Direct Mail Printing Outlook for 2022: Still Remains as a Shining Star

As we close in on two full years of the pandemic, lockdowns, Zoom meetings, and lives lived through screens, experts are finding that digital fatigue has firmly set in. Everyone is looking to make connections that don’t involve the light of a computer, phone, or tablet. Direct mail — a brand’s old and trusted friend — is one of the answers.

“Businesses are realizing with digital fatigue that direct mail can play a critical role of getting attention,” notes Jeff Heyman, VP of product development and e-commerce for FedEx Office. “Direct mail is an integral part of the most successful marketing strategies that combine digital and physical communication.” He continues, “Customers are longing for connection after being home for so long and direct mail gives that to them. It allows businesses to communicate that they are open for business, and how they have adapted their business throughout the pandemic.”

Illustrated with Numbers

But what does that mean in real world numbers? How will that carry over into 2022 and beyond? First and foremost, it’s important to note that this “new normal” of hybrid and remote work that has led to digital fatigue in the first place is here to stay. According to Pew Research, 71% of workers are currently work-from-home, and 54% of them want to continue after the world finally leaves the pandemic behind. That is compared to 20% of people who worked from home prior to COVID-19, which is a huge shift in the workplace.

“This makes quality direct mail pieces stand out,” Heyman continues. “Even in the digital age, print ads engage viewers for more time, and a week later readers show greater emotional response and memory for print ads. This is especially true for tactics such as direct mail and personalized print pieces. A recent study showed that 39% of customers tried a business for the first time because of direct mail, and 60% of direct mail recipients were influenced to visit a promoted website.”

For direct mail printers, that means there is a need to help brands find new ways to connect with their consumers in a way that stands out from the crowd. And while the numbers dipped early in 2020 when everyone was still trying to find their footing, direct mail has seen a surge as marketers quickly realized its power in a more scattered and isolated world.

Chanhassen, Minnesota-based IWCO Direct remains one of the most capital-intensive direct mail printers in the country.

“Like other service providers, we saw clients pull back direct mail volume early in the pandemic as they rebuilt marketing campaigns to address the many changes the pandemic brought,” John Ashe, CEO of IWCO Direct, says. “As marketers discovered that direct mail is a great channel to reach consumers who were working at home and suffering from screen fatigue, we’ve seen volumes
rebound to close to pre-pandemic levels during the past 15 months.”

That surge in volumes is something RRD has experienced as well, Maureen Powers, president, RRD Direct Marketing Group, reports. “At the onset of the COVID-19 pandemic, we experienced a decline in direct mail volume, consistent with the industry, in the second and third quarters of 2020. However, throughout 2021, we have seen volume trends significantly ramp up and we expect this to remain consistent into 2022,” she says.

That said, direct mail hasn’t picked up across all sectors. According to Melanie De Caprio, VP of marketing at SG360°, “Last year we were lucky that our client base is diversified across industries, so when a customer in the travel industry stopped mailing, we had others staying strong, like insurance. And, because of our diversity of printing platforms and robust finishing options, and our ability to be flexible with last-minute changes, we actually brought in more new clients in 2020 than any other year in company history. And 2021 has been lucky for all the same reasons — it’s certainly been a challenging year, but it’s also been a strong year by normal standards.”

Demand for Supplies

Like all other segments of the greater printing industry — and the world at large — shipping challenges and labor shortages have had their share of impacts on the direct mail space, something that isn’t going to ease up any time soon. Most experts conservatively predict that both of those challenges could start seeing some improvement in the latter half of next year, but it’s a delicate balance that could easily be tipped the other direction.

That said, the direct mail shops that are finding success are the ones confronting the issues head-on, rather than sitting back and hoping for improvements. “Demand is high, and capacity across the industry is low due to labor and supply chain challenges. We’re not immune to that,” SG360°’s De Caprio adds. “Our CEO, John Wallace, says we’ve had a career’s worth of challenges in the past two years. But we’ll continue to problem solve, and our employees have stepped up, going outside of their comfort zones to serve as best we can, [and manage] what’s in our control.”

