
Why does the mailman bring us so many catalogs, credit card offers, and pizza coupons? Because his job depends on it. Zachary Crockett checks the mailbox. This episode was originally published on February 25th, 2024.
Loading summary
The Hartford Insurance Advertiser
There's no small business like your small business. And when it comes to choosing an insurance policy, your business deserves to be treated with the same care you run it with. The Hartford knows that one size absolutely does not fit all. We help protect your passion for your company with our decades of experience delivering speed, ease and accuracy. Get a quote or find an agent today@theheartford.com smallbusiness before we had AT&T business
AT&T Business Wireless Customer
wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even livestream the whole thing. Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
AT&T Business Wireless Narrator / Sponsor Voice
AT&T business Wireless connecting changes everything.
Zachary Crockett
All right, let's see what we got here. That's me partaking in a great American ritual. A daily trip to the mailbox. At least it used to be a great ritual. All right, I have what looks like a bill here, but it's just a car insurance offer. We have some coupons. Smart and final. Safeway doordash. I have a credit card offer here, and this one's printed to look like it's handwritten on a piece of binder paper. But it's just a guy trying to replace my windows. This stuff. The people who send it call it direct mail. Those of us who receive it call it junk mail. And my mailbox isn't the only one stuffed with it. By one estimate, the average American receives around 41 pounds of junk mail each year. In an age of digital ads and email inboxes, you may wonder why we still get bombarded with paper advertisements that most of the time go straight into the recycling bin. Well, for starters, it works.
Mike Gunderson
The faux checks, maybe the official envelope that looks like it's a tax document. They're very inexpensive, and those work really, really well.
Zachary Crockett
But there's another reason the Postal Service has an interest in delivering us as much junk mail as possible.
Aaron Gordon
The direct mail industry, one of the things they like to say is that they basically pay the USPS bills for
Zachary Crockett
the Freakonomics radio network. This is the economics of everyday things. I'm Zachary Crocket. Today, junk mail.
Aaron Gordon
If you're listening to this at home and you have this vague perception that there's more junk mail now than there was when you were a kid, you're probably right.
Zachary Crockett
That's Aaron Gordon. He's a journalist who has spent a lot of time looking into direct mail. He says the road to the current onslaught of junk began in the late 1960s.
Aaron Gordon
There was a broad consensus amongst the American elite that if only everything was run more like a corporation, we'd all be better off. And so the federal government is looking at a lot of things that are owned by the government and that they think could be better run if they were privatized or semi privatized.
Zachary Crockett
Legislators set their sights on what was then called the Post Office department, which was seen as the essence of bloated, taxpayer funded bureaucracy. In 1970, they passed the Postal Reorganization Act. It turned the Post Office department into the U.S. postal Service and structured it more like a corporation.
Aaron Gordon
It's still a part of the federal government, but important aspects of it were essentially privatized. And the biggest, absolutely most important aspect was the USPS was going to lose its government funding and was going to have to start paying for itself starting in the 1980s. So if you're the Postmaster General and you're trying to figure out, okay, I got to make a lot more money, but cutting costs is going to be actually pretty hard because I still have this mandate to deliver to every single address in the country. What's the answer here? The marginal cost of delivering each piece of mail is very, very small, right? Because you're very rarely going to have a piece of mail that has to be delivered to somewhere you weren't going to go anyways. So it's very natural if you're trying to figure out how to make more money as the USPS to be like, well, we just got to deliver a hell of a lot more mail to everybody.
Zachary Crockett
The USPS couldn't just force grandmas to start sending out more birthday cards. So they turned to a group of people who had an interest in sending more marketers. Direct mail had been around since the mid 19th century when Montgomery Ward and Sears Roebuck used catalogs to sell jewelry, saddles and sewing machines. Throughout the 20th century, it grew into a sizable industry. The USPS decided to give these direct marketers an incentive to send more mail.
Aaron Gordon
So the USPS said, what if we encouraged companies to sort the mail themselves so then we don't have to do it. We can just give it straight to the delivery guy who then puts it in every mailbox. So they created a pricing category that's called pre sorted. And the rates for pre sorted mail are much cheaper than regular postage rates.
Zachary Crockett
Those cheaper rates made it possible for marketers to send a lot more mail.
Aaron Gordon
In 1972, junk mail was about 25% of all mail pieces people received 10 years later. By 1982, it was up to 32%, and then in 2019, it was 63%.
Zachary Crockett
Today, all that junk mail keeps the postal service afloat. Last fiscal year, the agency delivered 59 billion pieces of it, more than all other types of mail combined. Marketing services accounted for around $15 billion, 20% of the agency's revenue.
