The industry's cost-effective and targeted nature will enable growth
Los Angeles, CA (PRWEB) March 04, 2012
The recession caused demand for the Direct Mail Advertising industry to fall as businesses cut costs to maintain profit. Clients reduced marketing budgets, causing revenue to decline at an average annual rate of 1.6% over the five years to 2012 to total $12.9 billion. According to IBISWorld industry analyst Kevin Culbert, “increased competition from other below-the-line promotional tools, including the internet and text messaging, has also hurt the industry.” Industry players attempted to control their costs, causing them to enter a period of consolidation. In the five years to 2012, the number of enterprises is expected to fall at an annual rate of 1.3% to 3,035. Despite these negative factors, the decline in revenue was relatively mild in the context of the broader advertising services sector, and the industry is poised for further growth in 2012. During the year, operators will benefit from programs implemented by the US Postal Service to encourage commercial mailers. This factor is expected to contribute to revenue growth of 1.2% during 2012.
For marketers that want to target a specific group or niche market, direct forms of advertising are often more cost effective than traditional advertising. Direct mail advertising displays relatively low volatility, suffering less in a downturn because many businesses substitute their traditional advertising methods with cheaper, broader-reaching advertising methods. Culbert says, “when the economy slows and businesses trim marketing budgets, marketers turn to more cost-effective and targeted forms of promotion.” While fewer funds are allocated to marketing across the board, the proportion devoted to direct mail grows; in essence, the industry takes a larger slice of a smaller pie. This factor helped distance the industry from the declines experienced by the wider advertising sector during the recession.
During the five years to 2017, industry revenue is expected to increase. While profit margins will improve, competition will continue to hinder their growth. As consumers increasingly turn to the internet to find bargains and coupons, a greater number of firms will offer services online. Continued consolidation among firms is expected to cause the number of operators to decline, with major players Valassis Communications and Harte-Hanks remaining the top two firms in the industry.
For more information visit IBISWorld’s Direct Mail Advertising in the US industry page
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
Direct mail advertisers distribute advertising materials (e.g. coupons, flyers and samples) or specialty items (e.g. key chains, magnets and pens with custom printed messages) by mail or other direct distributions. Industry participants may also prepare advertising materials or specialties for mailing or other direct distribution. They may also compile, maintain, sell and rent mailing lists.
IBISWorld industry Report Key Topics
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.