Lou Heldman on media, technology and society

By Frank D'Angelo, for AdAge.com

Oct. 27 marks the 15th anniversary of the industry's first banner display ads, which appeared on Hotwired.com. To the many of you reading this who weren't in the business back then, that's not a typo; I'm not referring to www.HotWire.com, the travel site, but HotWired -- the first commercial digital magazine on the web and the offshoot of Wired magazine.

--> For us, it started with a speech. It was May 1994, and Ed Artzt, the chairman of P&G at the time, made his landmark speech at the 4A's meeting in White Sulphur Springs, WV calling for marketers and their agencies to dive headlong into the "new media" revolution or be left behind.

My boss and mentor Bob Schmetterer, president of Messner Vetere Berger McNamee Schmetterer (MVBMS), a unit of Euro RSCG, was in that audience and he was totally energized by Artzt's challenge. It's important to note that our largest account at the time was MCI, which employed Vinton Cerf -- the "Father of the Internet" -- as VP-data services.

At the time I was an MCI account guy and Bob assigned me to this new media and created a deadline in order to jumpstart the agency's involvement in "cyberspace." Our challenge seemed simple: develop something called a "graphical ad unit" for HotWired. This initial assignment was under the guise of "let's explore this new medium and see what happens."

HotWired was the first commercial web magazine to attract blue chip corporate sponsorships dollars on the web. The site launched shortly before Netscape's browser, and the advent of such other new media such as Pathfinder.com (Time Inc.'s commercial web content offering) and Cnet.com.

Once the media commitment to HotWired was made, we needed to select clients we believed would share our excitement in entering this new space. We went through the client list and quickly reasoned that MCI (telecom), Volvo (automotive) and ClubMed (travel/hospitality) would be as good a core of candidates for this exploration as any.

Four of our then-clients placed ad banners as part of that first campaign, MCI, Volvo, Club Med and 1-800-Collect. (The other two advertisers were AT&T and Zima.) Keep in mind, this was 1994; the first graphical web browser, Mosaic, was less than a year old (soon to be replaced by Netscape Explorer), and Web access? Purely dial-up, 24.4kps if you were lucky, meaning these ads took a while to load. The online U.S. population? Two million, if that.

These "original six" were the first brands to take a leap of faith and place advertising in the unchartered "cyberspace" territory. But several didn't know they were taking it until after the fact. Corporate America was still largely unfamiliar with the graphical web, so we didn't even try to sell the concept. We decided to commit agency media and development dollars to place client banner ads on HotWired without clients' prior consent or knowledge. The way he saw it was if they liked it, they would be happy to pay us and if not, that was OK too; but at least the agency would get a running start at exploring this new exciting medium that was on course to change all of our (professional) lives.

--> We were given the ad specs by HotWired and it was only then that we realized banners ads were clicked on and could drive consumers to a client designation on the web. Oops! This accidental lesson sparked us to develop websites for these initial ad banner placements. Some of our clients weren't too sure they even wanted to "interact" with this new online population. Can you imagine?!

Its launch in 1994 was not without debate internally as to whether the ad units offered to the advertiser community should be simple text links or graphical ad banner units. Graphical ad display banners won out and the rest is history. And take a look at the hilarious come-on AT&T used to generate a click-through: "Have you ever clicked your mouse right HERE? You will!"

The reaction ran from enthusiastic to somewhat leery. MCI, as one would expect, was truly supportive of our proactive initiative. Their corporate culture encouraged exploration. Volvo, on the other hand, understood the value of our experimenting with the new medium, but did not want to push/urge any interaction with the consumer. They didn't know what to expect, did not know how to handle responses and was concerned legal implications were involved. As a result, you see the first Volvo ad banner was nothing more than the Volvo logo and photo of an auto. No call to action or direction to click was to be incorporated into the Volvo banner. In fact, if someone clicked on that banner in October of 1994, it would take them to a simple questionnaire that could be emailed by the consumer on what kind of Volvo they might be interested in.

--> Looking back at the birth of this industry and the first simple graphical banners, I am still amazed at how much has been achieved in the first 15 years. That said, I anxiously await the further advancements coming our way in terms of new ad technologies, ad forms and ad measurement capabilities (e.g. attribution modeling). The issues surrounding display banners and online brand measurement are many and have been well chronicled (see the recent special eMarketer report entitled The Online Brand Measurement: Connecting Dots for example).

