligned Senate Leadership Fund placed $141 million in ads and the Chuck Schumer-aligned Senate Majority PAC reserved spots totaling $106 million.
                                    • Apple’s iOS 14 privacy change has caused some firms that advertise via Facebook to consider other options. Lea Richards, the founder of Pig of the Month, an Ohio-based direct-to-consumer seller of barbeque, is among those using direct mail advertising “With post-iOS 14 ads not working, we’re getting back into direct mail. We’ve found good results, up to 6-times return,” she said. Richards uses direct mail mainly for acquisition, working with joint venture partners, cross-promoting to each other’s customer lists. Her partners are companies that offer complementary products, such as grilling and patio supplies and cigar and wine companies.
                                    • Workplace occupancy, an indicator of demand for business-to business direct mail advertising, was 43.2% for the seven-day period ending on May 4, down slightly from 43.4% for the seven-day period ending on April 27 but still up from 40.5% for the seven-day period ending on April 20, according to data gathered from swipes of access control cards in buildings with security systems provided by Kastle Systems. The Austin, TX, metropolitan area had the highest occupancy for the seven-day period ending on May 4 at 60.3%. The San Jose, CA, metropolitan area trailed all others tracked at 33.3%.
                                    • Marketing expenditure has outpaced sales growth in some sectors during the coronavirus pandemic, according to consulting firm McKinsey. The situation may be reversed by 2023 with a strategic approach, the company says. Market research firms may be negatively affected if attempts to reverse the trend result in reduced expenditures on research.
                                    • Use of QR codes — essentially a kind of bar code that allows transactions to be touchless — surged during the pandemic due to their touchless nature and is now common in direct mail advertising. The codes let businesses integrate more tools for tracking, targeting, and analytics. Placing a QR code on direct mail allows tracking of user location, time, and date of scan, for example, and allows analysis of the efficiency of the marketing campaign by looking at engagement, scan rates, and sales. QR codes also allow customers to access the latest technology. Ikea’s direct mailers include a QR code that – when scanned through the Ikea app – allows customers to see how an item would look in their space using Augmented Reality technology.
                                    • Real disposable income, an indicator of demand for discretionary purchases, decreased 0.4% month over month in March, according to the US Bureau of Economic Analysis. It was the sixth straight month that real disposable income decreased. Consumer spending increased 1.1% month over month in March.
                                    • Luxury brands will be betting on traditional forms of marketing as the pandemic wanes, according to Vogue Business. Channels including direct mail will be used to diversify from digital advertising, where recent privacy changes make it more difficult for brands to reach customers. “Digital is so fast that we were missing the ability to talk about our brand, what we care about and what we stand for,” says Mansur Gavriel’s chief executive Isabelle Fevrier. “[Direct mail] is a way for us to tell our story long-form, which appeals to us, because Mansur Gavriel has always been focused on art and photography and [not just clothes].” Digital marketing is also becoming “much more expensive”, she adds.
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