SG360°'s study also examined what digital tools support direct mail campaigns.

Click to enlarge.

Click to enlarge.

One way SG360° has adapted is to try and steer customers into getting orders in far earlier than they would have before, allowing the company to better ensure the right supplies are on hand when the job is ready. “If any control is to be had, it’s by knowing in advance,” she says. “We’re lucky they listened, so we got a change from 2020, where customers were making decisions at the very last minute. We explained that we have to go in the opposite direction and plan way ahead.”

For IWCO Direct, Ashe points out that paper supply is a challenge his company is trying to stay ahead of as well. “IWCO Direct has paid close attention to the ongoing supply and inflationary challenges across the paper market, as well as resource availability impacting transportation,” he notes. “IWCO Direct has relied on our close, collaborative relationships throughout the paper industry to maintain availability, flexibility, and affordability for our clients. We are also actively engaged with our logistics partners to ensure we are making the most efficient and effective use of available trucking to achieve timely delivery of our clients’ mail to destination postal facilities.”

The Need for Labor

On the labor side of the equation, across the board, direct mail printers, like printers serving other markets, are having to take steps to make working for a print shop an attractive option. Heyman notes that FedEx office relies on the fact that it has a robust network, with more than 2,100 stores and 18 dedicated print shops, so it is able to balance the load in ways most direct mail printers just can’t match. But that said, he notes, “labor and the job market are challenging everyone, so we are staying vigilant and proactive. We are hiring; FedEx Office is a great place to work with competitive pay and great benefits.”

According to Ashe, IWCO Direct has taken a more active approach. “We have taken several steps to make ourselves more competitive as an employer, including strengthening our culture and approach to work/life balance, adjusting compensation, implementing referral and sign-on bonuses, and making changes to our production platform to make our manufacturing processes more efficient.”

De Caprio notes that job fairs have been one option SG360° has tried with some success, along with changing up its incentive package to make the company a great option for job seekers. “We’ve been really lucky with that,” she says, “but challenges aren’t over, especially with the fourth quarter being the busiest of the year, and capacity is really strained across the entire industry.”

Beyond the Obvious

While labor and supply chain issues are dominating the direct mail trends right now — and will for the first half of 2022, at least — they aren’t the only trends direct marketing printers should be paying attention to. A few others to consider:

1. Data Is King. While more marketers are returning to direct mail, they aren’t just looking to blanket the market with a static piece. They are more often looking to target pieces to select segments of their potential customer base, which means they need to know who these people are, and where to find them. Data is key, and those direct mail operations that provide a way to collect, analyze, and use that data to refine campaigns will be better situated to capture more of the market.

“Mailers continue to leverage data to make more efficient use of their postage spend by sending relevant, enticing messaging to more receptive audiences,” Ashe says. “We frequently work with clients to build response models that allow them to focus their marketing efforts on those prospects who are most likely to respond. While this may result in somewhat smaller mailing volumes, the pieces that are mailed will drive stronger campaign performance and more robust return on marketing investment (ROMI).”

2. Omnichannel Campaigns. Just because brands are realizing how much direct mail still brings to the table doesn’t mean they are abandoning their other channels, which means direct mail needs to be thought of not as a stand-alone piece, but as a single piece in a much larger effort.

“In a research report that we hired a third-party survey firm to conduct for us, with 1,000 consumers and 400 B2C marketers, marketers rated pieces — omnichannel in support of direct mail — a four or five out of five in terms of effectiveness, and we expect that to continue,” De Caprio points out. “There is certainly interest from clients and prospects on which channels can be used to support direct mail.”

“We are likely to see more personalization from businesses that help brands stand out,” Heyman notes. “Studies show that consumers utilize three or more marketing channels through their journey, and direct mail is one of the most effective mediums.

3. Look to Automation. As margins continue to erode, one way direct mail printers can offset the squeeze is by investing in tools to improve productivity. Automation, in particular, is going to be a key point that separates the most successful and profitable direct mail printers from the rest, especially in the coming years.