Research suggests we have a long road ahead in terms of measurement -- and I don't disagree; however, I'm not convinced we're that far off. I don't believe there will ever be a "silver bullet" to solve all of our problems, as our industry is constantly evolving, becoming more complex and proving to be a moving target. But all that said, from what we have learned through the use of fundamental building blocks of acquired knowledge, industry and case studies, the use of traditional media metrics, the use of existing best measurement practices for digital and a quest to continually "test and learn," we will ultimately be successful.

Has any one item in our industry been encased with so much debate -- at times even disdain -- as to its true value, role and contribution to marketing communications from its inception in 1994 to this day? Yet the display banner is the impetus to the creation of the online advertising category that will reach beyond $24 billion in 2009, according to eMarketer. Perhaps more important, no other development since has advanced advertising measurement, effectiveness and accountability than the display banner.

So on Oct. 27, I hope you will join me in toasting the birthday of the banner display ad -- whether you are a "cup is half-empty" or "cup is half-full" type of person. Some days I love the business and others day... well, not so much... but I have to admit: it's been an unbelievable 15 years.

I leave you with a challenge... Can you guess the two-word copy from one of the original banner ads that generated 78% click-through rate? I look forward to your answers.

ABOUT THE AUTHOR

Frank D'Angelo is founder and partner of CL&S, New York.

By Jonathan A. Knee, Barrons.com

RECENT HYSTERIA OVER THE IMMINENT demise of daily newspapers is misplaced. As an economic matter, most newspapers still are far more profitable than other, higher-profile consumer media. As a policy matter, those calling for government subsidies or other protections ignore the true state of the marketplace of ideas: It has never been so vibrant.

Newspapers do face a genuine crisis, but the nature of this crisis is misunderstood. Formulating a coherent response -- for operators, investors and policymakers -- requires a clear-eyed view of the state of the industry.

Doing worse doesn't mean doing badly. Until recently, many newspapers had profit margins exceeding 30%. By 2008, the industry's average margin had fallen to the mid-teens. The speed and magnitude of this decline have resulted in wrenching changes in the way these historically stable businesses must operate.

The continuing drama shouldn't distract from real earnings power. Many newspapers still have almost double the profitability of other media sectors, such as movies, music and books -- which have long struggled to achieve margins of even 10%.

EVEN GOOD BUSINESSES can have bad capital structures. Many newspaper companies took on debt that could have been easily supported if profitability had been maintained. The problem is that current earnings, even if superior relative to those of other media businesses, are far below what anyone had anticipated.

For instance, McClatchy put much of its $2 billion of debt in place in early 2006, when margins still approached 30%. In 2008, it had 20% margins on almost $2 billion of revenue, but debt service consumed its profit. As a result, while its recent share price at $3. 65 is well above its July all-time-low of 40 cents, McClatchy's stock-market value is still barely $300 million -- down from a high of more than $3 billion as recently as 2005.

One way or another, the capital-structure crises at newspaper companies will be resolved, by paying back the debt over time, negotiating with creditors or by bankruptcy. The underlying businesses will go forward.

There are many newspaper industries. The handful of national newspapers that garner the most attention represent a tiny subindustry (about 10% of daily circulation) within the overall sector. These papers, which include the New York Times, the Wall Street Journal (published by News Corp., which also owns Barron's) and USA Today, have long been among the industry's least profitable.

USA Today, for example, took a decade to attain profitability, and has continued to maintain much lower margins than the small market local papers that filled parent company Gannett's coffers with the cash it spent on USA Today. With daily circulation under 100,000, local "monopoly" papers represent the backbone of the industry, and continue to be highly profitable -- although not as profitable as they once were.

Some major-market local papers have become unprofitable under the combined burden of antiquated cost structures (including union contracts that severely limit operating flexibility) and new market entrants -- both off- and online. Some of these papers might seek bankruptcy protection or even shut temporarily, in order to address anachronistic legacy-cost issues. But there are few markets that shouldn't be able to support a healthy newspaper.

OBVIOUSLY, THE INTERNET ISN'T the newspaper industry's friend.

