Mailing houses

We’re all guilty of generalising, but tend to get a bit miffed when we’re generalised about. So, before we go any further, let’s be clear that the catch-all term ‘mailing house’ covers a number of different types of company. They include:

* letter-shops (or ‘integrated production facilities’ as some prefer to be known), whose primary role is the print, production and enveloping of direct mail pieces.
* polywrappers, with their high speed lines, whose main function is the polywrapping of large mail runs (for publishers, this is typically the issue runs). Just to confuse matters, some printers also have their own polywrapping lines.
* mail consolidators consolidating mail, primarily for international distribution.

Of course, there are many companies that perform more than one of these functions, but it is best, when sourcing a mailing house, to at least be aware of the differences. Some in the industry don’t like the term ‘mailing house’ at all, because they feel that it doesn’t do justice to the breadth or expertise of their service offering. Alas for them, because the end product of most of their work does end up in the mail, the epithet will be difficult to shift.

Multi-channel world

It is hard to escape the fact that many companies are doing less mailing than they were five years ago and direct mail’s proportion of total direct marketing spend has also declined. The reason is not hard to fathom – the growth of multi-channel marketing. Publishers that used to put the vast majority of their direct marketing through the post, are now diverting large proportions of it into other channels, principally online. A good illustration of this is provided by an analysis of the audited circulation figures for Marketing magazine (see table below). Six years ago 84% of its requested readership was ‘in writing’ (or … through the post). Fast forward to 2006 and you see the ‘in writing’ percentage slipping to just 4%. And this pattern is fairly typical in the B2B sector, and those mailing houses that provide direct mail facilities to publishers will have suffered as a result. On the other hand, those mailing houses that provide polywrapping and mail consolidation services will have been less affected, because ‘multi-channel’, at this stage, relates more to marketing than distribution. The size of issue mailings has been much less affected by the online advance.

As it happens, the table is not all bad news for mailing houses, since it also illustrates that, in a multi-channel world, there is room for more than one channel. We have moved from a situation where one channel was overwhelmingly dominant to a situation where each of the channels has a part to play (note, for instance, the ‘by telephone’ growth). When 4% of a very online-literate readership still prefers to respond ‘in writing’, then you can see that an over-reliance on any one channel could be shortsighted. As DPS’s David Laybourne says, "the challenge for publishers is communicating with customers using their preferred channel. They must also recognise that single channel marketing and communication may not be the preferred option. The biggest dilemma for marketers, when carving up their budgets, is knowing which channel supports which. The challenge is to work out the triggers for purchase." As a result of the emergence of new channels, the mailing house sector is unlikely to get back to the volumes of the past, and they will have to adjust their offering accordingly.

One word of caution regarding the Marketing magazine analysis above. Controlled circulations are particularly well suited to online communications. The shift from direct mail to online will not be nearly so marked in paid-for subscription sectors.

On a more positive note, there are still huge volumes of publisher direct mail and this is likely to continue for the foreseeable future. According to the Direct Marketing Association, total expenditure on direct mail, across the economy as a whole, was £2,466m in 2005 (compared to £1,520m for new media). So, direct mail is going to remain a potent tool for many years to come.

What then is happening at the mailing house coal face? From my discussions with some leading operators, I would highlight five trends:

1. Smaller mailings
Most mailing houses would agree that the heyday of the big, single run mailing is over and that the trend, now, is towards smaller, more targeted, quick turnaround mailshots. The online age has made clients and consumers alike, impatient of delay and more demanding of quick turnaround times. Mailing houses have been able to deliver because they have invested in extra capacity, quicker machines and smarter software. For instance, advances in publishing and printing software and online communications has meant that the process of creating, checking and signing off artwork is now done in a fraction of the time it took previously, thereby helping to slash the lead time for mailshots. And the mailshots are smaller because publishers are getting better at marketing, at segmenting their prospects and at delivering a tailored message to tightly defined groups. The emphasis on cost control and return on investment means that publishers are even less tolerant of waste than before, so every mailer must count.