Aaron Gordon
Postal workers, some of them, refer to these batches of mail that they have to put in every mailbox along their route as job security.
Zachary Crockett
Now, there's no universal definition of what junk mail is. Some people think it's any unsolicited commercial mail. Others think it's just the stuff that isn't relevant to you. But one thing is certain. The companies that make it and send it out would rather you not use the J word at all.
Mike Gunderson
Well, we don't like it.
Zachary Crockett
Is there a term you prefer?
Mike Gunderson
I would say hand delivered communications.
Zachary Crockett
Mike Gunderson is the president of Gunderson Direct, one of the largest direct mail companies in America. Since founding the firm in 2003, he's helped companies like Wells Fargo, Union bank, and Redfin send out enough paper to fill a mailbox that's 80 miles tall.
Mike Gunderson
We're sending out anywhere between 200,000 pieces of mail to millions of pieces of mail per month.
Zachary Crockett
Direct mail comes in a lot of forms. The cheapest and simplest version is something that Gunderson calls the taco.
Mike Gunderson
The taco taco is like it's usually coupons, it's got a couple other mailers in it. Sometimes it's got a rubber band around it, and all your other mail is stacked on top of it.
Zachary Crockett
This taco actually has a more formal name everydoor direct mail, and it's a product of the U.S. postal Service. Through a USPS online platform, advertisers can select which demographics they want to target, and the USPS will recommend a mail route. The mail is delivered to every household on that route without names or addresses on it, and it only costs around 20 cents per piece.
Mike Gunderson
It's pretty much just like closing your eyes and essentially mailing an untargeted list to see if you get anybody to raise their hand.
Zachary Crockett
This tactic tends to work best for small local businesses.
Mike Gunderson
If you open up a small coffee shop, say, here in Alameda, California, you can essentially select that I want to send Everybody in this 1 mile radius a postcard for a free cup of coffee. That's a very good tactic to spray and pray and just send it to everybody and it's very inexpensive to do that.
Zachary Crockett
The problem is, not everyone is a big fan of the taco.
Mike Gunderson
Some people are trained to just throw that taco out right when they get it. So you want to get above that and really get something that's a little bit more personalized.
Zachary Crockett
Above the taco?
Mike Gunderson
Yeah, above the taco, that's right.
Zachary Crockett
But sending you something that's a little more personalized requires a direct mailer to get access to your data. And it also calls for some psychological trickery that's coming up.
Discover Credit Card Advertiser
It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show see terms@discover.com Credit Card the Economics of
Booking.com Advertiser
Everyday Things is sponsored by booking.com if you're looking to grow your vacation rental business, this is the place to be. Booking.com is one of the most downloaded travel apps in the world. And for good reason. Since 2010, they've helped over 1.8 billion vacation rental guests find places to stay. But here's the thing. Most vacation rental hosts don't even realize they can list their properties on booking.com and if you're not on the platform, your rental is basically invisible to millions of Booking.com travelers worldwide. After all, they can't book what they can't see, right? But once you start listing on booking.com, your property gets seen by a massive global audience of unique travelers. So if your vacation rental isn't listed on booking.com, it could be invisible to millions of travelers searching the platform. Don't miss out on consistent bookings and global reach. Head over to booking.com and start your listing today. Get seen get booked on booking.com
AT&T Business Wireless Customer
before we had AT&T business Wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route. A 14 point turn. An influencer even livestream the whole thing. Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53 new followers though.
AT&T Business Wireless Narrator / Sponsor Voice
AT&T business Wireless Connecting changes everything.
Zachary Crockett
The aim of direct mail purveyors like Mike Gunderson is to make sure the mail you're getting is actually relevant to
Mike Gunderson
you if you're a single mom raising a kid and you're getting an offer for men's cologne, that's not right. If you've never golfed in your life and you're receiving golfing ads, that's not cool, right? You don't want that. The goal is to get it to the right person and then let them make a decision whether or not that product or service is right for them.
Zachary Crockett
Getting a piece of mail to the right person comes down to data. When a new client comes to Gunderson, the first step is to look at their existing customers and find other people with similar characteristics who might be responsive to a flyer or catalog. To find those prospects, Gunderson turns to a data broker who has a surprising amount of information about what we've all bought in the past.
Mike Gunderson
A lot of the websites that you might be purchasing from, if you read their extensive privacy policy, you can see often that your information can be sold.
Zachary Crockett
Data brokers buy all that information and put it in a database, which makes it very useful to marketers.
