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Direct mail is being negatively affected by online efforts, specifically email, and is expected to decline 39% in the next five years – from $49.7 billion in annual spend in 2008 to $29.8 billion by then end of 2013, according to a report from Borrell Associates, writes MarketingVOX.

This decline will relegate direct mail from the primary beneficiary of ad revenue to the fourth, as it falls behind the internet, broadcast TV and newspapers, the firm predicted, noting that “direct mail has begun spiraling into what we believe is a precipitous decline from which it will never fully recover.”

The report, entitled “Direct Mail Falls, E-mail Soars,” said the increase in e-mail is the primary reason for the corresponding decline in direct-mail revenues. “Last year, e-mail advertising quietly moved to the #1 online ad category spot, surpassing all other forms of interactive advertising,” Borrell Associates wrote.

In ’08, advertisers spent $12.1 billion on email marketing – more than what they spent on search ads or display/banner ads.? The report predicts that e-mail will grow to $15.7 billion by 2013 and remain the preferred channel among many marketers:

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Local Email to Rise

Local e-mail is expected to account for a significant portion of e-mail growth overall. Borrell Associates forecasts that local e-mail advertising will grow from $848 million in 2008, to $2 billion in 2013, as more small businesses abandon direct-mail couponing and promotions and turn to the measurable and less costly online medium.

Online coupons are credited, in part,? with expediting direct mail’s demise. A report by PriceGrabber noted 53% of online Americans say the recession compels them to spend more time on the internet, where they research purchases to suppress impulse buying and shopping for deals that do not include shipping fees or sales tax.

According to Platform-A and Information Resources (IRI), 90 million US consumers (78% of retail shoppers) currently use newspaper coupons, and 40 million (40% of shoppers) say they are likely to use coupons accessed online.

Borrell Associates observed that 8% of US adults now claim to use coupons delivered via e-mail or the internet at large.

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