DELIVERING PERFORMANCE

DIRECT MAIL IN THE

UNITED STATES 2023

SEPTEMBER 023

PRESENTED BY

NOTICE

This report contains brief, selected information and analysis pertaining to the advertising, marketing and technology industries and has been prepared by Winterberry

Group. It does not purport to be all-inclusive or to contain all of the information that a prospective manager, investor or lender may require. Projections and opinions

of hundreds of mrketin industry eders who contributed their time nd

insihts in support of this reserch To  of them we sy thnk you

ACKNOWLEDGMENTS

It’s old school. Out of touch with the digital age. Unlikely to

connect with younger consumers. And yet this year, U.S. brands

will invest more than $39 billion on the channel (inclusive of

postage, materials, printing and mailing services, data and a host

of other functions associated with executing campaigns). If stood

up against a roster of other paid advertising vehicles, this “out of

touch” medium would thus rank fifth among advertising and

marketing channels used by U.S. brands—commanding a

healthier share of total expenditures than those directed to

connected TV, online display advertising, email and other

proven to be a highly capable tool for helping brands acquire new

customers, drive incremental sales and support winback and

cross-selling efforts—all while generating the kind of data that

supports measurability, audience segmentation, granular

targeting, personalization and other functions that are

increasingly at the heart of the modern marketing playbook.

Marketers continue leaning into the channel because it works—

and for that reason, say they intend to continue investing in

direct mail at comparable levels for the foreseeable future.

Nevertheless, direct mail today exists at something of a

crossroads—delivering reliable value when brands are looking to

capitalize upon its modern, performance-oriented benefits,

but often saddled with a reputation for being expensive,

appeal. How should brands thus be thinking about incorporating

The answers to those questions will vary from vertical-to-vertical,

and brand-to-brand. Today, no fewer than six dominant themes

are dictating how U.S. brands invest in—and derive value from—

direct mail in the United States:

phiosophy

, emphasizing the integration of all marketing

channels, both digital and traditional, in a diverse media mix

many marketers (and digitally native direct-to-consumer

brands, in particular) to test alternative channels, like direct

mail, in support of their growth ambitions

content, coupled with the advent of less expensive and more

capable marketing technologies, are allowing direct mailers

retretin nd other innovtions tht cpitize on

at scale; and

suppy chin prtners tht provide for exibiity

scbiity nd the biity to rpidy dpt to

sometimes significantly and without much advance warning.

The COVID-19 pandemic presents just such a case study. As

with other channels, direct mail spending declined precipitously

in 2020 as brands moved to conserve precious resources and

redirect their efforts to support short-term business priorities.

In the case of certain verticals—store-based retail, automotive

and travel & hospitality, most notably—this no longer included

“new customer acquisition,” for which DM had long represented

a tried-and-tested tool.

some brands “paused” their outbound marketing efforts, and

others redirected a significant share of expenditures toward

digital media that until then had been considered new

and untested.) Nevertheless, aggregate marketer investment

in the DM channel has yet to return to pre-COVID levels—

and may not do so for another year or longer based on

conservative approach to their marketing investments—

particularly those focused on acquiring customers and

driving incremental sales in verticals that were most

susceptible to inflation-related pullbacks. On a full-year

basis, DM spending will remain robust relative to other

prominent advertising vehicles (and especially as compared

to other “traditional” channels, many of which are rapidly

losing share to emergent digital media). But with postage

and other campaign costs on the rise, and no federal

elections or major tentpole marketing events—like an

the past few years. And while diminished inflation, higher-than-

expected GDP growth and the easing of supply chain pressures

have helped instill enough confidence such that many expect to

soon resume their focus on customer acquisition and growth, the

persistence of high interest rates and tepid consumer confidence

have led many to remain cautious with budgets for the third and

fourth quarter of 2023. The net result: the back half of the year

should bring with it some growth in DM expenditures, but not

enough to make up for the sleepy first two quarters of the year,

and total annual U.S. direct mail spending will slip more than

Even as they work to activate the transformative growth

that should come from better orchestration of direct mail

and other touchpoints in their omnichannel mix, brands are

already seeing improved returns from their DM investment

through the activation of data-enabled innovations that allow

them to capitalize on the channel’s inherent differentiator: the

ability to deliver relevant, timely and compelling offers directly

into the hands of a target consumer. In most cases, these

advances reflect the maturation of technology and process

that have been long available in nascent form—but now

faster production speeds and higher quality output have

allowed for richer levels of targeting and content

personalization (at more palatable cost economics)—

enabling a paradigmatic shift away from generic,

high-volume campaigns

where the availability of rich, actionable digital and terrestrial

identifiers—and growing brand focus on deploying technology-

centered solutions to integrate this vast trove of data, whether

touchpoint for the mailer and another potential indicator

of audience engagement (as well as improved postage pricing,

in some cases, via USPS promotions); and

of shorter-run campaigns.

Adoption of these innovations, many

added, will have the added benefit of

promoting a virtuous cycle of sorts—

with technological advances in data

who are already astute managers of their

return on marketing investment (ROMI)

and customer lifetime value (CLV), then

enterprise marketers with responsibility

for supporting the growth of billion-

dollar-plus product lines, and finally

the smaller and more emergent corps of

brands who may come to represent the

next generation of direct mail innovators.

In an era when macroeconomic conditions are evolving fast (and

budget priorities, consumer preferences and merchandising

needs changing right along with them), it should then come as no

surprise that brands today are prioritizing media channels and

supply chain relationships that provide for flexibility, scalability,

modularity and maximum adaptability to changing need.

Such qualities have long been hallmarks of most digital

marketing channels. But the physical nature of direct mail