Direct Mail Potential in Emerging Economies

North America, and increasingly Europe, have demonstrated that direct mail is an important component of the postal “eco-system”. Direct mail plays an important economic role by bringing key information to citizens about products and services, including government services, and by providing efficient ways for small and medium businesses to expand their market areas and advertise their products. Postal operators benefit from the revenue generated by direct marketing, and by the mail volume which increases or maintains delivery point density, keeping delivery services affordable.

The affordability of digital printing, the use of multi-channel marketing, and the integration of a customer’s purchasing history in marketing campaigns is increasing direct mail response rates and the overall return on direct mail investment. This is becoming a real possibility in emerging economies. In the United States, it is estimated that an average of $5,595 in sales is generated every year from direct mail (as compared to $3,753 in Canada).

An econometric model taking into consideration individual income, purchasing power, and household size, shows that economies with $5,000-$8,000 per capita income could generate between $400 and $750 in sales per year per household. This would bring the 3-year net present “value of an address” to $1,000 which is significant. One of the issues, of course, is that many of these countries do not have the address infrastructure to support a direct mail industry: there are no street names, or they are not inventories and the buildings on these streets are not recorded, and sometimes there are no postal codes to disambiguate one named street from a similarly named street elsewhere nearby.

However, there is clearly the economic potential to support these activities, and to build the address infrastructure, and the address maintenance services, that are required to support direct mail and direct marketing. The key is for industry stakeholders, including postal operators, potential advertisers, regional industrialists, and potential service providers to get together and find ways to move forward. The U.S. service industry is ready to help.

World Mail & Express Americas conference presentation