By Cassandra Balentine
Part one of three
As postage costs continue to rise in the U.S., print, mail, and marketing service providers find ways to be more strategic with mailings, including better tracking; smaller, more targeted runs; interactive and embellished mailpieces, and staying on top of U.S. Postal Service (USPS) discounts.
Since the USPS was granted additional pricing authority, known as “adders,” in August of 2021 they have aggressively increased postage twice per year, says Chris Lien, EVP, postal affairs, BCC Software. “In July of 2024, postage will increase by 7.8 percent, which is the highest single price increase since 2006. The cumulative effect since August of 2021 has been over 30 percent and mail volume has been declining in part because of these price increases,” offers Lien. “However, it is important to keep in mind that these are ‘“o nothing’ price increases. If mailers do nothing different, then they will indeed see a 7.8 percent increase on July 14, 2024. But if mailers instead choose to ‘do something,’ then they can mitigate that increase down to three or even one precent by leveraging USPS promotion discounts.
“Mailers are taking advantage of USPS promotions to reduce the cost of postage, including making mail pieces tactile, sensory, and interactive, and taking advantage of Informed Delivery, Retargeting, and other USPS promotions,” comments Lisa Weese, senior director, marketing, Canon Solutions America, Production Print Solutions.
“Marketers today are not just focusing on costs but are keenly driving value, achieving impressive results in return on ad spend (ROAS) and optimizing their cost per acquisition (CPA),” shares Ray Van Iterson, director, brand mail, marketing, USPS. He says The Association of National Advertisers’ Response Rate Report highlights that direct mail stands out among marketing channels, delivering superior ROAS.
Mailers are primarily selling additional value in the work they are producing such as personalization and embellishments to capture attention and results. In addition, they focus on internal processes to gain efficiencies, adds Billy Stojanovski, global production portfolio marketing manager, Xerox.
One way is through implementing workflow automation tools to automate prepress processes and taking advantage of omni-channel marketing software to improve post-print processing and finishing of printed output. “Mailers are also producing work regionally to try to reduce mailing and shipping costs where possible,” suggests Stojanovski.
Weese agrees, noting that print service providers are optimizing their print production to mail stream in order to gain efficiencies to offset margin erosion associated with rising postal costs.
To further enhance the value derived from direct mail, marketers adopt sophisticated measurement techniques. “These include tracking both online and in-store consumer behaviors that follow the distribution of mail pieces. This refined approach mirrors strategies employed in digital marketing, where an emphasis on channel effectiveness prevails over mere cost considerations,” explains Van Iterson.
Tim Murphy, president, Printware, points to the added value of print and mail in providing a one-stop service for clients.
Consumables also play a role in adding value and reducing costs. “By combining digital printing with alternative fiber substrates like Astrolite PC 100 Velvet C2S, brands can reduce waste by producing shorter, more targeted print runs. The high quality and durability of our sustainable papers reduces the likelihood of damaged mailers, ensuring recipients get the best possible experience. Additionally, by leveraging USPS promotions that incentivize creative, eco-conscious mailers, brands can offset postage costs while maximizing engagement,” says Julie Brannen, director of regional sales and sustainable solutions, Monadnock Paper Mills, Inc.
Word to the Wise
There are many strategies to improve costs and efficiency and add value to the mailpiece, all available to print providers looking to profit in direct mail.
Morgan DiGiorgio, SVP sales and marketing, DirectMail2.0, says one of the biggest challenges mailers are facing is the continuous rise of postage with the imminent twice a year increase. “Some are taking advantage of presorting, co-mingling, and drop shipping to reduce postage costs. Customers are paying more for the same product. In times like these mailers need to find ways to add value,” she stresses.
