Mailing on a Shoestring Budget

Nine billion pieces of direct mail just went missing. That’s how many mail pieces the USPS estimates diminished from the mailstream in 2008, and there’s no uptick in sight. Such a decline has an enormous household impact. “There’s 110 million active households in the United States, but about 50 million of them really get the preponderance of mail. Divide that nine billion into the 50 million households, and that’s pretty significant,” explained Monica Smith, president and CEO for Marketsmith Inc., a Morristown, New Jersey-based multichannel marketing firm. In other words, every mailbox has seen a decrease.

Direct mail budgets also are shrinking, relative to the decrease in mail volume. “Mailers are seeing a decreased response,” said Grant Johnson, founder and CEO of Johnson Direct, a full-service marketing agency in Brookfield, Wis. “They’re seeing their ROI is not as high as it should be; they’re attributing it to increases in postage, production costs, printing, letter-shop work, all that kind of stuff—as well as economic conditions. That’s why people are shying away [from mail]. People are spending less money and are spending more cautiously because of the downturn in the economy.”

Bob Martel, president of JMB Marketing Group, a full-service direct marketing agency in Marlborough, Mass., said that along with budget cuts, he also sees an increased demand for accountability. “[Clients] are saying, ‘We’re willing to spend the money, but we need to see every dollar work,’” he explained.

Smith views direct marketing budget cuts as part of a vicious cycle, potentially leading to net losses. “If you don’t have good cash flow, you have to shrink marketing dollars, and unfortunately, when you shrink your marketing dollars, your cash flow gets worse,” she commented. Martel echoes that sentiment, saying smaller companies, especially those in the $1 million or $2 million range, need to make their marketing dollars work or they might not survive this downturn.