Royal Mail’s recent price hikes might not have exactly come out of the blue; after all, there have been multiple increases in rates for direct mail and door drops since 2023, shifting from a traditional annual cycle to as frequent as every six months.
The company has long argued that it is the fixed costs of the Universal Service Obligation that are forcing the issue. Regulator Ofcom first launched its review of the USO over three years ago, while protracted negotiations between the postal operator and the Communications Workers Union have also been a major sticking point.
Many in the marketing industry have claimed that, while most media owners would respond to falling demand by reducing prices, Royal Mail has done the opposite, and time and time again, it is business customers who end up shouldering the cost.
The issue has been compounded by recent reports that Royal Mail is prioritising parcels over mailshots because they are far more profitable; an accusation that the company has fiercely denied.
On the other hand, there is plenty of evidence, from the likes of Royal Mail Marketreach and Jicmail, that the mail channel is highly effective, especially when compared to digital media. But what more can be done to ensure that clients do not abandon physical mail for cheaper alternatives? Decision Marketing gauges industry opinion.
As a board member of the Strategic Mailing Partnership and the former head of media specialists at Marketreach, Eight Group CEO Lance Hill has been on both sides of the fence. He is also a council member of the Independent Print Industries Association, where direct mail is a common topic of focus.
He comments: “From a personal perspective, and I’m sure I speak for many of my industry colleagues, there is concern about the price increases from Royal Mail. When is it ever good to pay more for something? However, I do understand the rationale behind it, as we saw from the Ofcom report, Royal Mail’s current USO model is not viable, and hasn’t been for several years, so something has to be done.
“I backed the USO reform from the outset, and subsequent proposal to change the model, but only if the quality of service could be improved as part of it, with mail landing when it is supposed to land, and not late.
“The sooner the deal is done, the sooner the new USO can be rolled out and Royal Mail has committed investment in infrastructure to support it.
“On the subject of effectiveness, advertising and critical mail is still very successful, even with the price increases we have seen. The evidence is clear from all of the data available from the likes of Jicmail and our own clients, that strong response rates are there because the targeting, creative and timing are better than ever.
“There simply is no other media channel that can hold a candle to physical mail, either an unaddressed door drop, or highly personalised and targeted mail piece, in terms of longevity or the multiplier effect. The smart marketers know that it is about a blended approach, using digital and physical together for maximum impact.
“The carpet-bombing days are long gone, and that’s a good thing, so while we are faced with challenges to keep mail relevant in a digital world, it is still very much a channel that is here to stay, as long as we embrace the change and use technology to enable it to compete, such as automated or triggered mail.
“With my SMP hat on, we work in collaboration with Royal Mail to ensure we have strong communication and the voice of the SMP membership is heard, the most recent board meeting, just last week, centred on this very subject and we shared our concerns to senior stakeholders at Royal Mail. We absolutely hold them to account, but in a collegiate way, whereby we work together to find solutions and outcomes.
“We all acknowledge that mail volumes are in decline, but in and among that, there are still great opportunities for mail to thrive and help businesses grow, despite the economic challenges.”
For Mail Users Association chair Paul Brough preventing further contraction in the market requires a collective effort. MUA’s board has recently met with senior representatives of Ofcom and Royal Mail to impress upon them industry concerns. A meeting is also planned with Department of Business & Trade officials to drive home the same message.
Brough says: “Reliability and confidence in delivery performance is fundamental, without that, even the strongest marketing proposition becomes harder to sustain. Continued focus from Royal Mail on improving quality of service, with pressure from Ofcom, will be critical in maintaining customer trust. Ofcom’s recent call for inputs on pricing has highlighted a desire in the industry to impose restrictions on further price increases by linking them to quality of service levels.”
Even so, Brough insists there is more that can be done to strengthen the commercial proposition. He explains: “Marketreach has made positive strides in promoting the effectiveness of mail and supporting industry insight. That work is valuable and should continue. Incentive programmes have a role to play and can be effective in encouraging innovation, especially for first-time users or those looking to expand volumes. However, their impact can be limited if they are perceived as complex, short-term, or insufficient to offset wider cost pressures. Simplicity and transparency are key to ensuring these schemes deliver maximum benefit.”
Brough maintains that the industry should continue to focus on making mail easier to buy, plan, and measure, and demonstrate the unique strengths of mail and its ability to cut through and build trust with consumers.
