This category includes establishments primarily engaged in creating, producing, and mailing direct mail promotional pieces for clients. This industry also encompasses establishments primarily employed in compiling and selling mailing lists. Establishments primarily engaged in reproducing direct mail copy on order but performing none of the other direct mail advertising services are classified in manufacturing, industry group 275 if they print the copy and in SIC 7334: Photocopying and Duplicating Services if they duplicate the copy by photocopying or similar reproduction methods.
541860 (Direct Mail Advertising)
Despite the fact that a majority of consumers claim they receive too much unwanted, unsolicited mail, commonly known as "junk mail," the direct mail advertising industry continues to grow. In 2002 marketers spent approximately $49.1 billion on direct mail, which generated sales of over $636 billion, up 9.4 percent from 2001. These figures represent a decade-long period of sustained growth. Direct mail-generated sales were an estimated $260.2 billion in 1992, $390 billion in 1997, and $421.2 billion in 1999.
Direct mail's expenditures are expected to grow at 6 percent per year through 2008, at the same rate projected for total advertising. Advertisers are seeking to replace mass media marketing with more focused and targeted marketing activities, which serve to increase response rates and reduce unproductive mail. As a result, new opportunities are opening up for database marketers, companies that gather and manage purchase history and personal information.
Concerns about privacy, however, are affecting the industry. More consumers are choosing to remove their names from mailing lists, and new laws regulate the companies' use of personal information. The Internet is also exerting an influence over the industry. Although web research complements direct mail efforts by providing new ways to gather information, it also competes with traditional print media for limited advertising dollars. E-commerce is relatively cheap compared to direct mail packages. As with direct mail packages, unsolicited commercial e-mail, a practice known as "spamming," has come under fire with consumer advocates, prompting new legislation.
Direct mail, like other forms of advertising, plays an important role in the U.S. economy by informing consumers about products and services. By expanding information and distribution channels, advertising is thought to benefit both businesses and customers with a more efficient market. Direct mail is part of the larger direct marketing industry, which also includes specific types of ads that are found in newspapers and magazines, on television and radio, and in telephone marketing.
Like other forms of direct marketing, direct mail ads differ from more traditional general advertising in several ways. The most important distinction, though, is that direct mail advertising typically solicits a direct response from the consumer. General advertising, by contrast, usually seeks to promote a company or product image, inform consumers, or sway public opinion. While direct mail may also attempt some or all of these goals, its primary purpose is to elicit a tangible, measurable reaction.
Besides prompting consumers to take a specific action at a certain time, direct mail also differs from general promotional mail in that each advertisement is usually targeted at specific individuals at their addresses. For this reason, direct mail is often referred to as a form of target marketing. It is also unique because customers respond directly to the company that placed the ad, so the marketer maintains control of the offer throughout its delivery. In contrast, companies that use general advertisements lose control of their message—at the moment an ad enters a distribution channel, consumers are left to decide when, where, and how they will react to the promotion. Direct mail ads are also more likely to stress benefits and features of a product or service. Furthermore, direct mail commonly contains repetitive messages within each ad, whereas general advertisements rely on repetition over time.
Although some advertising firms were engaged solely in providing direct mail services, most companies in the industry were active in all aspects of direct marketing. Moreover, many of the largest companies that offered direct marketing also provided general advertising services. In addition to actually printing, assembling, and mailing promotional pieces, most direct mail firms provided services related to strategic planning, research and development, results tracking and reporting, and database management.
Types of Ads. Direct mail promotions can be categorized as lead generation, mail order, traffic building, subscription marketing, and fundraising. According to a 1996 Gallup survey, about 89 percent of direct mail advertisers employ lead generation mailers. These ads simply ask recipients to exhibit an interest in the company's offer. For instance, consumers may indicate a desire for more information by returning a response card requesting that the company call or write them with more data. Lead generation ads are often used to build a list of prospects on which the company can focus its future marketing efforts.
