Lou Heldman on media, technology and society

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.