Companies often look to direct mail as a cost-effective alternative to other advertising mediums, however due to the current recession expenditures on direct mail have decreased for the first time in almost 60 years. While the direct mail industry has been hurt it has done relatively well compared to its competitors that have been hit even harder. Forecasts are calling for a 4% decline in 2009 direct mail expenditures which is on par with the decline expected in television advertising but pales in comparison to forecasted declines of 15% in newspaper advertising revenues and 10% in radio advertising expenditures. However, increased expenditures on direct marketing via the Internet, which are expected to grow at more than double the growth rate of direct mail, present a major threat to the long-term success of the direct mail industry. 
Faced with negative internal and external factors, companies in the direct mail industry are being forced to adapt and discover a business model that does not just maintain the status quo, but rather allows them to thrive. It is not likely that many companies will be able to thrive as stand-alone direct mail shops. In order to deliver greater value to their customers and differentiate themselves from the competition, direct mail companies will need to start offering a complete package of services. Not only will companies have to offer typical low margin services such as database sourcing and the actual direct mailing but they will also have to leverage higher margin creative services such as design and even help with coordinating and implementing their client’s overall direct marketing campaigns. |
140 transactions occurred in the fourth quarter of 2008 representing a 42% decline (relative to fourth quarter 2007) in deal volume for the advertising, marketing and digital media and a 27% decline relative to third quarter 2008. This lack of deal volume will persist for the remainder of 2009. As the economy regains form in 2010 we expect deal volume will pick up as buyers achieve more attractive multiples and sellers are more able to raise capital. Additionally, of the deals getting done in the marketing research arena there has been a noticeable preference for companies generating data online rather than through direct mail or telephone. Companies looking to succeed in the direct mail industry or achieve attractive valuations must diversify and expand their services.
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