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April 1, 2014

For years pundits have predicted the demise of direct mail, as electronic channels offer supposedly superior alternatives. But, as Mark Twain might have said, reports of its death have been exaggerated. Direct mail remains a vital revenue-earner for posts. In the UK, for example, addressed marketing mail accounted for 22% of Royal Mail’s revenues from addressed letters in 2012-13.

According to the International Post Corporation (IPC), unaddressed mail volumes at 13 national postal operators from Asia-Pacific, Europe and North America remained stable in 2012 despite a drop in overall mail volumes. In fact, in 2012, Deutsche Post and Swiss Post grew its volumes of unaddressed mail by 2.2% and by 51.4% respectively.

Direct mail is also highly effective. According to research by Royal Mail, 73% of Britons who indicated they had received direct mail in the past year said that they had responded to it once or more. Effectiveness can be measured in many ways, from dedicated phone numbers, website addresses or voucher codes to using QR codes that can be scanned on a mobile phone and used to direct the customer to a website or social media space. Responses and orders can also be matched back to the original mailing list.

Direct mail still has a unique appeal to many recipients. “The process of opening mail takes longer and engages more senses, exposing the client’s brand to the prospect more effectively,” says Ian Simpson, managing director of direct mail specialist Catalogues 4 Business. “You can touch and smell mailing pieces and they can give off subtle messages, even down to the quality of the paper.”

In a survey by ADMA for Australia Post, consumers ranked personalised direct mail as more effective than any kind of digital channel. The higher cost of paper mail compared with digital is offset by its greater efficiency, says Mark Harrison, head of markets at IPC.

“According to the US Direct Marketing Association (DMA), the average response rate for direct mail in the US in 2012 was 3.4%, around 30 times higher than the response rate for email (0.12%),” says Harrison. “It also has a lower cost per lead than email (US$51 versus US$55). In 2012, US$600bn was generated by US$50bn spent on direct mail, giving it the best ROI of all media.”


Digital versus mail

Email addresses change three times faster than postal addresses, says Harrison, making it harder for marketers to keep up. Spam filters can be ruthless, and even if emails get through, many digital inboxes are so cluttered that people may only read 20-30% of the contents, according to Sohail Choudhry, executive general manager at New Zealand Post. By comparison, 81% of consumers read or scan their direct mail, according to the DMA in the USA.

Companies can put far more collateral in an envelope than an email, and the added weight can be symbolic as well as literal. 

“Being perceived as ‘serious’ is increasingly important in an environment where prospective buyers are swamped by information,” says Anders Bjerre, senior consultant at the Copenhagen Institute for Futures Studies. “Direct mail enables a supplier to stand out in the deluge, and the increasing amount of electronic communication may help direct mail to become even more important in future.”

Perhaps the most telling endorsement of direct mail is that online brands use it themselves. “Google posts 100 million pieces of direct mail each year around the world to sell search advertising, mainly targeted at small businesses,” says Harrison. This exemplifies the fact that direct mail and online media are complementary, not competitors.


Multimedia approach

Right: New Zealand Post
recently purchased two direct mail printers from Pitney Bowes. The HP IntelliJet 20 Printing Systems allow white paper and envelopes to be transformed
into personalised customer communications

“The most successful campaigns these days employ a mixture of media, for example using direct mail to drive people to websites, or encouraging them to browse
a printed catalogue and then order online,” says Mike Lordan, chief of operations at the UK DMA. “Postal operators need to be aware of how direct mail interacts with other media, such as TV advertising and email campaigns.”

The evidence speaks for itself, says Elliott Mallows, UK head of marketing at international postal operator Asendia. “According to Royal Mail, the average ROI per £1 spent from a TV advert is £1.71, but combine that campaign with direct mail and the ROI increases to £2.34.”

“Using a range of tools that customers can respond to will increase response rates,” agrees Choudhry. “A company website, a personalised microsite accessed via a PURL (persistent URL), or a QR code embedded in the direct mail campaign, are all digital response vehicles. We enable an omnichannel communications approach.”

Dutch operator PostNL is linking unaddressed mail to an online service, folders.nl, says Harrison. All unaddressed mail is uploaded, letting consumers search, receive email alerts and share offers via social media. The tablet app was downloaded 100,000 times in its first three months and the site gets 50,000 hits a month.

Many posts are investing heavily in the technology and know-how to help their customers at all stages of the direct mail journey. “Research shows that a high degree of personalisation, such as printing the recipient’s name on the envelope, increases response and conversion rates considerably,” says Choudhry. “New Zealand Post has invested in advanced digital printers that give our customers a higher degree of personalisation. We can personalise thousands of variables in one print run on anything from envelopes to booklets.”