Direct mail advertisers also vary the contents of their packages. The traditional format includes an outer envelope, cover letter, product brochure, order form, and sometimes a separate reply envelope. The 1999 study conducted by the Graphic Arts Marketing Information Service (GAMIS) stated that direct marketers were using co-op packs, card decks, ride-alongs, statement stuffers, and self-mailers. The new models tend to be simpler in design and therefore cheaper to produce. Direct mail advertisers also use more four-color printing and specialty papers to attract potential customers.
Almost all direct mail campaigns fall into one of three market categories: charitable contributions, business ads, or consumer promotions. According to the 1996 Gallup survey, companies used many different forms of direct mail to generate leads and sales. The survey reported 86 percent used brochures; 80 percent, direct mail letters; 77 percent, flyers; 69 percent, newsletters; 55 percent, postcards; 35 percent, catalogs; 25 percent, invoice inserts; and 22 percent used package inserts. Average mid-sized and large companies' direct mail production was 672,100 pieces each year.
Benefits and Disadvantages. Organizations seek services from direct mail companies for selectivity and personalization. By carefully selecting the group of consumers that will receive an ad and carefully tailoring the message to that group, a direct mail company can maximize the efficiency of a client's marketing dollars. For this reason, direct mail advertising is the most costeffective means of advertising for many types of products. In addition to savings related to marketing expenditures, direct mail allows many manufacturers to completely bypass costly retail centers and distribution facilities by delivering products through the mail.
Direct marketing companies also offer the benefit of being able to measure and test the effectiveness of a company's advertising efforts. In fact, direct marketing firms commonly test multiple offers and formats before distributing an ad on a broad scale. This important feature allows an organization to exercise more control over its promotion than is allowed by almost any other type of media. A related advantage, in comparison to other forms of advertising, is that direct advertising campaigns are more difficult for competitors to monitor and track.
A major disadvantage of direct mail is that it can be very expensive. Direct mail firms typically charged at least 40 cents per piece to print, assemble, and mail even a relatively simple promotion. In addition, clients often pay for creative services, tracking, and strategic planning. In comparison, a full-page advertisement in a trade magazine that reaches 50,000 readers may cost as little as $2,000 to $3,000. Another disadvantage of direct mail is mailbox competition. In the New York Times , Stuart Elliot reported that direct mail climbed to 44 percent of all pieces of mail handled by the post office in 1998, up from 41 percent a decade ago and 32 percent in 1978.
Consumer perception is another pitfall. Most consumers commonly refer to direct mail as "junk mail," and hold in low regard the more cost-efficient mail-merge packages that combine pieces from a number of different advertisers in one envelope. More than 50 percent of direct mail envelopes end up in the garbage. Moreover, many consumers—the DMA reported more than 3 million—were exercising their right to have their names removed from mailing lists. Fewer consumers take the time to clip and redeem coupons the way they once did, making it difficult to track the effectiveness of direct mail campaigns. Despite a general rise in coupon face values, the overall coupon redemption rate fell throughout the decade—6 percent in 1993, 9 percent in 1994, 6.5 percent in 1995, and 8.6 percent in 1996.
Mailing Lists. Mailing lists are the backbone of the direct mail advertising industry. Regardless of how competent and alluring an offer may be, the success of any direct mail promotion is contingent upon the quality of the mailing list used to distribute the piece. To avoid unnecessary expenses, list providers must insure that address lists are up-to-date, devoid of duplicate names or addresses, and accurate. Mailing lists were commonly sold on labels for anywhere from $7 to $80 per thousand for one-time use and about twice that amount for computerized lists that could be used more than once.
Mailing list companies offer the critical advantage of market segmentation by tailoring a list to include only the consumers to which it would be profitable for a company to advertise. For instance, a luxury Japanese car dealer-ship may wish to send an advertisement to all residents in Southern California that earn more than $150,000, have two or more children, own a three-car garage, and currently drive a German car. Using computer database management techniques, list companies in the early 1990s were able to extract even the most unique niches, such as that just described, from a list of names and information.