Since they are spending more, they are more cost conscious and they can use some of the latest technologies to track and show attribution to their mail campaigns so they know that its working and prove the efficacy of mail to their customers keeping it as a contender in the ring. “Customers are also looking for more targeted mailings so I would suggest using technology to build mailing lists of interested prospects from customers websites to market to the right people, at the right time and with the right message. These lists yield nine to 18 percent response rates on average. Targeted marketing means saving on postage costs and earning big dividends on the direct mail investment. I encourage mailers to show their customers that mail works, find ways to add value and improve the direct mail marketing channel so regardless of the cost it remains a no brainer because of the return on investment,” explains DiGiorgio.
“Efficiency in end-to-end management of the marketing piece is key. “With increase in postage costs, the right piece has to get to the right demographic. Some mailers are utilizing sophisticated tools to automate bulk mailings, manage weight and efficiently use discounted rates. The ability of a versatile production press with high volume to deliver across a range of applications as well as optimize print on a larger printing format is a significant value driver in fighting postal cost increases,” says Amir Shalev, market development director, Landa Digital Printing.
Mark Hunt, director of strategic alliances, Standard Finishing Systems, feels that while some postal increases can be passed along, mailers also need to manage rising overhead in other areas of their operation including labor, which is their biggest cost center. “Direct mail producers are looking for ways to reduce their labor burden while maintaining or even improving their production levels, and manufacturers in the print industry are rising to meet that challenge with equipment that offers varying levels of end-to-end automation.”
Marc Johnson, senior global market development manager, HP PageWide, admits that marketing budgets have remained relatively flat to slightly declining depending on which industry you look at. “With postage—and paper—costs rising, it has forced marketers to cull their lists and be much more strategic in their marketing spend. While relatively expensive compared to digital marketing channels, marketers continue to find that physical direct mail drives a strong increase across key performance indicators like open rate, time spent, website visits, orders, and order size.”
Johnson points out that marketers who have eliminated physical mail have paid a price and rethought those decisions.
The rise in costs is not something new to modern-day companies. However, when utilized, smart technology is helping decision-makers save money. “One of the ways they are doing this is through the adoption of targeting customers with smaller more personalized runs. By tailoring mailings to specific demographics or segments of their audience, organizations can optimize the efficiency and impact of their direct mail campaigns,” says Fred Morrone, senior manager, product marketing, Kyocera.
Managing rising postal costs is a real challenge for mailers and the industry. “Talking to the companies that are on the front line, concern about rising costs has had a chilling effect on overall volume. The additional stress of more frequent rate hikes also compounds the pain that our customers are feeling,” comments William Longua, senior director, Digital Print Group, Quadient.
However, even at twice the price, there is no more efficient way to get communications delivered directly into the hands of a targeted audience than direct mail. “I’m not advocating for postal rates to increase, but the value proposition for direct mail is very real. Mail’s resilience even in the face of increasing costs shows that value. More importantly, it reinforces the incredible value that automation discounts provide for volume mailers, as well as technology discounts for live postage application from compliant meters,” stresses Longua.
Even with rising costs and concerns, Scott Eganhouse, VP, business development, TEC Mailing Solutions LLC, feels that for the most part mailers aren’t taking advantage and continue to do things the way they’ve always done them, which can be a huge mistake. “Mailing software tends to work in a vacuum, ignorant of the world outside the walls of the USPS, but consider how much mail is processed by co-mingle providers and the benefits they provide. As direct mail continues to evolve so should the approach print and marketing service providers take to create and process mailings in a holistic approach that demands cost savings be part of the mix.”
Making Mail Moves
While mailers struggle with aggressive postal increases, the proven effectiveness of direct mail make it worth the effort to ensure profitability.
Put simply, Mark Pomerantz, director of sales and marketing,North America, Xeikon, says marketers produce less mail pieces with higher response targets as a way to manage rising postal costs.
Today’s tools, from workflow to finishing, enable more efficiency and value to direct mail. It is essential to evaluate and adopt new tools to ensure profitability on a tried-and-true print application that must evolve to ensure results.
Jul2024, DPS Magazine
