Reader Reaction: Is the direct mail market suffering from overcapacity?

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Charles Grant-Salmon, chairman, 4DM Group

There is overcapacity, but I don’t believe it’s as bad as the web market or the commercial print market. However, where direct mail has been affected significantly has been by the financial sector not wanting to communicate with its customers as much. That has dramatically affected the volumes going out, which has affected the whole marketplace because traditionally 50%-plus of what went through people’s letter boxes was from the financial services sector. As a consequence of that drop in volume, I think the overcapacity is there now because the market is geared up for a certain level and that level has significantly reduced.

Robert Keitch, chief of membership and brand, DMA
We find ourselves in the worst economic environment ever and that isn’t helping the situation. Demand is patchy. There has been a slowdown with traditional users of direct mail, while other areas have gone up. It’s not a clear picture. If clients are being demanding and inordinately cautious, they are holding back supply, which is driving a smaller pool of demand. This will always exaggerate overcapacity and this is the situation we find ourselves in. However, overcapacity isn’t unique to this industry, many markets don’t have the margins built into their businesses.

Yolanda Noble, chief executive, Dsicmm
There is overcapacity in the direct mail sector, by a long stretch. It is terrible to see companies like TPF and Blackburns the way they are at the moment. Having said that, the entry level for direct mail is always very low and while some companies try to maintain professionalism as much as possible, there are those that don’t. They create overcapacity and DM becomes a commodity over a product because people compete on price. We have not suffered as much as some sectors because our clients are more targeted and some suggestions of the seriousness of the overcapacity are way out, we don’t have anywhere near the problems of web or litho.

Tim Lance, sales director, X1
I really do think there is a case of overcapacity in the direct mail market. It seems that the companies within the sector that are having the most problems are the medium-sized businesses. It’s because they are selling things too cheap and, of course, that’s a major issue. Only the other day, I had to sell a job at 35% less than I normally would have just to keep the customer. It’s got to that stage where there’s no profit being made and that’s severely impacting direct mail businesses and it is simply not sustainable