In the early 1990s, list companies offered more than 10,000 different lists, most of which could be tailored to suit specific requirements. The four major types of lists were response, compiled, consumer, and business. Response lists were made up of people that had previously responded to a direct marketing promotion. Because these lists typically provided higher response rates and were more difficult to create, they commonly cost $50 to $80 per thousand. Furthermore, these lists accounted for approximately 60 percent of list industry sales.
Compiled lists were usually created using mass listings from voter registrations, telephone books, licensed driver listings, or other common groups. These lists typically cost $25 to $30 per thousand. Consumer lists were compiled from the general U.S. population and were segmented by various demographic factors. Because these lists often were not proprietary and were sold in huge volume, they usually cost $7 per thousand. In 1992, more than 90 percent of the U.S. population was accessible through more than 6,000 consumer mailing lists. Business lists (13 percent of sales) contained addresses of more than 9 million different enterprises from more than 4,000 lists in 1992. Prices in this segment ranged from $35 to $40 per thousand names.
By the late 1990s, however, a fundamental shift had occurred regarding the perception of information. For decades, information collected about or from consumers was regarded as the property of the organization that collected it, to be used at that organization's discretion. But another consensus developed that said the information was the property of consumers, whose consent should be required before information about them was used. Privacy protection laws, which seek to limit the transfer of personal information, especially medical histories and other sensitive data, have been enacted or were under consideration in the United States.
Direct mail advertising was invented by Benjamin Franklin in 1744. He produced a mail order catalog bearing this promise: "Those persons who live remote, by sending their orders and money to said B. Franklin, may depend on the same justice as if present." About 100 years later in Philadelphia, in 1841, the first advertising agency was opened. In 1863 Congress authorized the issuance of a discount stamp for mailers of "printed matter and manuscripts," known as second-class mail. It also issued a third-class stamp for "bulk mailers."
Direct mail advertising in the United States did not become a popular marketing tool, however, until the beginning of the twentieth century. Although still not considered an important information and distribution channel in the early days of the industry, several large companies relied heavily on direct mail to promote their businesses. Sears, Roebuck, and Co., which marketed heavily through its innovative mail catalogs in the early 1900s, became a notorious early example of direct marketing. The Montgomery Ward, Aldens, and Spiegel companies also mailed large numbers of catalogs.
In addition to the large catalog retailers, store-based retailers and industrial advertisers helped expand the industry. In fact, these organizations accounted for the bulk of direct mail sent out by the 1910s. National Cash Register (NCR), for instance, attained legendary results by using mail order to generate leads and to support its sales force. On the cutting edge, NCR mailed tens of thousands of advertisements targeted specifically at niche markets, such as butchers and grocery storeowners. Fundraisers, particularly politicians, were also beginning to realize the benefits of direct advertising.
In response to the growing volume of direct mail advertising, lettershop owners and their customers formed the Direct Mail Advertising Association (subsequently called the Direct Marketing Association or DMA) in 1917. The organization was established to help advance the fledgling industry and grew throughout the 1920s from its initial membership of around 500. The 1920s also saw the emergence of several companies devoted solely to providing direct mail services. For example, DIMAC Direct of St. Louis, Missouri, was founded in 1921 and remained an industry leader in the early 1990s.
Despite immense setbacks during the Great Depression of the 1930s, when DMA membership fell to less than 300, the industry continued to progress. The post-World War II economy spurred the success of direct mail companies, which were using their increasing political clout to influence postal rates. By the late 1950s, the DMA had about 2,500 members, and the direct mail industry represented a multi-million dollar business. The industry maintained steady growth in the 1960s and 1970s, spawned in part by new catalog retailers like L.L. Bean, Inc., J.C. Penney, and Lillian Vernon. Also boosting industry growth in the 1970s was the advent of postal ZIP codes, which allowed companies to more easily target their mailings.
By 1980, U.S. companies were spending more than $7.6 billion per year on direct mail advertising, and total mail order sales had risen to $72 billion. Furthermore, direct mail accounted for nearly 15 percent of all advertising expenditures. During the coming decade, these figures were destined to rise substantially, for both technological and demographic reasons.
