Things to Know Before Buying a Direct Marketing Company
Purchasing a company in any industry can be a daunting task and requires extensive knowledge about the industry and individual business. The business transaction brokers at Murphy Business & Financial Services are experts in the industry and not only know the major factors to consider before purchasing a direct marketing company but also know how to capitalize on those factors. Below are a few of the many items that should be considered:
- What services does the company offer? Letter shops, printing, list, and concept development services are among a few. It is important to know the type of direct mail pieces the firm specializes in and the marketing channels the firm specializes in. Small companies can differentiate themselves from larger companies by specializing in specific marketing arenas.
- What trend is the company seeing in demand for its services? The spending by commercial companies on direct marketing services is closely related to the financial health of the U.S. economy.
- How has the growth of e-mail and internet technologies affected the company's business? Direct mail remains the most popular medium used by direct marketing companies. The increased rates of standard mail will likely lead to an increased popularity of other marketing mediums. It is important to know if the company is engaging new channels for reaching its target audiences.
- How is the company combating the increase in postage costs? The increase in postal rates will likely force the company to pass on costs to customers. Additionally, the increase in electronic communication has forced the USPS to change policy qualifications for companies to receive bulk discounts.
- How much of the company's business is long-term contracts versus one-time projects? The industry trend is to engage in long-term contracts with clients. Small firms my have just a few clients. If that is the case, it is important to know the financial health of those clients.
- How effective is the company in retaining key personnel? The professional and technical staff of a direct marketing company is the business's most important resource. The need for technical staff has increased making retention of key employees essential to the successful operations of the company.
Trends and Opportunities in the Direct Marketing Industry
The services that direct marketing companies provide vary. Direct marketing companies utilize many mediums to reach specific customers, including mail, e-mail, TV, and print. The direct marketing industry is changing as more companies are looking to launch internet and electronic campaigns while the need for variable data printing continues to grow.
- Roles of Catalogs Remains Steady: The increase in internet shopping has not decreased the need for catalogs, as was expected by experts in the past. Catalogs remain key tools for building brand awareness. Even if customers order over the internet, they still prefer to look through catalogs initially. Catalogs are being printed at a higher rate than ever.
- Technology Decreases Labor Costs: Technology has automated many of the once manual steps in preparing and producing mailing campaigns. Labor costs as a percentage of direct marketing revenues have been consistently declining.
- Cell Phones Emerging as a Marketing Channel: Marketers are constantly searching for means to effectively reach target audiences. The use of cells phones to reach young adults is being viewed as an effective method to do so. Experts believe that as technology develops, cell phone marketing will become a valuable tool for direct marketers.
- Variable Data Printing: Variable Data Printing allows the mass customization of documents without slowing down or stopping the printing process and is becoming more and more popular in the direct marketing industry.