Trends in consumer and business direct mail volumes March 2010 Author: MMC Source: Royal Mail Trends in consumer and business direct mail volumes An overview of the key trends in B2C and B2B mailings from 1983 to 2009 with comparisons by sector – including financial services, government, health, telecomms and utilities mail. The report also looks at the impact of the credit crunch on mail volumes and provides up to date data on cost-effectiveness and seasonality.

B2C direct mail traffic has grown Consumer and business direct mail volumes by calendar year, 1983 to 2009 B2C direct mail traffic has grown more than B2B because it delivers higher response rates and better returns. Consumer direct mail grew by 137% between 1988 and 2009 as consumer spending rose and businesses used improved segmentation techniques to target new audiences. Business direct mail grew by 23% between 1988 and 2009 but declined by 31% from 1998 to 2009. Source: Royal Mail

Direct mail volumes have decreased Total direct mail volume by quarter, 1998 to 2009 (millions of items) The decrease in direct mail volumes since 2004 has been caused by consolidation in the financial markets and the credit crunch. Volume % Change 2009 3563m -18.2% 2008 4353m -6.5% 2007 4655m -7.4% 2006 5028m -2.1% 2005 5134m -5.3% 2004 5418m -0.4% 2003 5438m +3.9% 2002 5233m +6.0% 2001 4939m +5.9% 2000 4664m +7.3% 1999 4345m +8.3% Source: Royal Mail

Economic trends affect direct mail volumes Total direct mail volume trends by calendar year, 1983 to 2009, highlighting the link between direct mail volumes and the wider economy. Consumer Index % Business Total 1983 713m 66 371m 34 1084m 1984 889m 70 373m 30 1262m 1985 933m 72 370m 28 1303m 1986 976m 425m 1401m 1987 1161m 71 465m 29 1626m 1988 1221m 69 545m 31 1766m 1989 1445m 100 68 672m 32 2117m 1990 1544m 107 728m 108 2272m 1991 1435m 99 687m 102 2122m 1992 1658m 115 74 588m 88 26 2246m 106 1993 1772m 123 73 664m 27 2436m 1994 2015m 139 715m 2730m 129 1995 2198m 152 76 707m 105 24 2905m 137 1996 169 77 737m 110 23 3173m 150 1997 2701m 187 75 887m 132 25 3588m 1998 3123m 216 78 891m 133 22 4014m 190 1999 3283m 227 1062m 158 4345m 205 2000 3516m 243 1148m 171 4664m 220 2001 3706m 256 1233m 183 4939m 233 2002 3939m 273 1294m 192 5233m 247 2003 4240m 293 1198m 178 5438m 257 2004 4222m 292 1196m 5418m 2005 4002m 277 1132m 168 5134m 2006 3937m 272 1091m 162 5028m 238 2007 3690m 255 79 965m 144 21 4655m 2008 3483m 241 80 870m 20 4353m 206 2009 2891m 200 81 19 3563m Source: Royal Mail

Direct mail has become more cost-effective Direct mail expenditure and postage expenditure by calendar year, 1990 to 2009 (£millions) Direct mail has become more cost effective, particularly since 1995, with postage expenditure rising less than the total expenditure. Total direct mail expenditure grew by 1% between 1998 and 2009. Over the same period, postage expenditure fell by 2%. Source: Royal Mail

B2C direct mail has increased volume share Direct mail volume and expenditure by calendar year, 2005 to 2009 B2C direct mail increased its share of total volume between 2005 and 2009 at the expense of B2B mail. Direct mail volumes (items) Direct mail expenditure change 4.353m (-6.5%) 4.655m (-7.4%) 5.028m (-2.1%) 5.134m (-5.3%) change £2.040m (-6.0%) £2.171m (-6.5%) £2.322m (-2.1%) £2.371m (-3.9%) Source: Royal Mail

Reduced direct mail volume means less competition on the doormat Consumer direct mail received, moving annual total Consumer direct mail volumes started to decline in 2004 following a long period of growth, with volumes declining by 17% during 2009. Mail volumes are down by 32% over the period Jan-Dec 2003 to Jan-Dec 2009. Source: Royal Mail

Financial direct mail is still largest by volume Consumer direct mail volume share 2009, by sector Base: Total consumer direct mail 2009 Financial direct mail accounts for 24% of all mail on the doormat, down from 29% in 2008 and a high of 34% in 2003. Source: Royal Mail

Trends in consumer mail volume share Consumer direct mail volume share Oct-Dec 2009, by sector Base: Total consumer direct mail (October-December 2009) 20% of direct mail between October and December 2009 was generated by the financial sector. 24% of direct mail came from the retail or home shopping sectors. Source: Royal Mail

Mail volumes rose in a number of sectors Consumer direct mail volumes by sector, 2009 v 2008 (millions) Base: Direct mail received by consumers (unknown and other excluded) The credit crunch has led to a drop in financial direct mail, but volumes have increased in the telcos sector.

Seasonal trends in mail volumes Consumer direct mail volumes by October-December 2009 v 2008 (millions) The weak economy reduced direct mail from the financial services sector. Volumes held up better in the retail and telcos sectors despite lower consumer spending. Volumes increased in the leisure sector.

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