He continues: “Ultimately, the direct mail sector has a strong story to tell. But maintaining and growing demand will depend on aligning pricing and service reliability in a way that gives customers confidence to invest. That requires ongoing collaboration across the industry and commitment from Royal Mail, with a shared focus on long-term sustainability.”
This last point is something that The Software Bureau’s managing director, Martin Rides, has been championing for years. He says: “For me, the issue is less about the effectiveness of mail and more about its efficiency. Most advertisers already accept that it works. What worries clients at the moment is value for money, particularly against a backdrop of rising prices and inconsistent service levels. This is where waste becomes central to the conversation.
“Reducing waste is the single biggest lever; the channel must become more cost effective. Mail less is not an anti-mail argument; it is a pro-mail one. Better targeting, cleaner data and more disciplined mailing strategies mean fewer wasted items, lower production and postage costs for advertisers, and better ROI overall. That is the story clients want to hear right now.”
Rides reckons that from a Royal Mail perspective, there is an even bigger opportunity, especially since the company carries a vast amount of structural waste through the network every day, both undeliverable mail and mail that has little chance of delivering commercial value.
He explains: “If Royal Mail were to seriously acknowledge this and work in partnership with the industry to reduce it, the benefits would be material. Less waste means lower handling volumes, simpler operations, reduced pressure on the network and ultimately lower unit costs. That efficiency gain should translate into better service quality and a more sustainable pricing position over time.”
In that sense, waste reduction is not just a client issue, it is a Royal Mail issue. “Incentives that reward smarter mailing, suppression driven by data quality issues and better use of data would send a strong signal that Royal Mail is aligned with advertisers’ commercial realities rather than simply passing cost increases through.
“There is also a collective responsibility on the industry. Bodies like the DMA, the Strategic Mailing Partnership and the Mail Users Association have a role to play in reframing the debate. The focus should be less on defending volume at all costs and more on improving the overall health of the channel. A smaller, better quality, more effective mail market is far more defensible than a larger one propped up by waste.
“If we can demonstrate that direct mail is becoming more disciplined, more accountable and more efficient, price rises become easier to justify, and client confidence is far more likely to hold. If we cannot, then rising prices combined with poor service will inevitably push advertisers to reconsider their channel mix, regardless of how strong the effectiveness data may be.”
Join the Dots managing partner Ben Briggs, meanwhile, claims that parts of the industry have been sleepwalking, with direct mail working well enough that rigorous measurement and targeting discipline has felt optional. The price rises are forcing a conversation that should have happened years ago.
He continues: “The channels that survive cost pressure are the ones with a clear, defensible ROI story. Mail has that story, the data on attention, trust, and cross-channel amplification is genuinely compelling, but you need modern measurement to tell it, and a lot of organisations aren’t there yet.
“My concern is that some will cut mail budgets, move to digital, watch their last-touch attribution numbers improve (because mail’s contribution disappears from the data), and declare victory, while quietly watching customer lifetime value decline. That’s the trap.
“The real answer is smarter mail, not less mail, better targeting, cleaner data, proper testing, and attribution that captures what mail does. The organisations that figure that out in the next 12 months will be in a very strong position.”
The final word goes to former Go Inspire CEO Patrick Headley, who recently launched a coaching consultancy. He insists the real issue is not the effectiveness of the channel – it is the commercial viability and confidence in its long-term future.
He explains: “A 20% price increase, particularly when combined with ongoing delivery concerns, inevitably makes clients question whether the return justifies the increased cost. For many advertisers, especially mid-market businesses, this risks moving direct mail from a scalable channel to a selective luxury.
“What is needed now is a far more apportioned and strategic rethink of pricing, even if that requires difficult conversations around the Universal Service Obligation. The industry cannot continue to absorb preposterous annual increases at this level. If this trajectory continues, the channel simply risks pricing itself out of relevance.
Headley argues that Royal Mail needs to decide what it wants this channel to look like not just next quarter, but in 20 years’ time. If mail is to remain a viable and attractive marketing channel for the long term, price increases need to become predictable and sustainable – linked more closely to the Retail Price Index rather than these repeated exceptional hikes.
He adds: “Clients can plan for inflation-linked increases. What they cannot plan for is sudden double-digit rises combined with uncertainty around delivery performance.
“The direct mail industry also needs to come together more collectively. Royal Mail, agencies, printers, data businesses and industry bodies such as the DMA, Strategic Mailing Partnership and Mail Users Association all have a role to play in protecting the future of what remains a highly effective medium.
“The channel still works brilliantly. The real question is whether the commercial model around it will allow it to still be working brilliantly in 20 years’ time.”
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