Large, fixed-cost printing machinery and distribution infrastructure are required to produce a daily local paper and represent the industry's biggest barrier to entry. Unfortunately for the newspapers, efficient delivery of classified advertising -- which represented barely a quarter of newspaper revenue but more than half of profit -- turned out to be the Internet's "killer app." Monster.com, Craigslist, realestate.com, cars.com and dozens of other sites emerged to capture an increasing share of this once wildly profitable and proprietary domain.

Newspapers continue to have advantages of scale in certain aspects of their business, such as sales and local-news collection. And cooperating with adjacent competitors or outsourcing certain functions altogether can ensure that the newspapers capture some continuing benefits of lost scale, even if these must now be shared.

Smart operators have begun to apply these principles to everything from printing and distribution to certain aspects of news collection and even the editorial process. Industry strategies should focus on reinforcing competitive advantages, not trying to reestablish dominance in areas where that is now structurally impossible.

The Internet should be part of these strategies, but blindly embracing this medium, which has few barriers to entry, will only accelerate the already ominous financial trends.

Bad for shareholders doesn't mean bad for consumers. Even the savviest newspaper operator won't be able to return its business to the level of profitability it once had. The Internet has increased competition for the attention of many audiences, not just the audience for classified ads.

Although this heightened competition has led newspapers to cut their costly original national and international coverage and investigative journalism, consumers have multiple new sources to replace what is missing from their local papers.

The Internet provides timely access to other local, national and international news outlets. Blogs, citizen journalists and social and experts' networks also make available a deeper, more textured collection of viewpoints on news events than local newspapers provided to their once captive audience -- no matter how much more the papers used to invest in coverage.

The Internet has created information overload. Media entrepreneurs surely will develop compelling products to guide consumers through the cacophony. But they may not be the third- and fourth-generation descendants of the entrepreneurs who founded mass-market newspapers.

THE NEWSPAPER OF TOMORROW will indeed be very different in terms of how it is produced and delivered, what is in it, and how profitable it is. It will be part of a much more crowded and complex news and information ecosystem.

Operators must aggressively focus on cost and cooperation, designing truly distinctive offerings that leverage their advantages in this newly competitive landscape.

Policymakers currently have plenty of legitimate targets of their attention without worrying about the fate of newspapers or trying to keep change from happening. If they keep out of the way, news junkies in particular should anticipate an era of unprecedented plenty. And investors will be well-rewarded by backing managers who appreciate the continuing, if diminished, profit potential of this new environment.

JONATHAN A. KNEE is director of the Media Program at Columbia Business School and coauthor of The Curse of the Mogul: What's Wrong With The World's Leading Media Companies (Portfolio: 2009).

Lou says: I read Knee's level-headed assessment of the newspaper business as I was absorbing new information about readership trends online and in print:

•An average 74 million people visited a newspaper Web site each month in the third quarter of 2009, equaling just under 40% of all active U.S. Internet users, according to the Newspaper Association of America, citing research performed by Nielsen Online.

This is the most unique visitors recorded since the NAA and Nielsen began tracking newspaper Web site audiences in 2004; the previous record was 73.3 million in the first quarter of 2009.
(Erik Sass in MediaPost, http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=116036)

•Following an average drop of 10.6% in the last six months, daily newspaper circulation has fallen to a pre-World War II low of an estimated 39.1 million, according to an analysis of industry data released today.
The first double-digit circulation decline in history means only 12.9% of the U.S. population buys a daily newspaper. The analysis is based on data provided by the Audit Bureau of Circulations, an industry-funded group.
Newspaper circulation now is lower than the 41.1 million papers sold in 1940, the earliest date for which records are published by the Newspaper Association of America. Back in 1940, newspapers were purchased by 31.1% of the population.

Sunday circulation, which fell an average of 7.5% in the last six months to an estimated 40.9 million copies per week, is at the lowest point since 1945 when it was 39.9 million.

At that rate, Sunday papers in the last six months reached only 13.5% of American homes, as compared with 28.5% in 1945, when the population was less than half the size it is today.
(Alan Mutter, on his blog http://newsosaur.blogspot.com)

Posted by Rick Edmonds,Oct. 12, 2009, Poynter.org

Nearly everyone agrees now on the basic narrative of the news business in transition. Old media -- newspapers especially -- are contracting drastically. They don't field the news effort they did in better times and probably never will again. On the other hand, alternative digital startups are exploding, and may in time plug much of the gap.

It occurs to me, though, that there has been very little effort to quantify what has been lost, then compare that figure to the scale of the best of new media.