“Clients are looking to us from an innovation perspective to manage the hike in demand in the face of labor and resource challenges, as well as offsetting the increasing costs of their campaigns,” RRD’s Powers notes. “Automation has always been important, and were aggressively rolling out automation initiatives across our platform. We’re starting to see this type of technology top our clients’ priority lists.”

4. Don’t Forget Good Design. It’s easy to get caught up in the idea of statistics and numbers, target markets, and omnichannel campaigns, but direct mail printers can’t forget that, at the end of the day, the design matters. The most well-researched, data-supported, targeted piece won’t get opened if it’s not enticing to the end consumer.

There are three elements that Heyman considers important for direct mail growth to continue in the next 12 months and beyond. First, he says, “Print quality: Vibrant, eye-catching colors, textures, and finishes that allow the piece to stand out in the mailbox will continue to be an important aspect for success. Next, quality design is crucial. You can have the nicest paper in the world with the prettiest ink, but if the design is not there it will be ignored. Finally, the ability to target an audience with custom messages that resonate with them is critical. A message tailored to the recipient is more likely to get a response.”

Gazing Into the Crystal Ball

With all of that in mind, what does the future look like for direct mail? While it’s hard to predict anything with any degree of certainty as the pandemic and social and political hot buttons continue to be unpredictable, there are a few things direct mail printers should be thinking about.

“As the U.S. economy stabilizes, direct mail will continue to rebound from the shocks inflicted by the pandemic,” Ashe predicts. “Marketers know direct mail works, and they also know that direct mail and its companion channels reinforce each other, making response to all channels stronger. Over the next few years, we will see direct mail become more relevant and more targeted as marketers leverage data to make their mail more compelling.”

Ashe believes that, over the next 12 to 18 months, direct mail service providers will continue to contend with supply chain challenges and transportation shortages. “Both of these issues can be minimized through strong networks and deeply-rooted partnerships. In addition, marketers will be challenged by rising postage rates, combined with reductions in USPS service standards. This will force them to adjust mail volumes and more carefully track and monitor delivery of their direct mail campaigns, not just up to the point of entry with the U.S. Postal Service, but all the way through in-home delivery.”

Heyman points out that part of the solution will be even further personalization, and even more refined use of data to ensure the pieces that do go out are getting the right message to the right people. “We can expect new technological advancements in this industry. Businesses can use AI to explore their segment’s preferences and enhance the message shared across platforms. This ties into the customization we spoke about earlier — customized and targeted messages using variable data and AI will continue to grow as major differentiators in direct mail.”

Finally, De Caprio says, expect new technologies to continue to gain ground — and for brands to want to tie them in directly with their direct mail campaigns. “We asked B2C marketers which channels they will still be using in three years, and direct mail came in a very close second, nearly tying with email, which took the top spot,” she reports. “We also asked about specific types of new technology and new channels they’re pairing with direct mail (see charts on page 22), and found that 41% are already pairing direct mail with streaming audio and video ads — there is a lot of interest in that — and another 28% had it on their wish list. The top wish list item was smart speakers, with voice-activated calls to action; 29% wished they were using that to support direct mail campaigns.”

“With accelerated marketing expenses, it’s important for us to help clients balance efficiencies and ROI, while positioning direct mail as part of the multichannel customer engagement,” Powers says. “Direct mail acts as a personalized storefront, and has become a vehicle to drive customers to the brand website. With flexible formats and highly targeted personalization, direct mail has become not only a tool for customer acquisition, but it also serves as an important touchpoint throughout the customer journey as we’ve been seeing with retargeting and trigger programs, which we expect to continue as a growing trend through 2022.”

The overall picture is that direct mail is changing — but it still has a very vibrant and relevant future ahead of it for printers that are nimble and flexible enough to adapt. Data and technology are changing the game, but digital fatigue means that consumers are looking for a more tactile connection — and direct mail is one of the best ways a brand can give them exactly what they want, when they want it.

Supply chain issues, labor shortages, and shifting landscapes make it difficult to know what the future will hold. But, as Ashe points out, “Direct mail may be used differently in the future, but it will continue to be an important part of increasingly integrated multichannel marketing campaigns.”