One of the greatest reasons for the proliferation of direct mail advertising during the 1980s was the metamorphosis of American lifestyles. More women working outside the home meant that households had more expendable income but less time to spend it. As a result, many consumers adopted direct mail advertisements, such as mail order catalogs, as an alternative to conventional shopping behaviors. Moreover, personal selling through direct marketing became more popular, which put a pinch on traditional retail outlets. The average cost of a business-to-business phone sale, for instance, had grown from $57 in 1971 to $137 in 1979 to more than $250 by 1987. Technological advances also increased the power and decreased cost of computers, allowing direct mail advertising firms to achieve almost exponential efficiency gains. By 1990, computers dominated every step of the direct mail process, from program planning and list development to order fulfillment and response tracking.
The proliferation of new niche products and services boosted industry profits in the 1980s. A dominant market trend since the 1980s was highly specialized offerings that targeted individual needs. Because direct mail provides efficient access to niche market segments, it became the medium of choice for growing numbers of companies. These companies also benefited from tollfree telephone numbers and private mail services, which further increased the efficiency of direct mail advertising efforts.
Other factors that contributed to the growth of the direct mail industry in the 1980s included: greatly expanded use of credit cards; the availability of computerized mailing lists; an aging population that shopped at home more often; and a rise in single households. By 1990, expenditures on direct mail topped $23 billion, representing a more than 300 percent rise since 1980. Furthermore, mail order sales grew to more than $200 billion by 1990. Direct mail expenditures also had grown to represent nearly 20 percent of all advertising dollars and had grown faster than any other segment of the advertising industry during the 1980s. In addition, industry employment leapt from 44,000 in 1983 to approximately 90,000 by 1990.
The growth of the direct mail advertising industry, which averaged well over 10 percent during much of the 1980s, continued in the early 1990s, despite a sluggish economy that reduced overall advertising activity. The industry remained healthy and billings for direct marketing services rendered by ad agencies surpassed $4 billion. Direct billings increased 15 percent in 1990 and 13 percent in 1991. Furthermore, total expenditures on direct mail increased 4.5 percent in 1992, versus a 2.9 percent increase in 1991 and a 7 percent increase in 1990. In fact, total direct mail expenditures climbed from $11.8 billion in 1983 to more than $25.4 billion by 1992.
By 1993 the direct mail advertising industry had firmly established itself in almost every sector of the economy. Once considered "junk mail" by some large corporations, direct response ads had become an important form of advertising for even the most elite and sophisticated corporations. IBM, General Motors, Nieman Marcus, and similar organizations were using direct response ads to promote their products and services. Small companies, too, were increasingly turning to direct mail to increase sales and to compete with larger companies.
According to a Gallup study in 1996, 77 percent of U.S. companies used direct mail, and marketing executives considered it the most effective technique in reaching their objectives. The survey reported that marketing executives credit direct mail sales with an average of 5 percent of their company's revenue. Compared to other media, however, direct mail continued to trail telephone marketing by volume of sales generated.
By 1997, sales generated by direct mail surpassed an estimated $421 billion per year, according to the DMA. As further evidence of the upward trend, approximately 100 million Americans were making shop-at-home purchases each year in the early 1990s, and 70 percent had used a toll-free number to purchase an item. About 68 percent of all magazine subscriptions were sold through mail order in the early 1990s, accounting for more than $190 million in sales. Also, insurance premiums totaling more than $10 billion per year were earned through mail order. In 1991, the average American spent $425 as a result of mail order advertisements. Furthermore, about 25 percent of all charitable contributions were obtained through mail solicitations, totaling about $50 billion.
In the late 1990s, the direct mail industry was thriving. In 1998, direct mail advertising accounted for 4 out of every 10 pieces of U.S. mail and generated more than $421 million in sales. Industry experts projected moderate growth into the next decade. Yet, the volume of incoming mail has not affected consumers' response rate. Most direct mail marketers considered a 2 or 3 percent response rate to be successful. Up to 98 percent of the people who receive unsolicited mail reject the offers, most tossing the direct mail unopened. The United States Postal Service (USPS) says that consumers are just as likely in the early 2000s to respond to direct mail as they were 10 years ago.