This is a first shot at those numbers.

By my back-of-the-envelope calculations (see below), newspapers have, just in the last several years, reduced their spending on journalism by about $1.6 billion annually. 

The new media sector defies that kind of collective measurement. By its nature, digital launches are extraordinarily diffuse. There is room for debate over what qualifies as a news/information site. And by any definition, new media ventures are a fast moving target with the pace accelerating even in the last few months.

What is known is the dimension of some of the most prominent ventures, the majority of them non-profits. Pro Publica has an annual budget of nearly $9 million and is growing. The Knight Foundation is investing up to $5 million a year in start-ups through the Knight News Challenge. The Kaiser Family Foundation is spending millions on a health policy news service launched in April.

San Francisco financier Warren Hellman is commiting $5 million through his family foundation over several years to a non-profit digital service that will also seek to harness volunteered effort by UC Berkeley journalism students. Venture capitalist John Thornton, several foundations and individual donors have committed $4 million to launch the non-profit digital Texas Tribune, which expects to operate on a $1.6 million budget in it first year.

Probably best known of the start-ups are MinnPost and Voice of San Diego. Both operate on a total budget of a little more than $1 million a year, probably about $1 million of that a direct spend on journalism. Geoff Dougherty recently suspended operation of Chi-Town Daily News, saying he had been unable to raise $300,000 to keep going. He commented that a metro digital report needed at least $1 to $2 million a year to make a difference.

So here is an indicator of relative scale. It would take roughly 1,600 MinnPosts or Voice of San Diegos to replace the spending on journalism newspapers have cut.

How do I figure the deficit at $1.6 billion? In 2004, 2005 and 2006, newspapers were a $60 billion industry with advertising revenues just over $49 billion and circulation revenues of about $11 billion. 

Deep advertising losses will take the advertising total for 2009 down to around $28.5 billion. The Newspaper Association of America no longer offers estimates of circulation revenue. I'm estimating that despite some rate increases, the total has fallen to around $8.5 billion. That will leave roughly a $37 billion industry as 2010 begins.

The Inland Press Assocation's cost and revenue study is the best source I know for figures on newsroom spending as a percentage of revenues. The latest report, as of the end of 2008, finds that figure at 13.7 percent for papers of roughly 100,000 circulation.

But in earlier work with these numbers, I found the newsroom spend was a lower percentage at the biggest papers of 250,000-plus circulation. Given their outsized weight as a share of the industry, I estimate the current industry average at 12 percent. When profits were higher in the middle of the decade, I estimate newsroom share was closer to 10 percent of revenue.

So at $60 billion total revenues in 2005 and 2006, the newsroom spend would have been roughly $6.2 billion. Now as a $37 billion industry, newspapers are likely spending $4.4 billion on news. That's $1.6 billion less. 

Newsroom spending, by the way is 80 to 90 percent salaries. It also includes fees for wire service and freelance contributions, as well as a travel and training budget. In the Inland survey, benefits are counted separately as part of "general and administration."

These raw numbers, you may already be thinking, don't tell the full story. Even stalwart newspaper enthusiasts would admit that some of the trimmed spending and positions were expendable with little impact on quality for readers. The industry is still hacking at inefficiencies like having six editors read a single story or sending hundreds of reporters, editors and photographers to the Super Bowl.

MinnPost, Voice of San Diego and the rest have made canny decisions about what to leave out of their report -- sports results, breaking crime news and more -- the better to deliver serious reporting. A number of the new non-profit units -- like Pro Publica -- focus exclusively on investigative reports.

The start-ups typically dispense with the expensive print, delivery and ad sales costs of newspaper organizations and thus can spend the great majority of their revenues -- not just 12 percent -- on content.  My comparisons, however, back out most of that legacy expense structure to look apples-to-apples at levels of news spending.

All that said, new media at best appears to be covering a small fraction of the traditional news capacity lost. (Broadcast and magazines have cut coverage too, though I do not have a handy way to measure how much).

We will save further discussion on how far a dollar goes in the old and new media for later in the week. Your thoughts are welcome in the meantime, however, and feel free to check my math, too.

Lou says: The Monday newspaper, my beloved Wichita Eagle, now comes to me in a plastic wrapping small enough to do double-duty wrapping foot-long hot dogs. While Rick Edmonds' methodology can be challenged, his point is unassailable -- newspaper readers have lost a lot in the way of local news (and enterprise) that won't soon be made up for by other sources .

