Direct Marketing Services
Description
Companies in this industry develop advertising campaigns and related materials for direct distribution to customers by mail or online. Major companies include Epsilon Data Management, Harland Clarke, Harte Hanks, Merkle, and VML (all based in the US).
The global direct marketing services market has been valued at about $170 billion in 2023, according to Statista. Direct marketing operates independently and relies on direct communication to individual consumers through various delivery systems, such as mail, email, social media, texting campaigns, and more. Email marketing in particular is a cost-effective way for global marketers to reach consumers, especially in countries that lack a traditional direct marketing infrastructure.
The US direct marketing services industry includes about 2,500 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $10 billion. The industry is part of the larger advertising and marketing sector, which is covered further in a separate profile.
COMPETITIVE LANDSCAPE
Demand is driven by economic activity and corporate profits. The profitability of individual companies depends on their targeting services, creative skills, and marketing ability. Large companies have economies of scale in database analytics, marketing, and automated operations, which allow them to compete more aggressively on price. Small companies can compete effectively by specializing in a particular industry, geographic market, or service type. The US industry is concentrated: the 50 largest firms account for about 50% of revenue.
Direct marketers compete against various print and electronic media and other forms of advertising for marketing and advertising dollars.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services include direct mail advertising (about 75% of industry revenue), letter shop services (10%), and direct mail advertising printing (10%). Other offerings account for about 5% of the industry revenue.
Historically, direct marketing referred to direct mail and telemarketing. Direct marketing can use any medium to reach specific customers, including mail, TV, print, email, banner ads, and billboards. The direct marketing industry is changing as organizations allocate more of their advertising budgets to online marketing.
The most commonly used medium for direct marketing remains direct mail, where marketing pieces are sent to prospects using the US Postal Service (USPS). Direct mail typically uses standard mail rates (previously known as bulk or third class mail), which are less expensive than first class mail. Marketers use customer databases to target those most likely to buy a product or service. Mailing lists are bought or rented from list compilers to reach prospective customers. The communication piece - a catalog, postcard, or mailers - is developed and then printed, packaged, sorted, and mailed. Responses are tracked to measure the effectiveness of the campaign, and changes may be made to improve response rates.
Direct mail marketing uses large amounts of paper, which is bought in bulk under long-term contracts. Postage is a major cost and firms depend on prices and mailing rules set by the USPS.
The global direct marketing services market has been valued at about $170 billion in 2023, according to Statista. Direct marketing operates independently and relies on direct communication to individual consumers through various delivery systems, such as mail, email, social media, texting campaigns, and more. Email marketing in particular is a cost-effective way for global marketers to reach consumers, especially in countries that lack a traditional direct marketing infrastructure.
The US direct marketing services industry includes about 2,500 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $10 billion. The industry is part of the larger advertising and marketing sector, which is covered further in a separate profile.
COMPETITIVE LANDSCAPE
Demand is driven by economic activity and corporate profits. The profitability of individual companies depends on their targeting services, creative skills, and marketing ability. Large companies have economies of scale in database analytics, marketing, and automated operations, which allow them to compete more aggressively on price. Small companies can compete effectively by specializing in a particular industry, geographic market, or service type. The US industry is concentrated: the 50 largest firms account for about 50% of revenue.
Direct marketers compete against various print and electronic media and other forms of advertising for marketing and advertising dollars.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services include direct mail advertising (about 75% of industry revenue), letter shop services (10%), and direct mail advertising printing (10%). Other offerings account for about 5% of the industry revenue.
Historically, direct marketing referred to direct mail and telemarketing. Direct marketing can use any medium to reach specific customers, including mail, TV, print, email, banner ads, and billboards. The direct marketing industry is changing as organizations allocate more of their advertising budgets to online marketing.
The most commonly used medium for direct marketing remains direct mail, where marketing pieces are sent to prospects using the US Postal Service (USPS). Direct mail typically uses standard mail rates (previously known as bulk or third class mail), which are less expensive than first class mail. Marketers use customer databases to target those most likely to buy a product or service. Mailing lists are bought or rented from list compilers to reach prospective customers. The communication piece - a catalog, postcard, or mailers - is developed and then printed, packaged, sorted, and mailed. Responses are tracked to measure the effectiveness of the campaign, and changes may be made to improve response rates.
Direct mail marketing uses large amounts of paper, which is bought in bulk under long-term contracts. Postage is a major cost and firms depend on prices and mailing rules set by the USPS.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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