Is size such a big issue?

Royal Mail's financial problems have been well publicised, and some direct marketers have made a connection between the Post Office's need to increase its revenues and the decision to move to a size-based pricing structure for direct mail.

The debate has been raging for months, ever since Precision Marketing first revealed the plans (PM May 24). Guy Chubb, production manager for Production Direct, states: "The proposed Royal Mail changes are just another attempt at making money under false pretences, instead of addressing the root cause – an issue of national non-conformance to a set of guidelines that have been loosely applied by Royal Mail, and seriously overlooked for some users."

Kevin Pembroke, EHS Brann Direct Communications director, is equally forthright. "Consignia needs to stem the losses it is making, but if that means restricting the creativity of the direct mail industry, Consignia will be the ultimate loser. Agencies and clients will use other channels that allow them to deliver their messages without compromise."

But whatever the subtext, size-based pricing is an issue the industry will have to respond to, so what are the implications of the changes? Some agency creatives are claiming their creativity will be constrained, while some clients have suggested the changes can be used to their advantage – since smaller, standardised packs might be more cost effective.

So will the new restrictions limit creativity and mailing individuality? And are non-standard mailing sizes needed to achieve direct mail success?

TDA head of art Roger Lipscombe argues: "The size constraints will make most mailings more uniform, and as a result, there will be less chance of standout in an already crowded market. This could lead to a lot more mail being unopened or binned.

"The market should not be driven by creating uniformity to aid ease of processing. Size should be relevant to the concept as a whole, and if the differentiation in the size adds value to the concept, and increases the response, then operational logistics should not restrict creativity."

But Lipscombe also states that restrictions, no matter how undesirable, should not be seen as an excuse for poor creativity. "Size shouldn't limit creativity. In fact, with tighter restraints, creatives often produce more creative concepts, so the perceived negative could turn out to be a positive. It's not size that makes a concept creative, it's the thinking behind it. The constraints may force creatives to use different materials; sound, incentives or interactive elements, for example."

Sean Roberts, creative director of Communicator, takes an even more relaxed view: "It doesn't seem unreasonable for Royal Mail to adopt size-based pricing. As creatives, we either adapt to the constraints or use different distributors. Our role has always been to overcome problems with creative solutions, and this is no different. There are occasions when a large piece may be appropriate, so it may cost marginally more, but if it gives an increased response rate then I can justify it to the client."

So it seems hostility towards the new pricing structure is less vehement than some reports suggest. Creative teams seem to appreciate the cost drivers that underly the move, and they are also prepared to accept the technical constraints that will be imposed upon them.

David Poole, managing director of DP&A, sets the new charging structure in a larger, media-wide context. "Size isn't an issue. Agencies that need to use 'size' to achieve standout are clearly limited. All media channels have some form of format limitation, usually linked to cost. You wouldn't expect a two minute DRTV ad to cost the same as a 30 second one, and no-one's complaining that you can't be creative in a 30 second spot."

Yet Paula Jenkins, production director of Soup, expresses concern with regard to lower volume mailings. "Non-standard sized packs are generally created for lower volume mailings. The size-based pricing proposition seems to be geared towards high volume runs.

"However, with most of our work, the cleverer we get, and the more niche marketing we do, the more our volumes are dropping. We need to stimulate direct mail recipients, particularly as we contend with other media. We need to hold their interest and surprise, but we shouldn't have to pay more for the privilege."

Pembroke argues that while the direct marketing industry has invested in the ability to produce individual mailing materials, Royal Mail now "penalises customers who want to create packs that are memorable and stand out". He asks: "Are charities going to be penalised for putting a pen in the pack, just because Consignia has invested in technology that sorts standard packs?"

Brett Smith, executive director of SR Communications, highlights another mailing sub-sector he thinks is likely to suffer as a result of the move. "Users of the larger, C4 sized packs tend to be financial services companies mailing high volumes of heavy weight documentation, such as annual reports, as well as publishers mailing magazine subscriptions. These sectors will be hit hardest by the changes," he says.

Stuart Archibald, managing partner of Archibald Ingall Stretton, comments: "Previously, you looked for the best creative solution for your client regardless of size, but size will now become a consideration due to the cost implications. The argument therefore is not about whether you can create small mailings with strong impact – you can – it's about the fact that limits are being set by the media owner, Royal Mail.

"Size will no longer be a creative choice, it will be predetermined by budgets. We recently carried out a mailing for Skoda that was quite large as it set out to emulate the style of the original design folder. That approach – which proved to be successful – may not have been adopted if the size meant incurring extra costs."

Mark Watson, managing director of Cypher Direct Marketing, argues: "There will be winners and losers. The winners will be mail order companies that currently use regular formats. While the losers are likely to be companies that have made a 210mm square format their corporate style. These packs will attract postal tariff increases of potentially 35 per cent. The key will be for planners to keep abreast of tariff developments and ensure all formats can achieve the best return on investment dynamics."

It's inevitable that many practitioners will bemoan any reduction in creative choice, just as they will an increase in cost, but of course there are alternatives to direct mail. Nick Wells, managing director of Circular Distributors, says outfits like his are able to deliver anything – "as long as it's legal and fits through the letterbox".

Further deregulation of the postal delivery system will tempt overseas operators to enter the direct mail market. And several are already well equipped to cope with 'non-standard' mailing sizes.

Direct marketers are not pleased with the prospect of paying more for some of their mailings, but there is a sense that the move to a size- based charging system is less significant than it seems. Everyone in direct marketing already operates within media imposed restrictions, and most marketers perceive these changes as simply more of the same.

But Royal Mail is taking a risk, and if direct mail volumes fall, the size-based pricing structure will have led to a decrease in mailing returns, and, consequently, a shift of marketing budgets to other media.