Mike Gunderson
They have transactional level data that they can apply to the model in order to figure out if you're going to be the right candidate for that offer or service in the mail. So if you buy something from L.L. bean, there might be a good chance that you might like something from Coleman, right?
Zachary Crockett
The Postal Service also shares data with advertisers. If you file a change of address form at the post office, you might start getting ads for home goods.
Mike Gunderson
The USPS receives that information, change of address, we're then able to say, hey, what products would they likely need as part of that new move, right? Maybe they need a Home Depot gift card in order to start shopping and repairing that new home. You know, maybe they need furniture, perhaps they need a new refrigerator.
Zachary Crockett
Finding the right people to send this mail to is one thing. Getting them to open it, that's a different challenge. If you have a recognizable product with a really good offer, say 25% off your next Home Depot purchase, Gunderson says it's best to send a postcard. The recipient can look at it and immediately see the value. But if you're a fledgling business with a less enticing offer, it's best to disguise it in an important looking envelope. The industry calls this stealth mail. It might be designed to look like a pay stub, a bank statement, or a tax document.
Mike Gunderson
These more official packages, especially in Fintech financial insurance, break through because you have to open it before you throw it away. When they open it up, it really does look like a tax form. And in very small type, it says, this is an advertisement. But it's very convincing.
Zachary Crockett
One favorite tactic is creating a sense of urgency.
Mike Gunderson
We love expiration dates. Even if you don't have an expiration date for certain offers, saying reply buy, you know, will gain some traction and get people to move faster, which is really great. You could say, response required.
Zachary Crockett
I don't know about response required. I think that one might piss me off a little bit.
Mike Gunderson
It might. When I talk to my friends and when I talk to other marketing experts, like, I just hate that. I hate that you trick me. But we try not to be dishonest. We want to make sure if we're tricking you to open the envelope that what's inside is more important than the feeling that you got by being tricked.
Zachary Crockett
Another trick that works well is putting something lumpy inside the envelope. A plastic card, a keychain, sometimes even a real dollar bill.
Mike Gunderson
It's a very expensive tactic. And usually when you see it, it's because you just bought a car who still does it effectively as J.D. power and Associates. So when you buy a new car from like BMW, they'll send you that letter to fill out a survey, right? And they'll give you the dollar. Now what the dollar does is it says, they are giving me a dollar, right? Okay, I'll fill out the survey. That's all the dollar does.
Zachary Crockett
At the Gunderson Direct office in the San Francisco Bay area, there are cabinets full of the company's various innovations over the years, each designed to get attention. There's a pamphlet advertising the groundbreaking ceremony for a new boys and girls club that has a little baggie full of dirt in it. There's a letter from AAA that smells like new car leather. There's even a piece of mail from a luxury real estate company that plays a video on a tiny LCD screen when you open it tells you all
Mike Gunderson
about the house that you're selling. So this multi million dollar house, the
Zachary Crockett
new high level brand that we're introducing
AT&T Business Wireless Customer
for homes valued at over 5,000.
Mike Gunderson
And what's cool is it has built in chapters so you can see skip to the very next section just by pushing a button that's built into the direct mail piece.
Zachary Crockett
And this goes through the mail.
Mike Gunderson
This goes through the mail.
Zachary Crockett
Once Gunderson and the client have agreed on a design strategy and target list, the printer takes over. Certain facilities specialize in direct mail with runs in the millions. And they have their own USPS service centers where they sort mailers into little bins for delivery right down to the carrier route. This is where the post office's pre sorted rate comes in. If you mail a standard letter, you'll pay 68 cents in postage. A direct mail company might pay as little as 20 cents.
Mike Gunderson
The user then goes out, they grab that direct mail, hopefully respond, and then based off of a bunch of different tactics, could be a QR code, could be a vanity URL, could be a special phone number. We'll get those responses in. We have direct attribution to the people that receive that mail, and we're able to prove they transacted off of that mail.
Zachary Crockett
A company like Wells Fargo or Doordash pays to send you junk mail because it actually works pretty well, at least when compared to digital advertising.
Mike Gunderson
For email, your response rate is typically going to be about a half percent and your conversion rate is probably going to be about 4%. The direct mail average response rate is going to be between 1 and 4%, and your conversion rates are going to be up to 14%, 20, 25%.
Zachary Crockett
Those are great numbers for advertisers. But junk mail is still a game of volume, and that game has consequences. Tens of millions of letters and catalogs are thrown away without even being opened or read.
AT&T Business Wireless Narrator / Sponsor Voice
The majority of junk mail is really just unwanted and unneeded.
