The Impact to Direct Mail During a Crisis

For those who lived through the most recent financial recession, it is tempting to compare the chaos of then to the pandemic of today. Though there are similarities, the crisis of 2008 was different in many ways. According to our direct marketing resource partners at Competiscan, the “recovery period” for direct mail amidst the 2008 recession was over two years. In our current economic environment, we expect direct mail to remain a more strong, steadfast marketing channel. Learn what Competiscan’s Director of Research & Insights, Jack Dobbin, has to say on the predicted impact to direct mail during the coronavirus pandemic.

How do the 2008 recession and today’s economic state compare in terms of consumer confidence?

Competiscan: The stock market crash that led to the 2008 recession was due to the economy having been built on a shaky lending foundation and abused leverage systems. The stock market crash of the last month is more rooted in uncertainty – there is a wide range of outcomes for how COVID will affect the world at an economic and societal level. It is possible that as that uncertainty is clarified, markets will rebound more quickly than they did after the recession, leading to accelerated consumer confidence and marketing efforts to woo those customers. 

What trends can we expect to see in near-term purchase behaviors and marketing efforts?

Competiscan: Industries that are currently suppressed due to social distancing could see a rapid and near-full recovery when social distancing recommendations are lifted. We could see a rush to “make up for” missed experiences, which would quickly revitalize entertainment, shopping, and ultimately spending. Companies will likely look to capitalize on this spending rush by ramping marketing back up to pre-COVID levels or higher.

What do you foresee as the impact to direct mail volume in the coming months?

Competiscan: Taking all this into consideration, we expect to see industry-specific recoveries to direct mail volumes, that are also dependent on the timeframe of the COVID pandemic. Some industries could incur fundamental changes to their business models that put a lengthy damper on acquisition efforts. But if optimistic projections come to fruition and social distancing is lifted after only a few months, there would likely be limited long-term damage to most companies’ operations, and consumers’ appetites should return in full, with direct mail volumes following suit before the end of 2020. However, pessimistic projections of disruption for six to twelve months or longer could lead to a tipping point of unemployment, savings depletion, economic stagnation, and frozen lending markets that have more wide-reaching effects across all industries. In this case we could see suppressed mail volumes in the months ahead.

Given your experience with direct marketing trends data, when can we expect further clarification on the timeline we are operating within?

Competiscan: Clarification will likely come sooner than it did between 2008-2010; we are still in the beginning stages of understanding COVID-19 and how successful our social distancing measures have been in limiting its spread. As COVID data continues to accumulate at a daily exponential rate, the predictive models will become more accurate, and we will have a better idea in which timeline we will be operating. This is in contrast to the 2008 recession, where even in 2010 financial experts warned of a tumultuous decade to come.

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Of course, predicting the future is not easy. These are educated opinions based on the experience of our direct marketing research partners at Competiscan, who have extensively covered marketing trends combined with external research into the causes and likely outcomes of the financial climate.

 

Posted 4.15.2020