It can pay to invest in the latest printing technology, says Grant Miller, vice-president of global strategy at print specialist Pitney Bowes. “The new economies of digital colour printing mean that direct mail can be personalised in attention-getting colour. Studies show that consumers are 70% more likely to open a mailpiece with colour text and graphics.”

Asendia prints transpromo mail, which is increasingly being used as an advertising medium. “Sophisticated prepress technology provides opportunities for targeted advertising on financial statements, etc, and intelligent enclosing systems enable relevant adverts and promotions to be included in different envelopes,” says Mallows.


Planning and execution

Left: Asendia offers a complete direct mail solution from data and print services to fulfilment, postage and response management

Norway Post is promoting the value of unaddressed mail by combining it with sales modelling and results analysis, says Harrison. When electrical retailer Elkjøp was planning to cut its unaddressed mail spend, Norway Post gained permission to model Elkjøp’s customer data and showed that direct mail drives 19% of the company’s sales.

“At NZ Post, we have a proprietary segmentation and mapping tool, Genius, which enables us to help organisations find and better target prospects and customers,” says Choudhry. “Along with data analytics, insight and modelling, these services help our customers plan, execute and measure the ROI of their campaigns.”

Web portals, such as Canada Post’s Precision Targeter and NZ Post’s Send a Card, enable customers to plan, design and execute simple direct mail campaigns cheaply and quickly – sometimes within minutes.

For international direct mail, localisation is a popular service. “Making mail look as if it has been posted locally encourages greater response and gives campaigns more impact,” says Mallows. “We also partner with a European marketing consultancy offering specialist advice on international marketing.”

Knowing exactly when mail has been delivered can be valuable to senders. So in the UK, Royal Mail is introducing MailMark, a barcoding scheme enabling the tracking of letter consignments through its network. The company aims to barcode 90% of machinable letters eventually, providing supply chain visibility, feedback and billing accuracy.

For posts such as Asendia, the aim is nothing less than a complete end-to-end service, says Mallows. “We can print direct mail using high-quality, digital printing; provide clean, targeted address lists; add personalisation; frank and sort mail for optimum postage prices; fulfil the campaign; and monitor returns, if any.”


Sharing best practice

Educating and informing direct mail customers can be as important as providing actual services. “Posts are well placed to educate their customers about best practice,” says Choudhry. “We offer advice and individual coaching where we work directly with customers to determine their needs and offer an integrated solution.”

Bjerre adds, “There’s huge competition in consultancy, but postal operators may have some advantages in relation to postal-specific information, such as which day of the week recipients receive the least mail, or what response rates are likely to be achieved by specific types of information.”

Marketing and advertising agencies may be equally in need of education, says Lordan, especially those staffed by Generation Y people who may be more familiar with digital media than traditional paper. 

Some posts work hard to share best practice. “Posten in Sweden invites agencies and advertisers to showcase their campaigns in its direct mail showrooms,” says Harrison. The showrooms are used as meeting points for both agencies and advertisers. Approximately 30 examples of good direct mail campaigns are displayed in Posten’s showrooms in Stockholm and Gothenburg.

Other posts could take more initiative in promoting direct mail, Simpson believes. “They need to tell people how easy it is, and position themselves as solution providers rather than just service providers. They should incentivise companies to test direct mail. Direct mail is about test and measurement, but people don’t like to take the risk. By offering discounts for test campaigns, posts would be sharing the risk and potentially the reward.”

Instead, says Simpson, the relentless upward trend in postage costs is an active barrier to direct mail, and customers also need more clarity on postal rates, such as extra charges for poly-bagging, or discounts for local induction or using recycled materials. If rates were lower, people would mail more.”

Nonetheless, most observers predict a healthy future for direct mail. “It will continue to play a big role,” says Mallows.

“Campaigns will continue to reduce in volume as marketers recognise the benefits of better targeting. But we’re unlikely to see the investment in direct mail decline in unison, as marketers will spend more per piece to maximise response rates.”

Right: Posten works closely with agencies and advertisers to ensure they choose the right direct mail campaign

April 1, 2014

 

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Hermes UK has opened its new purpose built, automated parcel distribution hub in Rugby, the biggest of its kind in the UK. The £31m (US$40m) development represents the most significant investment in the company’s history and will create more than 100 jobs. Located in Rugby, the Midlands super hub measures 270,000ft², the equivalent of 34 soccer pitches, and has the capability to efficiently process in excess of one million parcels each day.

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UPS delivery drivers trained using VR simulations

UPS has announced that it will start training student delivery drivers to spot and identify road hazards using virtual reality (VR) headsets that simulate the experience of driving on city streets. The company will launch VR training at nine UPS Integrad training facilities in September.

To read more about the training simulation, click here.

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