Zachary Crockett
That's Brett Chamberlain. He's the program manager at Catalog Choice, a nonprofit that helps consumers opt out of receiving unwanted junk mail. There are federal laws and policies that can help you block email, spam and telemarketing calls, but there's no equivalent for direct mail. On Catalog Choice. You can type an advertiser's name into a search bar and fill out a form to ask them to stop sending you junk. There's no guarantee that direct mailers will comply with this request, but most of them do.
AT&T Business Wireless Narrator / Sponsor Voice
We call it experiencing mailbox bliss. It's a real pain in the butt for people to constantly get a flood of junk mail every single day that they need to sort through and dispose of.
Zachary Crockett
Catalog Choice now has nearly 3 million users, and over the last decade, those users have submitted 30 million opt out requests to around 8,500 different companies.
AT&T Business Wireless Narrator / Sponsor Voice
That corresponds with an estimated diversion of over 100,000 tons of paper waste and nearly 2 million tons of CO2.
Zachary Crockett
But Chamberlain does not see direct mail firms as his enemy. By filtering out people who don't want junk mail, Chamberlain says he's actually doing
AT&T Business Wireless Narrator / Sponsor Voice
marketers a favor for a marketing associate at a direct mail marketing company. Weeding out the people that are just not interested in that marketing to begin with can maybe help drive up their response rates and, of course, keep their marketing costs down.
Zachary Crockett
Mike Gunderson has no problem with that kind of service. In fact, he has an opt out button on his company's website. His ultimate goal is to not be considered junk at all.
Mike Gunderson
When I explain what I do to people and they say, you're the junk mail guy, I go, I'm actually. I'm not the junk mail guy. Everybody else is the junk. I'm doing my best to truly give you products and services that you want. Now, you may not want them right now, but eventually I think you're going to want this great offer that's in the mail. There's so many times people say, I hate direct mail, but if you really dig deeper, they're like, oh, yeah, I guess I did respond and get a credit card. Oh yeah, I did get my life insurance through direct mail. Or that's right, I did take advantage of that. 30% off the pottery Barn, so it works
Zachary Crockett
for the economics of everyday things. I'm Zachary Crockett. This episode was produced by me and Sarah Lilly and mixed by Jeremy Johnston. We had help from Daniel Moritz Rapson.
Mike Gunderson
It's got a special varnish on it that smells like.
Zachary Crockett
It smells like car leather.
Mike Gunderson
How cool is that?
Zachary Crockett
Smells a lot better than my car.
Booking.com Advertiser
The Freakonomics Radio Network. The hidden side of everything.
Bank of America Advertiser
What would you like the power to do?
Mike Gunderson
Don't worry, you got this. Whoa.
Bank of America Advertiser
Hear that?
Mike Gunderson
I did it.
Bank of America Advertiser
That's the sound of you helping your child find confidence that lasts a lifetime. Bank of America invites kids 6 to 18 to join golf with us for a limited time. Sign them up for a free one year membership, giving them access to discounted tee times at thousands of courses. As we champion the next generation. Who dares to ask, what would you like the power to do? Restrictions apply. Activation required. CBFA.com call with us for complete details.
AT&T Business Wireless Narrator / Sponsor Voice
This episode is brought to you by Charles Schwab. Is there a right time to sell a stock? Are you taking the right risks with your portfolio? Financial decisions can be tricky, and often your own cognitive and emotional biases can lead you astray. Financial Decoder, an original podcast from Charles Schwab can help join host Mark Reape as he offers practical solutions to help overcome the cognitive and emotional biases that may affect your investing decisions. Listen@schwab.com FinancialDecoder Est Episodio es presentado por opel.
The Hartford Insurance Advertiser
La primera pil La conceptiva dia de venables. En los quinesecitabas prescription medica par la pildor anticonceptiva and terminado Opel de ponidoria del asiendas Tomal control de dus Salud reproduction Tiva con Opel Usalcorigo birth control Irresiva ventico pociento de descente Opel and Opel Puntokomb.
This episode explores the overlooked, bulky world of junk mail—known to the industry as "direct mail." Host Zachary Crockett investigates how and why so much unsolicited paper ends up in our mailboxes in the digital age, how it keeps the USPS solvent, the psychology and data behind it, who profits, and whether anything can be done to stem the tide.
Junk mail—though widely maligned—is essential to the USPS’s finances and is surprisingly effective compared to digital marketing. Fueled by intricate data collection, psychological tricks, and mass logistics, it keeps coming because people do in fact respond, even as millions try to opt out. Ultimately, junk mail is both a symptom and a driver of America’s complex relationship with advertising, privacy, and public services.
End of Summary