NEW YORK The direct mail industry is about to get a lot more competitive. UPS said it is testing a new service for its clients called UPS Direct to Door.
In five markets, UPS drivers are delivering small boxes filled with about 12 premium offers and samples to targeted consumers. More than a dozen brands, including Bed Bath & Beyond, FTD.com, Sephora and Zappos.com, are onboard for the pilot program.
This is an unwanted addition for those in an already struggling market channel, said Gordon Borrell, CEO of Borrell Associates. "Everything is headed toward delivering targeted advertising in the digital form. [Direct mail competitors] should be scared. It's getting harder and harder to make money."
Earlier this year, Borrell projected that direct mail spending would decline 39 percent over the next five years to $29.8 billion.
UPS is undeterred. The world's largest package delivery company feels it has a secret weapon -- its drivers. "It's someone they trust who they see all of the time," said Lisa Lynn, director, UPS new product development. "We can leverage the familiarity and trust people place in us to help our customers grow their businesses."
UPS Direct to Door differs from Cox Target Media's Valpak because it will be more national in scope, said Lynn. "Valpak is a more localized and service-oriented. We'll deliver far more premium offers from nationally recognized retailers, e-tailers and consumer packaged goods companies."
A Valpak rep responded: "Extending services to the client base is another existing form of cooperative advertising. As leaders in the industry, Valpak is familiar with advertisers who need to reach consumers in a variety of new ways." Earlier this year, it branded itself "The original stimulus package since 1968."
The test is being held in Chicago, Dallas/Fort Worth, Miami, Phoenix and Washington, D.C. If successful, it will be expanded and supported with a full-scale marketing campaign.
UPS is currently conducting an agency search. It spent $103 million on media last year and $50 million for the first seven months of 2009, per Nielsen.
Still, success is far from assured for this new product, according to Borrell. "They are trying to ride along on a trend that is going down," he said.
Lynn disagreed. "There will always be packages that need to be delivered. It's unique because it's brought to you by the drivers. That personalized delivery is going to break through the clutter of those other channels," she said.
Nielsen Business Media