A tale of two door drop markets

Two recent studies, one by the DMA the other by the European Letterbox Marketing Association (ELMA), reveal some interesting trends in the UK door drop market, compared to our European counterparts.

The DMA’s annual door drop report, published in October, highlighted a decline of 11.8% in UK door drop volumes between 2010 and 2011. However, there was a negligible impact on spend, with a decline of only 1.4%. So what is happening? These two statistics indicate the structural shift that has occurred within the industry in the past couple of years. The availability of lower cost Newshare has declined dramatically and some but not all of that volume has migrated over to the higher cost Royal Mail service which has made itself more available by releasing the cap on availability.

Europe sees a rise in door drop volumes
In May, ELMA published its own report of 20 European markets – the first time a comprehensive overview of the size and relative vitality of the industry was attempted. The results are interesting and put the UK experience into some context. Overall, the door drop industry grew by 0.5% in volume and 1.5% in revenue. The average number of door drop items per household in Europe was 12 compared to an average of just six in the UK. Only Poland, Romania and Ireland have fewer items delivered per household than the UK.

At the other end of the spectrum lie markets like the Netherlands with 37 items per household per week, Norway (30), Denmark (27) and Austria (27). Which naturally begs the question why does the UK have such comparatively low volumes? This fact is particularly surprising when you consider that the vast majority – something in the region of 90-95% of the European door drop volumes – come from the retail sector.

UK-based retailers send weekly door drops in Europe
Across Europe almost every retailer, even UK-based retailers who ironically don’t use door drops in their home market, distribute leaflets on a weekly basis. It is widely viewed as the primary and most effective store traffic generating medium. In the UK, retailers make up around 45% of the door drop volumes and we have a much more diverse range of clients active in the industry including telecommunications, charities, finance and manufacturing.

The answers to this are numerous and lie in large measure in the media context. Take Denmark, for example. Television advertising in Denmark only started in the late 1980s and has never gained the traction that it enjoys in the UK, where both consumers and marketers have grown up with it since the 1950s. Similarly, direct mail has never enjoyed the popularity that it does in the UK. The UK also leads the way in its adoption of digital media, which has now surpassed expenditure on television for the first time.

Media agencies don’t always ‘get’ door drop
Another factor in the UK is the role of the media agency. They are incredibly influential in both the strategy and the selection of individual mediums to meet their clients’ objectives. It is impossible to generalise because there are centres of real expertise in door drop in some agencies but others seem to dismiss it or silo its usage perhaps because of a lack of experience or understanding.

For example, one very large UK media agency with a solid retail client base prefaced its tender for its door drop supply with the comment that they understood the importance of the door drop channel which they viewed as an excellent vehicle to support new store openings. Some of their clients are among the largest users of door drop across continental Europe so there is no doubt that their dismissal of this channel as a blunt, local broadcast tool has an impact on UK media strategy.

Role of supplier funding in door drops
Finally, probably the key differential between the UK and European retailers is the degree to which they use supplier funding. In Europe most retail volume is more than 100% supplier funded meaning that not only are both print and distribution costs covered by suppliers, the leaflet actually generates profit for the retailer. Thus it is not considered a marketing expenditure but a revenue stream for the retailer and this protects it from economic downturns and assaults from most other media channels. There are very few retailers in the UK who have developed such sophisticated methods of supplier funding or perhaps rather they choose to use supplier contributions in other ways.

Some Europeans spend 30 minutes reading door drops
Some of you reading this article may still be stunned at the thought of over 30 leaflets arriving through your letterbox each week yet the people of Holland and Scandinavia reportedly spend over 30 minutes each week reading their advertising leaflets. It is also interesting when you consider the environmental scrutiny that our limited volumes are subject to. All the markets where weekly volumes are high have an enviable reputation for their environmental credentials so it clear that levels of education surrounding the sustainability of print are considerably higher than in the UK.

Naturally, the decline in volumes has been good news for many advertisers. Their door drops now have far less to compete with on the door mat and this is translating into better returns on investment. What’s more, with significant improvements in data-led targeting methodologies and better and more effective methods of evaluating online impacts from offline creative many advertisers are proving that less is definitely more. It genuinely can be argued that there has never been a better time to add a little door drop into your marketing mix.

Mark Davies, managing director, TNT Post