Higher Postage and Lower Response Squeeze Direct Mail

A report released Monday by the Winterberry Group warns the use of direct mail may diminish as result of rising postage costs and declining response rates, unless the medium is made more efficient.

Rising postage costs accounted for $22.8 billion or 40% of total direct mail spending in 2007, according to the report. This represents nearly one-third of total revenues for the U.S. Postal Service.

Credit card marketers have been among the hardest hit by declining response rates. Many mailers now struggle to reach a 1% response rate, compared to five or six years ago when response rates were typically four or five times higher, according to the report.

Direct mail also faces increased pressure from environmental advocates who estimate 3.6 million tons of unwanted direct mail winds up in landfills annually.

The report says the volume of undeliverable “direct mail waste” increased to nearly 6 percent in 2007, compared to 4.5% in 2005.

The report cited improved data hygiene processes, volume postage discounts, commingling mail and other existing practices as proven strategies to improve efficiency for direct mail.