From MediaPost, September 21, 2009

According to a survey conducted for the American Press Institute, reported in Media Buyer/Planner, more than half of newspaper publishers believe readers will pay to access online newspaper content. 51% of publishers say they believe they can successfully charge for content, while 49% either aren't sure or believe paying for content will not work.

But Alan Mutter, in his Reflections of a Newsosaur blog, said "While 68% of the publishers responding to the survey said they thought readers who objected to paying for content would have a difficult time replacing the information they get from newspaper websites, 52% of polled readers said it would be either "very easy" or "somewhat easy" to do so... "

The survey, which was conducted for the latest in the series of industry conferences this year studying how to monetize the valuable content most newspapers give away for free, shows that publishers who are worried about charging for content have good reason to be concerned.

68% of publishers said they thought that, even if readers object to paying for content, they would have a difficult time finding that information in other places, while 52% said they thought it would be either very easy or somewhat easy for readers to find replacement content.

More data from the study includes:

• 58% of publishers said they are considering charging for content
• 49% said they have no timetable in mind for how that will play out
• 12% said they plan to charge for content by the end of the year
• 18% said they will do so in the first quarter of 2010
• 10% said they would begin charging by the beginning of next summer
• 10% currently charge for some portion of the web content

According to the study:

• 38% of the respondents say they will limit full access to stories to monthly subscribers
• 28% say they will likely offer monthly subscriptions as well as micropayments for individual articles
• 15% expect to offer monthly subscriptions, micropayments, and "day passes"
• 19% expect news articles to remain free but that they will produce content specifically for the website which would be behind a pay wall
• 9% say they may adopt a system which would make visitors pay separately for each story they want to read

At many airport food courts, Asian restaurants offer free samples on toothpicks to entice you to buy a full meal. Newspapers have been offering multi-course free meals on the Web for years. It will be hard, but not impossible, to get customers used to paying.
Despite how established the Internet is in our lives, business models are still evolving. It's too early to write off the possibility that a smart pay strategy may yet emerge for local newspapers.

Excerpted from nytimes.com, September 9, 2009

Over the course of 10 months in eastern Afghanistan, an Army specialist nicknamed Mud Puppy maintained a blog irreverently chronicling life at the front, from the terror of roadside bombs to the tyrannies of master sergeants.

Often funny and always profane, the blog, Embrace the Suck (military slang for making the best of a bad situation), flies under the Army’s radar. Not officially approved, it is hidden behind a password-protected wall because the reservist does not want his superiors censoring it.

“Some officer would be reviewing all my writing,” the 31-year-old soldier, who insisted that his name not be used, said in an e-mail message. “And sooner or later he would find something to nail me with.”

There are two sides to the military’s foray into the freewheeling world of the interactive Web. At the highest echelons of the Pentagon, civilian officials and four-star generals are newly hailing the power of social networking to make members of the American military more empathetic, entice recruits and shape public opinion on the war.

Gen. Ray Odierno, commander of American forces in Iraq, is on Facebook. The chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, has a YouTube channel and posts Twitter updates almost daily.

The Army is encouraging personnel of all ranks to go online and collaboratively rewrite seven of its field manuals. And on Aug. 17, the Department of Defense unveiled a Web site promoting links to its blogs and its Flickr, Facebook, Twitter and YouTube sites.

The Web, however, is a big place. And the many thousands of troops who use blogs, Facebook, Twitter and other social media sites to communicate with the outside world are not always in tune with the Pentagon’s official voice. Policing their daily flood of posts, videos and photographs is virtually impossible — but that has not stopped some in the military from trying.

The Department of Defense, citing growing concerns about cybersecurity, plans to issue a new policy in the coming weeks that is widely expected to set departmentwide restrictions on access to social networking sites from military computers. People involved with the department’s review say the new policy may limit access to social media sites to those who can demonstrate a clear work need, like public information officers or family counselors.

If that is the case, many officials say, it will significantly set back efforts to expand and modernize the military’s use of the Web just as those efforts are gaining momentum. And while the new policy would not apply to troops who use private Internet providers, a large number of military personnel on bases and ships across the world depend on their work computers to gain access to the Internet.

