Direct Marketing Services

Brief Excerpt from Industry Overview Chapter:

Companies in the direct marketing services industry develop advertising materials for direct distribution to consumers by mail or online. Major US companies include Harte-Hanks, Valassis Communications, and Vertis.

The US direct marketing services industry includes about 3,500 companies with combined annual revenue of about $10 billion. The output of US advertising and related services, like direct marketing, is forecast to grow at a low rate for the next two years. Key challenges include privacy concerns and higher postal rates as mail volume continues to decline.

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 advantages in 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 industry is fragmented: the 50 largest firms account for about 45 percent of revenue.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services are letter shop services (preparing and sorting mail pieces); printing; mailing list services; concept development; and full direct mail services, which include all of the above. Full direct mail services account for about half of industry revenue; letter shop and print services each account for about 15 percent. Other offerings include fulfillment, sales promotion, and distribution services.

Historically, direct marketing referred to direct mail and telemarketing. Direct marketing can...