In the summer of 2009, something very strange happened: a sector in the print market claimed it had experienced an upswing. Perhaps even more strange was the fact that the sector, direct mail, felt confident enough to report, be it with some caution, green shoots of recovery. This was extraordinary for two reasons: firstly, summer is traditionally a slow time of the year for the DM sector; and secondly, the UK was, and is, in the worst recession since records began.

But then the Autumn arrived, when sunny skies grew overcast, and the DM industry was hit by strikes by Royal Mail workers aggrieved at the prospect of drastic changes to the business. Postal chaos ensued with millions of letters lying in mail depots undelivered. Merci­fully, the dispute hasn't disrupted Christmas deliveries.

Such a development might be viewed as disastrous for the DM sector, putting the brakes on a fragile recovery. But have the Royal Mail strikes put a dampener on the year and led to more brands communicating to their customers through alternative mediums, such as email or the internet? Was the summer uplift a blip, or are there signs that the strong showing will extend into the new year?

At the start of the year, things were looking decidedly rocky, as Lance Hill, managing director of print services at 4DM, recalls. "We saw a significant dip at the start of 2009," he says. "January to April were very poor and we were taking significant hits. That carried on until May, but our clients knew that they could only hold back for so long."

Waiting game
Lucy Edwards, assistant managing director at Howard Hunt, reckons that there was a realisation that, recession or not, brands had to get back to doing what they had been doing before. "There was a period when budgets were on hold," she says. "But our clients still had to recruit customers and communicate to them. Direct mail is very measurable."

According to Patrick Headley, sales director at GI Direct, financial services is one sector that's making a return to the DM market. After an "unusually busy" summer, the Leicester-based company had a solid final six months of the year. "We are quite bullish going into 2010," adds Headley.

Howard Hunt and 4DM report a similar story, as does Nick Dixon, chief executive at Lateral Group, who also found the year to be a good one.

"We have been bucking the trend," Dixon explains. "A number of different clients have been utilising direct mail and other forms of communication. We're not pinned to only direct mail."

Lateral Group's MarketPower product allows its clients to go into the multichannel arena, as well as procurement. It's shifted the company's focus away from being purely a DM printer. Howard Hunt has also moved into this arena and Edwards notes that 2009 has been the year where integrated marketing campaigns have come on leaps and bounds.
"Direct mail is still very important, but we have seen more multichannel campaigns," she adds. "It makes sense and is an intelligent use of data."

However, 4DM's Hill adds that direct mail is still a key offering. "It is measurable and direct mail is a tried and tested way to talk to customers," he says. "We are pushing highly personalised, full-colour digital mailings. The costs are coming down and databases are getting slicker. There has been a much bigger trend towards more targeted mailings. It's pure one-to-one marketing with less waste."

But Lateral Group's Dixon observes that there has been a dip in marketing spend and that clients have been exploring their online options. "I think the pendulum has swung too far to online, but it will swing back to offline," he adds.

Strikes fear
The fear is that the pendulum may not swing back if the postal strikes resume in the New Year. Dixon says that, for any pure direct mail printer, the dispute would have been a disaster. "You can't put a positive spin on this - the strikes have been to the detriment of direct mail," he adds.

The nationwide postal strikes started in October and the actions of Royal Mail workers outraged the great and the good of the industry. However, the knock-on effect appears to be, so far at least, minimal.

"In general there was not a downturn," GI Direct's Headley reports. "We were very nervous about the threat to the business, but we only had one client that decided to switch its campaign from direct mail to TV. I'm hoping that strike action won't raise its head again. Royal Mail has to be cost effective, otherwise it will not survive. A lot of people need to realise that they can't turn the clock back."

Damage done?
"Royal Mail needs to get its house in order," adds Hill. "What the workers did was extremely damaging for people's confidence in mail. Further strikes could have a significant impact on the industry."

Royal Mail's support for direct mail is strong, particularly as it faces stern competition in the sector from the likes of TNT and Deutsche Post. Both Hill and Edwards note that Royal Mail is offering discounts this month, although the ultimate decision on what postal operator to go with often rests with the client. But with discounts available, the hope is it will be one factor in convincing clients not to switch away from direct mail.

"We didn't see anyone pull any campaigns during the strikes," says Howard Hunt's Edwards. "I think our clients' reason for this was that their mailings would reach customers eventually. During the last industrial disputes, companies did trial email communications, but these didn't work well. However, if there are more strikes next year, then clients will think of different ways around it."

Though some DM companies have had a good 2009, the outlook for 2010 is still cautious. "The big test will be in the New Year - no one knows what will happen," adds Hill. "The general election may drive activity and, at the moment, things are rosy and we are actually ahead of budget."

Lateral Group's Dixon agrees that it's difficult to predict what will happen in 2010, although the first quarter is looking strong for the company. Yet, that's tempered by his belief that there won't be any major economic improvement until the end of 2010 or the start of 2011.

With that in mind, it's quite remarkable that some DM printers have reported a decent 2009. The recession may have cast a cloud over the past 12 months, but brands haven't lost faith with the medium just yet. However, it's also worth noting that those companies that have performed solidly have all embraced multichannel campaigns. If Royal Mail's strikes do kick-off 2010, it's the traditional ink on paper players that will suffer most. And those that have adapted might be well-placed to benefit from any decision from their clients to dabble into the online arena

DM TIMELINE 2009

January

• The industry welcomed the introduction of environmental standard PAS 2020
• The Bellwether survey revealed the biggest fall in marketing budgets for nine years

February

• KPMG confirmed that it was appointed at direct mail house Blackburns
• Capital One, the UK's second largest direct mailer, turned its back on printed DM

March

• Royal Mail launched an online resource aimed at helping marketers get the most out of DM campaigns

April

• The first ever drop in charity sector direct mailing volumes

• l Royal Mail's price increase for first and second class stamps came under fire from the direct mail sector

May

• Direct mail remained "very valuable" to the charity sector, despite the medium prompting nearly 20,000 complaints in 2008, according to the Fundraising Standards Board

• TNT Post announced a 3D-effect direct mail offering using a "new" printing technique

June

• Research showed that nearly 87% of consumers would stop trading with a company that sent a direct mail piece addressed to a deceased family member

July

• National Savings and Investments became Royal Mail's first government customer to take up its Sustainable Mail service for direct mail campaigns

August

• Direct mail printers reported an unseasonal upturn in business

September

• The Direct Marketing Association accused the Communication Workers Union of undermining the commercial value of post as a communication tool following strike action

• 4DM said that "decent businesses" in the direct mail market should be investing in new kit

October

• Print and online were the most effective forms of advertising for financial services companies, according to Brand Science

• The first nationwide Royal Mail strikes took place

November

• Further industrial action at Royal Mail was postponed until after Christmas

December

• 4DM warned the DM sector that it needed to adapt to new technologies now or face becoming obsolete within a decade