Despite increasing competition, revenue will fare better as disposable incomes rise
New York, NY (PRWEB) March 25, 2014
Direct-mail advertisers distribute marketing materials, such as coupons, flyers or samples by mail through the US Postal Service (USPS) and less often through other commercial delivery services. A reduction in corporate profit margins led to cuts in spending on all forms of advertising during the recession. Increased competition from other promotional tools, including the internet, email and text messaging, also hurt the industry. These factors caused demand for the Direct Mail Advertising industry to decline at an estimated annualized rate of 2.1% to $12.2 billion over the five years to 2014.
“The industry regularly competes with print and electronic advertising in up-and-down markets and in all stages of the business cycle,” says IBISWorld Industry Analyst Stephen Morea. When the economy slowed and consumers curtailed their discretionary spending, businesses responded by trimming their expenditures on all forms of advertising. Direct mail is a low-cost substitute for traditional media advertising; however, technological advancements have paved the way for other cost-effective methods of product promotion such as daily-deals websites and email marketing campaigns. Despite these negative factors, the industry is poised for marginal growth, increasing by an expected 1.5% in 2014 as operators will benefit from higher corporate spending and programs implemented by the US Postal Service designed to encourage commercial mailers.
During the five years to 2019, industry revenue is expected to increase slightly. “Higher expected levels of consumer spending and rising corporate profit margins are anticipated to increase advertising expenditures, aiding industry revenue,” says Morea. However, significant revenue growth and profit improvement will continue to be hindered by outside competition. Consolidation among direct-mail advertisers is expected, as the USPS will likely continue its high-density mailing discounts, providing an incentive for the industry's largest players. Additionally, as consumers increasingly turn to the internet to find bargains and coupons, a greater number of direct-mail advertisers will offer services online.
For more information, visit IBISWorld’s Direct Mail Advertising in Canada industry report page.
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IBISWorld industry Report Key Topics
Direct-mail advertisers distribute advertising materials (e.g. coupons, fliers 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.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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