The increased segmentation is showing itself not only in acquisition and renewal marketing. Some publishers are also applying the logic to their issue runs, where the mailing run is being split into multiple sections to accommodate different inserts and carrier sheet messages. On the subject of carrier sheets, many publishers are still missing a trick. As Mail Matters’ John Hughes says, the "carrier sheet is the first impact page!" Pharos’ Fiona McLellan points out that it is the first page seen, not only by the recipient, but by everyone else who handles it, and yet, says Air Business’ Shelley Ellin, "many publishers run the same carrier for months with no messages." According to Mail Options’ John Fea, "the simple use of additional dedicated cells and columns in their Excel address lists, can open up incredible opportunities for merging text and design into a creative enhancement of their publication." Whether simplex or duplex, whether the message is the same across the run, or tailored to each individual, it does seem a crying shame that many publishers still do not use this, virtually cost-free, promotional, space.

2. Increased personalisation
According to Mail Matters’ John Hughes, "personalisation is more than just getting the name right on the carrier." It’s also more than the inclusion of a proper salutation on the letter, even when it is printed in a different colour. It is more about one-to-one communications; specifically the crafting of an offer or a message based on our knowledge about that individual. As such, increased personalisation (or as DPS’s David Laybourne prefers to call it, ‘individualisation’) goes hand in glove with the trend to more segmented mailings. And it comes out of the increasingly sophisticated marketing skillsets to be found at many publishers. The more we know about our prospects and the more we can market to them as individuals, the less likely it is that we’ll ever return to the large single message mailings of yesteryear.

This moves mailing houses further away from their old volume based business model and they are investing in the software and personnel to handle the increasingly sophisticated requirements of publishers.

3. Increased creativity
In the rapidly fragmenting media landscape, publishers know that they can’t take their current subscribers for granted. Therefore, they are starting to put the same creativity into their renewals as they have always put into their acquisition mailings. ESco’s Susan Duffin has noticed that publishers are getting much more creative, particularly in the area of renewals, which are more colourful and attractive than ever before. As a result, companies like ESco are investing in more and better print facilities to accommodate this.

4. Digital colour printing
These trends all lead inexorably to digital colour printing – don’t they? Whilst the large supermarkets, and companies like Carphone Warehouse, have started using digital colour printing to great effect, publishers are proving very resistant to its charms. Many are showing an interest, but very very few (if any?) have actually taken the plunge. Priority Terry Turner puts this down to cost, but he hopes that the Xeroxs and HPs of this world will change their pricing model eventually to allow prices to drop. Although, DPS’s David Laybourne points out that the price differential is not that great when you factor in all the other costs, rather than just focussing on the headline cost per thousand rates. The real reason for the lack of movement in this area probably has more to do with publisher inertia than anything else.

Whatever the true reason, the tantalising potential of digital colour printing (with its ability to tailor the message and graphics to the individual, without breaking the run) are not being exploited by publishers. Both Terry Turner and David Laybourne agree that the most suitable publisher application, in the first instance, would be renewals. The need to tailor the message both to the renewal effort and the individual makes digital printing particularly well suited. The possibilities are endless; take the gardening magazine trying to get Bob to renew his annual subscription. They know that Bob is particularly keen on shrubs, because he responded to that reader offer they ran a few months back. "I know what we should do – on his first renewal effort, let’s put an image of the March front cover, you know the one, the one with loads of shrubs on it." Subtle and highly effective marketing and only really possible using the combination of variable data and digital colour printing. Yes, there are lots of packages (like Crystal Reports) that will allow you to tailor your text to the individual, but it is in the use of colour and graphics that digital colour printing really comes into its own.

5. Value added services
The move away from the volume driven model has meant that many mailing houses have invested heavily in added value services. These include design and repro work, database management and analysis, data cleaning and consultancy. They have also become much more efficient at running their businesses, cutting away at fat and inefficiencies. However, due to the highly competitive nature of the industry and the reluctance of clients to ever pay more, most of the efficiency gains have been used to maintain competitiveness rather than banked.

Conclusion

The mailing house sector is coming to terms with its place in the multi-channel world and has refined its service offering to enable publishers to take maximum advantage of their own increased marketing skills. Publishers are more sophisticated than ever, but are still missing tricks, some of them quite obvious ones. A greater dialogue with their mailing house (even, perhaps, visiting them from time to time!!) would open the doors to an even more productive relationship. And a final word – don’t over rely on email. Yes, it’s cheap, quick and often highly effective, but it’s not the best channel for everyone. Multi-channel marketing is the way forward.