Trends and Future of Direct Mail Through 2020
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1 Trends and Future of Direct Mail Through 2020 A PRIMIR Study Presentation by INTERQUEST Ltd. NPES 2015 Annual Conference and PRIMIR Fall Meeting Palm Beach, Florida October 28, 2015
2 Trends and Future of Direct Mail Through 2020 Objectives & Methodology
3 Objectives, Issues, and Scope Definition & use of Direct Mail (DM) DM printers & mailers perspectives Key issues (USPS, data, cross-media, transactional) Print technology trends DM volume history and forecast Implications of findings on PRIMIR & NPES members 3 3
4 Methodology In-depth telephone interviews 36 Agencies/experts 5 Mailers 21 Providers 10 On-line provider survey (quant.) 54 4
5 Trends and Future of Direct Mail Through 2020 Key Findings/Conclusions
6 Definition of Direct Mail Any unsolicited advertising sent to prospective customers through the mail. It is a type of direct marketing and increasingly uses tailored offers or messages sent to targeted prospects. 6
7 Definition of Direct Mail North America Direct Mail Volume Digital printers 8% In-plants 5% Marketing services Companies 13% Commercial printers 38% Direct mail printers 36% Source: PRIMIR/INTERQUEST,
8 Demographic & Generational Trends Increase of DM mail with income, education, household size, and Internet access < 25% of households not reading DM More DM reading from lower income & offline households The more DM received the less read Age matters, but! 8
9 Demographic & Generational Trends 40% 35.9% Usually Read Advertising Mail 30% Respondents 20% 19.2 % 15.2 % 20.4% 21.2% 21.7% 22.2% 20.1% % 0% Source: USPS 9 9
10 How is Direct Mail Used? Format of Direct Mail Produced (% of total direct mail volume) Coupons 1% Brochures 5% Flats 4% Inserts 5% Other 1% Postcards 12% Letters 58% Self-Mailers 14% Source: PRIMIR/INTERQUEST,
11 How is Direct Mail Used? 11
12 How is Direct Mail Used? 12
13 Vertical Markets Advertising Mail Sent Billions of pieces Financial Merchants Services Manuf. Social Govt Source: USPS 13
14 Vertical Markets Finance: volume back, a lot of personalization Insurance: diversion to digital, simple personalization Retail: mixed views, power of loyalty programs, decentralized campaigns Move towards on-line marketing, but DM seen as a sure value 14
15 Impact of USPS on Direct Mail 0.0% Volume Trends of Major Mail Classes ( ) -2.0% -0.7% CAGR -4.0% -3.6% -6.0% -8.0% -7.1% Consumer (single piece) First Class (business mail) Standard Mail Source: USPS 15
16 Impact of USPS on Direct Mail USPS proactive programs to help mail Rising postal cost impacting DM ROI and usage Mailers moving to less expensive formats and lower rate providers How far can the USPS go? Opportunities for both providers and mailers in the mean time! 16
17 Printers Perspectives Leading Market Trends Cited by Direct Mail Providers Digital color printing Targeting & personalization 59% 57% Consolidation Multichannel Declining print runs 41% 46% 44% Competing media 30% Inkjet adoption 20% % of Respondents Source: PRIMIR/INTERQUEST, % 10% 20% 30% 40% 50% 60% 70% 17
18 Printers Perspectives Positive about direct mail More letters/postcards, less brochures/coupons Best opportunities Personalization Postage expertise Greater automation Growth of color digital printing and inkjet 18
19 Printers Perspectives Revenue from Non-Print Services 100% 18% 80% 42% % of Respondents 60% 40% 40% 33% 20% or more 10%-19% 0%-9% 20% 43% 24% 0% Source: PRIMIR/INTERQUEST, 2015 Now In 3 Years 19
20 Mailers Perspectives Overall, commitment to direct mail Stretching direct marketing expenditure across digital and traditional channel More targeting/personalization, but limitations for cost reasons Multi-channel Still at the beginning, still many silos! Synergy and competition with printed mail 20
21 Mailers Perspectives Print's Share of Direct Marketing Budget (% of respondents) Stay the Same 16% Grow 5% Source: PRIMIR/INTERQUEST, 2015 Decline 79% 21
22 Print Technology Trends Developments New enhanced color toner units New generation of high-speed web inkjet presses B-size inkjet presses? Entry-level inkjet devices (roll & sheet) Many finishing announcements Envelope personalization/automatic creation Coating & special effect solutions Still waiting for drupa 2012 new players! 22
