December 19, 2014
Postage price rises: what next for direct mail?
Royal Mail driving the postage price rise price rises are not a surprise in themselves, but those in the direct mail industry were generally shocked to discover that, with very little notice, pricing changes expected for April 2015 will now take effect from the week beginning 2nd January 2015. It’s likely to make many rethink their strategy, but could mean more effective mail marketing for some.
One important effect of the price changes could be that it improves the economics of using machine-readable addressing, such as barcodes, optical character recognition and the Royal Mail’s Mailmark system. For first-class deliveries, using such addressing can now save as much as eight pence per letter for both advertising and business mail. It’s certainly possible that some firms which might have taken their business elsewhere after the price changes may instead figure it’s better to remain with their preferred mail supplier, but adopt machine-readable addressing.
Will this effect smaller firms cutting back on direct mail? With the overall quantity of poorly targeted mailouts received by householders dropping, it’s certainly possible the recipient will pay more attention to better profiled more pertinent individual pieces. Ironically, that could even mean the return on investment actually rises for those companies that invest further in the direct mail but apply improved data process, following the price changes.
Catalogue companies could be most affected by the price changes. The sheer weight of catalogues makes them most susceptible to price increases, meaning retailers will either need to absorb the extra expense or reduce page counts to keep costs constant. Either way, many will have to concentrate on making catalogues more effective to boost orders if they are to avoid passing on the added costs to consumers. One way that this is being ‘rethought’ by Royal Mail is to shrink the postal weight bands for advertising catalogue companies and bring in, for example, 10g incremental price brackets so that should a retailer have 8 extra pages of a brochure that takes it over 100g, they will pay for the increment by weight. This is being considered – watch this space.
The price changes could also bring more attention to direct mail specialist firms which handle Direct Mail advertising on behalf of clients. The price rise means such firms will need to work even harder to justify their services, but will also mean the difference between the most and least effective specialists will become ever more significant.
One thing we at Romax know is that the direct mail and postal market provides marketers with a complex array of variables to consider whan planning their campaign: data, weight, format, machineability, stock, message postal service and of course these costs in relation to ROI. The other thing we know is how to take away those potential pitfalls for a marketing department, save money and add value to client campaigns.
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