To many analysts and officers, the debate reflects a broader clash of cultures: between the anarchic, unfiltered, bottom-up nature of the Web and the hierarchical, tightly controlled, top-down tradition of the military.

“We as an institution still haven’t come to grips with how we want to use blogging” and other social media, said Lt. Gen. William B. Caldwell IV, the commander of the Army Combined Arms Center at Fort Leavenworth, Kan.

One of the Army’s leading advocates for more open access to the Web, General Caldwell argues that social networking allows interaction among enlisted soldiers, junior officers and generals in a way that was unthinkable a decade ago.

He requires students at the Command and General Staff College at Fort Leavenworth to blog, and the college now sponsors 40 publicly available blogs, including his own, where policies are freely debated.

But getting approval for those blogs, as well as for YouTube and Facebook access at the college, was a struggle. “At every corner, someone cited a regulation,” General Caldwell said. In recent months, however, “the Army has made quantum leaps” in embracing the Web, he added.

Noah Shachtman, editor of Wired.com’s national security blog, Danger Room, which has reported extensively on the new policy review, said he recently asked students at West Point whether they would allow soldiers to blog. Almost every cadet said no.

“Then I asked, ‘How many of you think you can stop the flow of information from your soldiers?’ ” Mr. Shachtman recalled. “Everybody agreed there is no way to stop this information from going out anyway. So there is this sort of dual-headedness.”

Skeptics of the Pentagon review say it is motivated partly by a desire among certain officials to exert control over the voices of troops on the Web.

Since the advent of military blogging during the Iraq war, some commanders have remained uncomfortable with the art form, citing concerns about both security and decorum.

Lou says: This is where the freedom afforded by social technologies runs smack into life-and-death issues. It's one thing to see corporations or sports franchises struggling desperately (and futilely) to control the messages coming from their employees and players; it's quite another to contemplate a situation where a soldier's blog postings or tweets can compromise a military operation.
World War II soldiers were warned about 10 prohibited topics in letters home. According to eyewitnesshistory.com, these included:
1. Don't write military information of Army units -- their location, strength,, materiel, or equipment.

2. Don't write of military installations.

3. Don't write of transportation facilities.

4. Don't write of convoys, their routes, ports (including ports of embarkation and disembarkation), time en route, naval protection, or war incidents occurring en route.

5. Don't disclose movements of ships, naval or merchant, troops, or aircraft.

6. Don't mention plans and forecasts or orders for future operations, whether known or just your guess.

7. Don't write about the effect of enemy operations.

8. Don't tell of any casualty until released by proper authority (The Adjutant General) and then only by using the full name of the casualty.

9. Don't attempt to formulate or use a code system, cipher, or shorthand, or any other means to conceal the true meaning of your letter. Violations of this regulation will result in severe punishment.

10. Don't give your location in any way except as authorized by proper authority. Be sure nothing you write about discloses a more specific location than the one authorized.

An updated version of that list, combined with training for those in sensitive situations, is probably the best way to go. The idea isn't to spare criticism of the military, but to preserve the safety of our troops and country.

Excerpted from The Center for Media research, MediaPost.com, September 2, 2009

According to the USPS Household Diary Study, In 2008, only 4% of household mail, and about 3% of total mail, was sent between households; the rest was sent between households and non-households, meaning junk mail, bills and periodicals. 

Advertising mail represented 63% of all mail received by households in 2008.

According to McCann-Erickson, says the report, American businesses spent about $271 billion in 2008 advertising their products and services, a decrease of 3.2% from 2007. Of this total advertising spending, 22% was spent on direct mail. In 2008, more than one-fifth of total advertising dollars was spent on direct mail advertising.

Direct mail was the second leading media choice of advertisers in 2008, after television. However, due to a steep economic downturn, direct mail advertising spending fell 1.0% compared to 2007. Except for the Internet and Other, all other spending media categories declined as well. 

