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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation 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

                                    Recent Developments

                                    Mar 7, 2023 - Some Brands Lean into Insert Media
                                    • As the economy shows signs of slowing and consumers pull back on spending, some brands and marketers are looking to leverage insert media to reach people who are still spending, according to Marketing Brew. Insert media are fliers inserted into packages or products consumers have already bought. While insert media isn’t new, it’s enjoying a resurgence as paid search campaigns have gotten more expensive, and social media conversions aren’t what they once were. Insert strategies are popular for emerging brands targeting younger, affluent shoppers. Such brands can strike deals with firms like Hello Fresh and Fanatics to reach people they know are still spending. Inserts in magazines effectively reach older consumers for products like medical devices.
                                    • Recent headwinds for social media, including trolling, bots, and management turbulence at Twitter, have given some marketers pause, which may create opportunities for print media advertising, including direct mail, according to a recent report by commercial printing firm RR Donnelley (RRD). In a recent RRD survey, 54% of respondents said they expect their firm’s marketing budget to increase in 2023. The survey also showed that 58% said that “optichannel” strategies that mix digital and print elements based on which types of consumers are targeted will yield the best results.
                                    • According to a recent report by direct mail automation platform Lob and marketing intelligence firm Comperemedia, 58% of marketing executives surveyed said their firms have more of their budgets allocated for direct mail in 2023 than they did in 2022. Nearly 70% of survey respondents said up to 25% of their 2023 marketing budgets are for direct mail campaigns. One-fifth of marketers reported direct mail efforts will account for 26%-50% of their budgets, and 11% said more than half of their 2023 budgets would be allocated to direct mail.
                                    • Open AI’s debut of ChatGBT, a large language model chatbot, has ignited interest in the advertising industry, according to Marketing Dive. Advertisers and marketers are interested in ChatGBT’s potential for creating and running campaigns more cheaply, especially when increasing economic uncertainty could impact ad budgets. Using natural language processing and GPT-3 technology, chatbots like ChatGPT can generate large amounts of content at a much lower cost and more quickly than a human can. However, some industry watchers note that while chatbots like ChatGPT are excellent at generating content by compiling existing information, they cannot create new ideas, which is the essence of an effective marketing campaign. This lack of human touch may limit ChatGPT’s advantage in terms of speed and cost.
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