Traditionally, direct mail can only produce a 1% to 2% maximum return on investment.

  Junk mail has earned a bad name, so direct mail has become less expensive when aggregated in a coupon book such as Val-Pak. In this medium, the end user is expected to sift through multiple offers, IF they actually open the mailer.

  This industry is going to more effective methods such as the 5 x 8 inch postcard which requires the end user to actually handle the piece of mail, so the "impression" is made in the process.

  Many direct mail houses are now using creative ways to increase effectiveness using more targeting lists via consumer intelligence.

Advantages

• An advertiser can target potential customers using direct mail by geographical area, product affinity, previous purchases, and potential interest based on accumulated or purchased databases.
• The medium potentially can reach every household in the market, or at least every consumer the marketer wishes to target.
• The response rate is easily measured, and can be tracked through coupon redemption and return-card/call-back options.

Disadvantages

• An average response rate of just over 2%, most of the people you market to will reject or ignore your offer.
• Direct mail is less effective in attracting prospects than in reinforcing existing customers. For any business whose future depends on expanding its consumer base, this is a significant liability. 
• Most consumers refer to direct mail as "junk mail" – and they have an even lower opinion of the most cost-efficient mail-merge packages that combine pieces from a number of different advertisers in one envelope. 
• Impending increases in postal rates, paper costs, production charges, and database fees could turn direct mail into one of the least cost-efficient of all media.