What has changed is the sophistication of the direct mail packages. An important shift in marketing has occurred in the last few years—a move away from mass marketing and towards a more information-led, targeted audience. Advertisers and agencies strive to increase the relevance of—and decrease customer annoyance with—direct mail by customizing the pitches they send to customers.
Database companies provide sophisticated information about customers by overlaying generic information, from phone lists and driver records, for example, with specific information about customers' spending patterns and family size. The Internet provides direct marketers with a powerful new information-gathering tool. "The consumer technology that makes the Internet possible," stated Stuart Elliot in the New York Times , "is also helping direct marketers in their quest for the grail of relevancy by making it easier than ever to compile extensive information about consumers before any mail is sent."
The direct-mail techniques have also become more sophisticated. A USPS study estimated that more than 20 percent of advertising mail was thrown away unread, partly because it looked unprofessional. To offset this image, the industry has developed new printers that add color, personalize addresses with special fonts to look hand written, and can add personal touches like deliberately crossed-out names. Direct-mail envelopes are sometimes designed to look like express mail and next-day delivery packages to imply urgency.
Consumers are not the only targets of direct-mail advertisers. The GAMIS study reported a rising trend of business-to-business direct-mail marketing. In 1998, business-to-business expenditures represented 39 percent of direct mail expenditures according to the GAMIS study; by 2009, they were expected to hit 45 percent. Consumer direct mail, which accounted for a 61 percent share in 1998, was expected to shrink to 55 percent by 2008.
Industry Challenges. Despite strong growth, the direct mail industry was not without its problems in the late 1990s. Postal rates increased in 1996, increasing the costs of and reducing the efficiency of direct mail ads. This change led direct mail agencies and their clients to streamline their lists to reduce the size of mailers and customize their pitches. Moreover, as the cost of mailing grew, more companies moved toward telephone marketing. By 1995, the telephone marketing industry had seized 40 percent of the total direct marketing expenditures, surpassing direct mail by 17 percent. But by 1999, the tide had again changed. In a Pitney Bowes "Mail vs. Telemarketing" survey, U.S. customers stated a preference to mail by a four-to-one margin.
Industry success was leading to another problem—overcrowded mailboxes. Because direct ads were competing with increasing numbers of other mail promotions for consumer attention, the response rate and profitability of sending out direct mailers was beginning to decline. Like the increase in postal rates, this problem encouraged more precise market segmentation.
Environmental waste, created by approximately 65 billion direct mail pieces sent out every year, represents a continuing challenge to the direct-mail industry. Each year, those direct ads and catalogs consume more than 1 million acres of forest. According to a study by Carnegie Mellon University, bulk mail was responsible for 5 percent of all paper pollution in 1996. The study concluded that companies could also find equal response and sales using the Internet. Consumer environmental awareness has negatively impacted the public's perception of mail ads. In an effort to reduce waste, the DMA reported that direct mail advertisers now use more recycled materials.
By 1997, the direct mail industry faced some competition from Internet marketing. Termed "spam" in Internet jargon, bulk e-mail grew with the number of subscribers. In 1996 the difference in cost was 99 percent less to send bulk e-mail instead of direct mail. Philadelphia-based Cyber Promotions, Inc., would send an e-mail ad to more than a million computer users for as little as $59 in 1996. This controversial practice was far from becoming commonplace entering the late 1990s, though, and faced potential government regulation in several states despite the general "hands-off" approach to Internet commerce promoted by the Clinton administration.
