Taking the Junk Out of Junk Mail

The “Delivery Point Validation” postal rules that went into effect August 1 also raised the bar for direct mail companies. Before that date, the Postal Service’s automation process compared the addresses on pieces of mail to a range of house numbers. If a mailing address was within a given range, the four digits following the five-digit zip code could be assigned and the piece was eligible for the automation discount. Beginning in August, however, the process of assigning the extra four digits became much more exacting. IWCO Direct says that it adapted its system so it was prepared for the change well in advance, and thus able to maintain its discounted rates.

No Net Loss

Rate increases haven’t been the biggest potential threats to the direct mail industry. That honor, of course, belongs to the Internet. Massachusetts-based Forrester Research estimates that marketers will spend nearly $1.5 billion to send nearly 600 billion e-mail messages this year; online ad sales are expected to reach $12 billion. “The Internet took some money from telemarketing and some money from print,” says Bruce Biegel, senior managing director of the industry consultancy Winterberry Group. “Magazines, newspapers, TV, and radio have seen their growth slow.”

But Biegel doesn’t believe that the Net has taken money away from direct mail. That’s been Andersen’s experience, too. In fact, Andersen believes that e-mail has actually complemented his business. IWCO Direct manages the loyalty programs for air carriers American and Delta; both sometimes use electronic marketing to alert members to offers that will be arriving in the mail. Most customers don’t use e-mail alone, Andersen says, because people prefer to handle the printed materials, “and the companies get better response rates that way.” Another reason IWCO Direct isn’t worried about e-mail: Internet servers don’t forward mail when consumers change e-mail addresses. Electronic spam blockers (however imperfect) have also been a boon.

Telemarketing, another big competitor to direct mail, has been hit with “Do Not Call” lists, a national effort that lets consumers block over-the-phone selling. “A lot of marketers put more money into direct mail marketing when they had to shrink their telemarketing budgets,” Andersen says.

But the “Do Not Call” programs have also sparked legislation to create “Do Not Mail” initiatives. So far, the direct mail industry has been able to thwart them. Taking the offensive, the Direct Marketing Association has set up its own online “Do Not Mail” list. Spokesperson Stephanie Hendricks asserts that her association’s program is less expensive to mailers than the state-proposed lists, and creates a national uniformity.

If do-not-mail efforts succeed, Andersen believes consumers will find it a mixed blessing. The drop in mail volume “could force the Postal Service to take six-day service to your home down to probably three or four days,”he asserts. “I don’t think many residents want that to happen, nor do businesses.”

Biegel says that the direct mail service providers that have refined and perfected their postal optimization schemes are rising to the top. “IWCO has been extremely focused in building out its scale of offerings and it has done a good job on the postal optimization side,” he says. IWCO Direct probably won’t ever surpass its largest competitor, R. R. Donnelley, but could it become the number-one provider in North America? “Maybe, but they can’t make mistakes” Biegel says. “This is a business that if you make a mistake, you can see large volumes of mail walk someplace else.”