U.S. Advertising Spending by Medium, 2006-2008 ( Billions of Dollars)
Medium	2006	2007	2008	Percent Change 2007-2008
Direct Mail	$58.6	$60.2	$59.6	-1.0%
Newspapers	$46.6	$42.1	$35.8	-15.1%
Television	$71.9	$70.8	$65.2	-7.9%
Radio	$19.6	$19.2	$17.5	-8.4%
Magazines	$13.2	$13.8	$12.9	-6.0%
Internet	$16.9	$21.2	$23.7	12.0%
All Other	$54.9	$52.3	$55.9	7.0%
Total	$281.7	$279.6	$270.8	-3.2%
Source: McCann-Erickson - estimates (Consumer magazines advertising only, business is in All Other)

Direct mail's share of total advertising spending has been on a strong upward trend for most of the past 17 years. Since 1999, the direct mail share has risen steadily reaching 22% in 2008. Direct mail has maintained its large ad share even with the introduction of new, fast-growing ad markets such as the Internet

Households received 100 billion pieces of advertising mail in 2008, and represented about 63% of all mail received by households in 2008. About 83% of all advertising mail received by households in 2008 were sent by Standard Mail, which equates to a total of 83.0 billion pieces. 

First-Class advertising mail accounts for 16.4 billion pieces (16.5%) of all advertising mail received by households. Of this, 8.3 billion pieces are advertising only, while the other 8.2 billion pieces are secondary advertising, such as an advertisement enclosed with a bill.

Financial institutions, the largest users of First-Class advertising, were particularly impacted by the collapse of the housing market and the sustained credit crunch that accompanied the recession. As a result, credit card and other financial types of advertising sent via Standard Mail decreased dramatically compared to other industries.

Advertising Mail by Year
	Volume (Billions of Pieces)	Growth
Mail Classification	2006	2007	2008	2006-2008
First-Class Advertising	18.0	16.9	16.4	-8.6%
Advertising Only	10.3	9.0	8.3	-20.2%
Secondary Advertising	7.7	7.9	8.2	7.0%
Standard Mail	86.9	83.4	83.0	-4.5%
Regular and ECR*	73.1	69.9	69.4	-5.1%
Nonprofit	13.8	13.5	13.6	-1.1%
Unsolicited Packages	0.2	0.2	0.1	-42.0%
Total Advertising	105.1	100.5	99.6	-5.3%
Unaddressed Mail	17.8	12.6	3.9	-78.3%
Source: HDS Diary Sample, FY 2006, 2007 and 2008.

  

Advertising Mail Per Week (Pieces per HH per Week)
	Pieces per HH per Week
Mail Classification	2006	2007	2008	Share of Total
First-Class Advertising	3.0	2.8	2.7	16.5%
Advertising Only	1.7	1.5	1.4	8.3%
Secondary Advertising	1.3	1.3	1.3	8.2%
Standard Mail	14.6	13.8	13.7	83.3%
Regular and ECR*	12.3	11.6	11.4	69.7%
Nonprofit	2.3	2.2	2.2	13.7%
Total Advertising	17.7	16.7	16.4	100.0%
Unaddressed Mail	3.0	2.1	0.6	N/A
Source: HDS Diary Sample, FY 2006, 2007, and 2008

The amount of ad mail received by a household is closely tied to income and education. The relationship between advertising mail and household income is quite strong, as seen in Table 5.4. Households with less than $35,000 income receive less than half as much advertising mail as households with $100,000 or more income. And, education plays a key role in the amount of advertising mail households receive, even after accounting for the impact education has on income.

The role that education plays in advertising mail is two-fold, says the report. First, direct mail is a written type of communication, and education may play some role in its relative effectiveness compared to television or radio advertising. Second, education is not only tied to current household income, but also future household income. A college graduate who currently has a relatively low income may, in a few years, earn a much higher income. 

Advertising Mail Received (Pieces per HH per Week)
	Education of Head of Household
Household Income (x000)	<High School	High School graduate	Some College or Tech School	College graduate	Average
Under $35	9.5	10.2	11.1	12.0	10.4
$35 to $65	13.4	13.3	14.7	16.5	14.6
$65 to $100	14.6	17.3	17.7	19.9	18.4
Over $100	21.0	22.7	22.6	26.3	24.9
Average	11.1	14.5	15.9	20.6	16.4
Source: HDS Diary Sample, FY 2008

For every income group, advertising mail received increases as the age of the head of the household increases. In part, this is because age is correlated with other characteristics such as marriage, home ownership, and the presence of children in the household.

Households with incomes over $100,000 and with a head of household age 55 and older received the greatest number of advertising mail pieces at 27.8 pieces per week. The amount of advertising mail received increases as income, education, and household size increases. 

To access the full report from USPS in PDF format, please go here.