However, by 1999, new synergies were emerging between the direct mail and Internet industries. A report commissioned by Pitney Bowes, Inc., Mailing Systems Division, "The Role of Mail in E-commerce Study," analyzed the relationship between direct mail and the Internet. It concluded that direct mail was considered the most effective tool for getting customers to go to a Web site and place an order, and it was nearly as powerful as Internet advertising in encouraging Web site visits, or "hits." Mail could help develop awareness, sales, and customer relationships, which, combined with the reach of the Internet, could create a powerful sales medium. In December 1999, Big iDeals, Inc., a Silicon Valley-based direct marketing services company, launched the Big iDeals Internet Guide, a 16-page booklet featuring multiple advertisers in a single publication that targeted women aged 25 to 54 who had an Internet connection. PR Newswire stated that the new publication signaled a new trend among marketers toward using traditional direct marketing in conjunction with online marketing.
In the late 1990s direct mail advertising methods continued to become more sophisticated. For instance, more advertisers stressed database marketing, which entailed maintaining computerized information about customers and leads generated from previous ad campaigns. Such databases were used to market new, or "add-on," products and to establish a relationship with the consumer that would lead to a pattern of sales. By 1992, 54 percent of advertisers were using database marketing, and 23 percent planned to begin doing so in the near future. Many direct mail agencies offered database management services to their clients.
Direct advertisers also continued to practice greater media integration, which involved running direct mail ads as part of a larger multi-media promotion. Sophisticated campaigns coordinated the image, message, and timing of multiple marketing channels to increase their overall effectiveness. According to Joanna Lowenstein in Folio , one method that might improve direct-mail response was telesurveying in advance of a direct-mail campaign. New technology and international marketing would also play a role in future growth.
According to a survey conducted in 2002 by StoptheJunkMail.com, 87 percent of Americans polled said that they received too much unsolicited mail, and 65 percent of those polled threw away their direct mail without opening it. In contrast, American Demographics reported that nearly three out of every four adults regularly read their direct mail, and 59 percent of those surveyed had opened their direct mail within the last week.
Despite the conflicting study results, there was a perceived public distain for unsolicited advertising, yet the industry continued to thrill. Credit card companies, which sent out a record four billion solicitation letters in 2002, received a strong response from certain demographic segments of the U.S. population. According to a 2002 survey of 2,000 adults conducted by Vertis, a marketing services company, 48 percent of those polled had obtained their most recent credit card via direct mail solicitation, whereas other sources received much lower percentages: a friend or relative (7 percent), at their bank (7 percent), special event/in-person promotion (4 percent), Internet (3 percent) or telemarketer (3 percent). According to Vertis' study, although only 21 percent of senior Americans read unsolicited advertising, 43 percent of those under the age of 25 read unsolicited mail.
The direct mail advertising industry was affected dramatically in the fall of 2001, in the aftermath of the terrorist attacks of September 11, which were followed by the spread of anthrax through the U.S. postal system. A survey by the DMA reported that one-third of all Americans began treating their mail with new suspicion. Warnings went out across the nation to avoid handling mail from unknown senders. As a result mass mailings dropped 7 percent from September 10, 2001 through November 30, 2001, compared to the same period of the previous year, and some companies reported a 50 percent decline in response rates. The DMA advised marketers to use a return address and a logo if possible to clearly identify the origins of the mail arriving in consumers' mailboxes.
As direct mail marketers optimistically predicted, the public's fear of what came into their homes via the U.S Postal Service was relatively short-lived. The industry, however, continued to face other challenges, including rising postal costs and increased competition from Internet-based advertising. In a study released in January 2003, Blue Martini Software, Inc. reported in its annual poll of 6,000 retail executives that for the first time retailers planned to invest more in e-mail advertising than direct mail advertising. Also, direct mail advertisers had to conform to new rules that went into effect in 2003 that guarded against misrepresentation and misleading advertising.
Valpak Direct Marketing Systems, Inc. was selected as the top franchiser in the direct mail advertising category by Entrepreneur in January 2003. There are about 220 Valpak franchises in the United States, Canada, Mexico, and Puerto Rico, along with five corporateowned facilities and a corporate-run Web site. The company sends over 500 million direct advertising packets every year.
