Service prices are forecast to rebound due to increases in corporate profit
Los Angeles, CA (PRWEB) November 03, 2014
Direct mail advertising services have a buyer power score of 4.3 out of 5. According to IBISWorld procurement analyst Kayley Freshman-Caffrey, “this score reflects strong negotiating power for buyers.” Prices for direct mail advertising services have declined over the past three years as companies struggled to recover from the recessionary fallout and digital advertising solutions grew in popularity. Nevertheless, strengthening corporate profit levels are encouraging businesses to increase their advertising expenditure once again, which will boost prices for direct mail advertising services higher in the three years to 2017. Although buyers will not benefit from the forecast rise in prices, this market will continue to experience low price volatility, which reduces the likelihood of large price swings.
Buyers currently benefit from a low level of market share concentration, which gives them a greater range of vendors to choose from for their advertising campaigns. The highly fragmented market has encouraged more price-based competition, which has made it difficult for suppliers to maintain strong profit margins. Furthermore, the emergence of digital and online advertising has only heightened the competitive environment. This tough competition has brought about a trend of consolidation among market suppliers in an effort to regain financial stability and better control over pricing. “Prices for the services will begin to rise as more vendors start to merge with digital advertising firms to offer integrated marketing solutions,” says Freshman-Caffrey.
Although digital alternatives have greatly impacted the overall advertising market, traditional direct mail still remains an effective tool to reach downstream clients due to its targeted and measurable approach. Although buyers may encounter high costs for mailing lists and postage, particularly when they send out large quantities of mail, this advertising method is generally cost-efficient. Buyers also benefit from other purchasing factors, such as the low level of specialization, short buying lead time and high number of substitute services. The largest vendors in the market are RR Donnelley & Sons, Quad/Graphics Inc, Alliance Data Systems Corporation, and Cenveo Inc.
For more information, visit IBISWorld’s Direct Mail Advertising Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of direct mail advertising services. Suppliers providing these services assist buyers by designing advertising campaigns for the sake of distributing marketing materials directly to targeted customers through postal mail. Services typically consist of material concept development, art design, printing, labeling and addressing. Advertising goods may consist of postcards, flyers, catalogs or other commercial merchandising materials. Some market vendors may also compile and manage mailing lists for buyers. This report does not include print distribution services or digital advertising services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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