23 Print Technology Trends Purchase Likelihood Over next 18 Months Color toner 15% 31% 19% 17% 19% Web-fed inkjet 9% 20% 35% 24% 11% Sheet-fed inkjet 2% 26% 41% 17% 15% Black toner 4% 19% 43% 20% 15% Offset press 2% 11% 44% 28% 15% Inkjet on offset 2% 9% 44% 31% 13% % of Responses Very likely Likely Unlikely Very unlikely DNK Source: PRIMIR/INTERQUEST,
24 Data Issues Mailers doing a much better job with their data Challenge of analyzing and integrating vast amount of data (particularly with printed mail) Attribution modeling, still a work in progress, not a bad thing for DM! DM personalization impacted by privacy & regulatory issues 24
25 Use & Effectiveness of Crossmedia Technologies How often do you use the following crossmedia technologies? QR codes 56% 31% 13% PURLs 48% 39% 13% Embedded Video 20% 45% 36% Augmented Reality 8% 38% 53% NFC 6% 43% 51% 0% 20% 40% 60% 80% 100% Quite Often, Often Rarely/Very Rarely Never Source: PRIMIR/INTERQUEST,
26 Convergence Direct Mail & Transactional Mail Transactional mail volume declining at 3%-5% per year Transactional providers eyeing DM opportunities Same print technology trends as for DM (move away from offset shells, inkjet, and color) Transpromo (relational marketing) growing, but not the only threat for DM 26
27 Direct Mail History U.S. Advertising & Marketing Spending $ billions Traditional Direct Digital Source: Winterberry Group 27
28 Direct Mail History 100 North America Direct Mail Volume ( ) $ billions B2C B2B Source: PRIMIR/INTERQUEST,
29 Direct Mail Forecast 100 North America Direct Mail Volume ( ) $ billions B2C B2B Source: PRIMIR/INTERQUEST,
30 Direct Mail Forecast North America Direct Mail Print Volume Impressions (billions) Offset Digital Source: PRIMIR/INTERQUEST,
31 Trends and Future of Direct Mail Through 2020 Implications of Findings for PRIMIR & NPES Members
32 Implications of Findings for PRIMIR & NPES Members Printing firms Focus on postage expertise and personalization Be ready to compete with transactional players Take advantage of new IJ opportunities & finishing solutions Chose between scale and/or specialization Develop/enhance marketing/data expertise & resources via partnership, acquisitions, and education Look into international opportunities 32
33 Implications of Findings for PRIMIR & NPES Members Conventional press manufacturers Move to digital printing,.. begin shipping your drupa 2012 IJ presses! Continue making conventional equipment more automated and more automated for short runs Think about integration services Investigate opportunities in 3D printing & packaging If you stick to it, manage to be the last one! 33
34 Implications of Findings for PRIMIR & NPES Members Digital press/output device manufacturers Continue enhancing web IJ presses/color toner devices and lower TCO Bridge the gap between high-end web color inkjet and high-quality toner presses Add finishing options targeted at DM Highlight your own company s success stories in the area of integrated marketing 34
35 Implications of Findings for PRIMIR & NPES Members Paper/substrate suppliers Expand offerings for IJ presses & reduce cost Look at opportunities in non-traditional substrates Follow R&D initiatives in haptic brain, interactive paper, impact of smell, drinkable book Explore new shapes/sizes that could be appealing to DM recipients Think about other ways/substrates to present marketing messages 35
36 Implications of Findings for PRIMIR & NPES Members Ink, toner, coatings & chemical manufacturers Develop new inks/coatings to provide a pop that electronic media cannot Continue reducing the cost of color ink & toner Look into liquid toner developments? 36 36
37 Implications of Findings for PRIMIR & NPES Members Pre- and post-processing/finishing vendors Focus on workflow, automation, and adding value to DM via special formats/effects Develop solutions for new entry-level IJ presses Market digital printing presses? 37
38 Implications of Findings for PRIMIR & NPES Members Software suppliers Develop/enhance solutions related to data analytics, asset management for marketing campaigns, postal integration & web-to-print Develop new creative/innovative solutions that make DM attract attention Continue to simplify design tools, while still providing opportunities for value add 38
39 Final Conclusion.Print, far from dead!... Thank you 39
40 Contact Information Gilles Biscos President INTERQUEST Ltd.
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