Paper costs represent a substantial proportion of total direct mail campaign costs. For some of our clients, it can be as high as 30%.
We’ve all experienced volatile paper prices for some time now and have been told to expect paper prices increases of as much as 50% in 2022.
This will certainly impact all our direct mail clients. Together with rising energy and transportation costs, this will create the perfect storm.
- The rise of e-commerce. Many paper mills have switched from paper to cardboard production to meet the demand for cardboard packaging.
- North America and China buying European paper stocks to boost their own supply.
- The reliance on foreign paper mills given there is only one paper mill left in the UK and this only produces a limited range of bespoke paper stock.
- Reduced European output due to ongoing strikes at key paper mills in Finland.
- Limited availability of production slots making it difficult to shop around for more competitive prices.
- The weaker Pound relative to other currencies making paper more expensive to buy from abroad.
- The introduction of post-Brexit tariffs of at least £90/tonne.
- Increased energy and transportation costs compounding the rises.
Something positive. You can still mitigate paper cost increases in 2022.
There are things you can do to soften the impact of rising paper prices in 2022. We’ve come up with some ways you can navigate the storm and keep your direct mail costs in check.
Be flexible and agile, even at short notice.
- Make yield savings by reducing your paper’s grammage. Even reducing it from 60gsm to 57gsm can make a material difference.
- Consider moving to a lower grade of paper if it is available.
Adapt your format.
- Although it may seem counterintuitive, consider a wrapped mailing to allow income-generating third-party inserts using 100% compostable bio wrap or even paper wrapping.
Get your data right.
- Reduce waste and reduce your print run by cleansing your data to remove gone-aways and deceased customers.
- Target customers using segmentation to increase conversions rates.