Source: The Deal
Private equity is leading the charge to consolidate direct mail marketers as more businesses find ways to use the traditional advertising channel effectively in marketing strategies.
Direct mail marketing continues to draw private equity investment as more businesses integrate the time tested channel into advertising strategies.
Monomoy Capital Partners LP, for instance, is the latest entrant to bet on the fragmented category with its June portfolio addition of the 116-year-old direct mailing business Japs-Olson Co.
“There is this common misconception that direct mail is a dying channel and that it’s not as effective but that’s just not the case,” Monomoy partner and head of investment team Jaime Forsyth told The Deal. “Direct mail has the highest return on investment of any direct to consumer marketing channel and is very important in conjunction with digital marketing in an omnichannel approach.”
As consumer audiences moved into digital formats over the years, businesses naturally shifted their budgets toward online marketing, according to Kroll managing director Jacob Rapp. But specialized direct mail campaigns have a proven history of offering meaningful return on investment when used in conjunction with digital marketing tools. Businesses are using tools such as QR codes and personalized URLs in direct mail, both to bring customers to their websites and to track customer behavior for targeted marketing.
Direct mail marketing can range from a simple postcard with a QR code for discounted grocery delivery to a perfume catalog, with samples, that includes a discount code for online checkout.
“The effectiveness of a direct mail campaign, or any sort of direct marketing strategy, depends on the quality of the data that you’re using to develop target lists,” Rapp said. “So if you can develop smart tools to target households through physical mail and link those to consumer identities in digital
environments, that’s where direct mail is more and more effective.”
Monomoy too plans to invest in data and analytics to help Japs-Olson tap new customers, increase customer wallet share and develop new products. The firm will also build out finance operations and invest in equipment and digital capabilities to boost production capacity in the company’s existing footprint.
Japs-Olson makes over one billion personalized direct mailers such as booklets and popups annually. The platform’s clients include Fortune 500 companies in industries including financial services, insurance, healthcare and large nonprofits, among others. The company, which has over 600 employees and a
704,000 square-foot facility outside of Minneapolis, ships the mailers either to its clients or mails them directly to households.
Backed by Numbers
Direct mail has an open rate of 90% among consumers according to Data and Marketing Association, now part the Association of National Advertisers, or ANA. Email marketing has an open rate of just 21.3% per Mailchimp data. In a 2022 survey by ANA, marketers who sent letter-sized envelopes to prospective
customers through direct mail reported the highest return on investment out of all marketing channels at 43% in 2021.
Even age groups typically viewed as digital-first engage with direct mail, data shows. About 47% of millennials surveyed by the United States Postal Service over six months between mid-2020 and early 2021, went to a company’s website based on information in a direct mailer while 27% made a purchase.
Millennials, the largest adult population in the U.S., were in fact more likely than any other generation to take an action . They also have the highest awareness of, and interest in, digitally enhanced mailers that include QR Codes and personalized links, the report said. Its no surprise then that half of the businesses that responded to ANA’s aforementioned survey said they were planning to increase their spend on direct
mail marketing over the course of 2022.
Research has shown that direct mail is not only effective for older generations, but it’s actually highly effective for younger generations too. It’s one of the positive trends that we think makes this market highly resilient.”
Jordan Liss, Director at Granite CreekSee below for full article.