In my last column, I covered inkjet developments and the early success of continuous feed (CF) inkjet in the transaction print segment in Europe. Today, let’s talk about a closely related application: direct mail. The big commonality being that both transaction print and direct mail need to be inserted and mailed. It is not surprising that many sites handle both transaction and direct mail, since they have the necessary mailing infrastructure. Adding TransPromo marketing content to a bill or statement can mean adding direct marketing-like content, making the step to producing direct mail smaller for transaction printers.
Direct mail production also overlaps into commercial print as typically, many commercial printers are producers of direct mail as part of their product mix. It turns out the investment into a continuous feed inkjet press by a commercial printer is often justified by the direct mail activities and serves as a springboard for other applications. So why is it still so rare for commercial printers to invest in high-volume inkjet?
There are several distinct requirements for direct mail, and a good number of companies do specialise on direct mail or direct marketing in a broader sense. Many tiers of direct mail exist in terms of customers, quality, format and substrate. Even in the use of personalisation there is quite some variety. Since door-drop direct mail is still popular in many European countries a lot of material is mass-produced, with a simple post code or even without any form of addressing. According to an Intergraf report on direct mail in the EU, the unaddressed pieces outnumber addressed direct mail by six to one. Quality is an important consideration as well. There is a high-end quality segment in direct mail, while other marketers compromise on quality for lower cost. Some even deliberately aim for a low-cost-look to appeal to their community. While early continuous feed printers originally catered for the low to mid-quality tier, the latest device generation can produce high quality material. If a wide substrate latitude is necessary, cut-sheet solutions have an edge.
The rationale for the success of high-speed colour inkjet in direct mail is much the same as for transaction print. By introducing a white-paper solution, preprint can be replaced. Additionally, a mailing can be enhanced with variable colour content. Finally, consolidating multiple toner lines due to the higher speed of inkjet is possible. The colour content (gamut, density, chroma) in direct mail is more crucial than in transaction print. Colour sells and usually a lot of colour imagery is used on a page. Ideally, colour variable data can be a boon for inkjet, but marketers often lack concepts and data. Otherwise it can be a burden as colour content is driving up ink usage, making offset print more cost effective – a reason why offset is still used widely.
Direct Mail Diversity in Europe
Europe is not a uniform market when it comes to direct mail. Addressed direct mail volumes differ a lot from country to country. This has historical reasons, but recent changes in postal rates and trends in advertising have an effect as well. The largest country by direct mail volumes is Germany, followed by the UK and France. Switzerland, Netherlands and Italy come next. Switzerland is the country with the most direct mail items per head – about 120, while Italy has 10 times less.
Direct mail volumes (excluding door drop) in Europe are about a quarter of the US volumes. Considering the lower direct mail spending in Europe, it is almost surprising to see that investments in continuous feed inkjet presses are not much behind US numbers. In my view, a main cause is the fragmented nature of the European market, driven by national postal systems, but also by the more national nature of advertisers and differences in national mailing and privacy regulations.
The UK is the leading country in continuous feed inkjet adoption in Europe with about twice as many installations as Germany, France or Italy. The UK is also the country with the largest scale investments in multiple lines of continuous feed inkjet presses. Leading the path are Communisis and Go Inspire (the resulting company after GI solutions acquired Eclipse). In Germany direct mail providers invested not as big as in the UK, but there are some larger users of continuous feed inkjet equipment as well. Swiss post is a major marketing services provider in Germany (based on the acquired mailing companies GHP and Meiller). Another large user of continuous feed inkjet in Germany is Campaign – the recently renamed direct mail arm of Arvato (itself part of publishing powerhouse Bertelsmann). Interestingly Ricoh owns a direct mail company in Germany after buying mailing company Georg Kohl out of bankruptcy in 2011. The company has been renamed into Ricoh Document Center.
France and Italy have a fair number of direct mail installations as well. Interestingly, direct mailers in the Netherlands invested in a relatively large number of continuous feed inkjet devices, being almost on par with Germany and ahead of Italy and France. However, The investments are spread across a number of companies with only few owning two lines, a sign of somewhat lower volumes in this market. The Netherlands are a large scale user of cut-sheet inkjet devices as well, especially the Canon Océ VarioPrint i300 – which is manufactured in the Netherlands.
There was noticeably less activity in Eastern Europe.
The overview on direct mail in Europe would not be complete without mentioning GDPR. The legislation was adopted in the European Union in 2016 and started to be enforced in May 2018. It governs the collection and usage of consumer information. Since its main targets are electronic data storage, processing and distribution, the effect on direct mail was deemed to be small compared to e-mail. It was estimated that more than half of all e-mail addresses were invalid when the regulation took hold. There is little data available yet, but it seems the GDPR negatively affected direct mail as well. The UK household panel of Wilmington Millenium found that direct mail volumes dropped by 30%. At least the perceived relevance of the advertising mail increased for 45% of the consumers surveyed since GDPR. It is likely that other countries had strong volume declines, but data is lacking so far.
While sales of continuous feed printers in Europe into direct mail increased over the years and peaked in 2016 numbers declined recently. Sizing how many print lines are used in direct mail is difficult, as many users produce several applications. Despite the recent declines direct mail has still some growth potential in Europe, although opportunities will differ from country to country.
Trends that will shape the demand for direct mail printers in Europe:
- The interest in high quality devices will remain high – direct mail is increasingly being positioned as a premium medium.
- Substrate flexibility will become more important to support a premium look. Being able to print on (light) postcard stock will be a bonus for many installations.
- The small mailer market remains under-served and lower priced, lower volume inkjet printers will have some opportunities
- Personalisation is growing, although marketers are cautious not to make it too obvious as consumers in Europe tend to be privacy conscious.