Wunderman, the direct marketing arm of advertising giant WPP, Inc., reported revenues of $378.2 million in 2002. Other industry leaders included Rapp Collins Worldwide, of New York, with revenues of $360.2 million in 2002, and Digitas (formerly Bronner, Slosberg, and Humphrey) of Boston, which produced $321 million in revenues in 2002.
According to the U.S. Department of Labor, Bureau of Labor Statistics, the industry group categorized as mailing, reproduction, commercial art and photography, and stenographic services employed 317,220 people in 2001. The industry's 22,900 mail machine operators and clerks (not including the postal service) reported a mean annual salary of $19,300; other office machine operators (except computers), totaling 21,550, reported a mean annual salary of $21,440; print machine operators, totaling 10,220, reported a mean annual salary of $26,010; and customer service representatives, totaling 7,280, reported a mean annual salary of $28,110.
Although job growth will continue to occur with advertising agencies, an increasing number of direct mail advertising positions will open up with product and service companies that are moving their direct mail operations in-house. In addition, direct mail ad occupations will become increasingly blurred with other advertising positions, as the trend toward multimedia and integrated marketing proliferates.
Direct mail advertising originated and developed in the United States, and America still leads the world in the use of direct advertising. In fact, while nearly 45 percent of all global advertising dollars are spent in the United States, a much larger proportion of global direct mail dollars are spent domestically. For instance, the average American receives about 290 pieces of direct mail per year, far more than citizens in any other country. Canadians, who receive the second largest number of mail ads, get only about 130 pieces per year, and much of that is mailed by U.S. companies.
Germans, in contrast, receive about 70 pieces per year, and Britons get about 40 direct mail ads each year. People in Australia only see about 15 mail ads every year. Even in Japan, which has a relatively advanced direct mail industry by world standards and a very high per capita gross national product (GNP), companies only spend about $14 billion per year advertising through the mail. Furthermore, many direct mail agencies in that country lag far behind U.S. firms in automation and information technology.
Besides the fact that other countries lag behind the comparatively advanced U.S. advertising industry, direct mail is popular in the United States for several reasons. For instance, the American lifestyle is more suited to mail advertising than most foreign societies. The U.S. marketplace imposes fewer language barriers than marketers in Western Europe, for example, might encounter. Finally, the lowest postal rates in the industrialized world make the United States a haven for direct mail advertisers. While in 2003 a first-class letter could be mailed for only 37 cents in the United States, Germans and Italians paid the equivalent of about 63 cents per letter. First-class letters in Japan and Norway cost about 50 cents, and most European Community nations charged more than 40 cents per piece.
Many Americans have become jaded by some less-than-honest direct-mail practices. Scandals involving Publishers' Clearinghouse, in which some elderly Americans lost their savings, served to tarnish the industry's image. However, direct mail was considered a new phenomenon in many parts of the world. While many Americans toss direct mailers in the trash unread, recipients in the Czech Republic and Russia, for example, pore over their mailings and pass them along to others. Higher postal rates and language barriers have not dissuaded many U.S. companies from launching direct mail campaigns overseas, and many increased their efforts by 1998.
However, other overriding political and economic factors radically changed the international investment landscape—and the prospects for successful advertising campaigns. The 1997 and 1998 financial crises that toppled economies from Asia to Russia and Brazil posed challenges to direct-mail marketers, including reduced demand, increased protectionism, and the deterioration of infrastructures, according to William J. McDonald in Direct Marketing.
Direct mail advertising companies continued to benefit from advances in automation and information technology that increased the value of their services. Advances in computer technology were already allowing companies to make mailings more personalized and specific. For example, many catalog producers were working toward developing personalized catalogs that would be tailored to certain demographic profiles. The same company's catalog, for instance, might be tailored during printing to emphasize different products or offers for a variety of different customer types.
Direct mail advertisers might also be impacted, perhaps negatively, by multimedia technology which would eventually integrate video, optical disk storage devices, and personal computers. Multimedia would increase the trend toward consumer controlled advertising by allowing consumers more power in choosing which ads and media they internalize. Advancements in recycled paper, printing technology, and ink would likely help the industry move toward reduced waste and lower production costs.
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