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

                                    Dec 5, 2022 - New Business Applications Rebound
                                    • New business formations have recovered after a small lull earlier in 2022 to the elevated levels seen during the fall of 2021, and their owners are hiring quickly, according to John Haltiwanger, a University of Maryland economist. The US Census Bureau reported almost 433,000 new business applications in October, up from 313,000 in December 2019, before the Covid pandemic began, and 413,000 as recently as June. "Even with the volatility and the surge [earlier in the Covid pandemic] we're still 30 percent higher in 2022 than in 2019," Haltiwanger said. "People are being optimistic about the future and that's a good sign."
                                    • About 86% of marketers surveyed by NAPCO Research have increased or maintained direct mail use in the last twelve months. The direct mail channel has been on a steady rebound since the initial plunge of 2020. Over half of respondents to NAPCO Research said that they entered the mail channel to escape the rising customer acquisition costs of digital channels and increasing privacy regulation. Reaching audiences without violating increased data security regulations is a top concern for marketers.
                                    • 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 47.3% for the seven-day period ending on November 2, down from 47.6% for the seven-day period ending on October 26, according to data gathered from swipes of access control cards in buildings with security systems provided by Kastle Systems. Occupancy reached 49% on October 12 after failing to break the 47.5% mark since at least August despite attempts by many organizations to bring employees back. The Austin, TX, metropolitan area had the highest occupancy for the seven-day period ending on November 2 at 61.9%. The San Jose, CA, metropolitan area trailed all others tracked at 39.8%.
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