From DVDs to Direct Mail Disruption: How Brad Kugler Is Rewriting the Rules with AI

sponsored podcast where we interview the movers and shakers pushing the print and mail industry forward I’m your host

Caitlyn Shanks and today I’m joined with Brad Kugler the co-founder and CEO of

Direct Mail 2.0 Brad welcome to Print Influencers Thank you Katelin It’s an

honor to be considered a mover and shaker in the industry I love that You know I’m a direct mail and omni channel

marketing evangelist So uh just happy to be here I think it’s a well-earned title

on your part after all these years Um so you know just diving right into you know

our half hour here I want to just really go into the pivot You know the print and mail industry it’s changing right before

our eyes you know we’ve got changing customer expectations different technologies the roller coaster which is

the USPS right now We’re living in in a change moment really And so I think

viewers would be so interested to know just how your own story of resilience and being able to pivot has uh you know

changed your approach to how you approach the print and mail industry at direct mail It’s great because to to see

where I how I got here I came from e-commerce I was specifically in the

pre-recorded media What is that that’s video games DVDs and CDs And I I would venture to bet that almost no one in the

audience has any way to play or watch or has purchased a CD or DVD in years So I

I watched a 25-year-old business sort of slip through my fingers and it was through no I mean I always have

responsibility but the fact is the market was disintegrating the price point was eroding This business was

going streaming We made efforts to get into it It was impossible because of the capital costs and I knew I’d have to

find something else to do And I’ll I’ll be honest you know spending 25 years in a business and being on the the the eve

of becoming 50 years old and now you must reinvent yourself Okay Was a scary

thing I had I had three kids in college and you know a couple mortgages and I’m like “Wow I’m going to be jobless for

the first time in a quarter century.” So I knew that I had to find something that

was on the disruptor side of the equation and not another potential disrupt

Uh luckily I had a longtime family friend in the print marketing business

Joy Jendusa of Postcard Mania and she had we had talked over the years and she

had seen my my very nice peak and then you know resting and I was riding this

boat back to zero you know and and I had a bunch of things going I had opened a couple of vape shops I had started

another retail store that we did some online sales things were happening but

it was still not in the world of anti-disruption I wanted to be that

disruptor So she had this idea that they had come up with at postcard mania Let’s

combine print and omni channel marketing And I thought what a great idea We know

print people have said is dead and this and that and direct mail it’s all digital now Let’s combine the two and

revive the direct mail industry So that was the genesis that kind of sparked my

new entrepreneurial spirit and that’s what led me to this chair

Amazing Thank you Um and didn’t you say that you

kind of took yourself back to grad school on your own so so in in the the months as I rode

this company down back to zero from you know $25 million I realized I never went

to I never finished college you know Um I jumped out of school after two years

and took over this business from my father who wanted to do something else And here I am almost 50 years old never

finished college And I’m like what is the business world like i’ve been selling DVDs and CDs I am a dinosaur at

49 years old So I I looked at all the MBA reading materials all the latest

business books and I think it was I don’t remember now because it’s been a few years but I think I read something

like 37 books in like a year business books a lot of them like uh book on tape

you know while I was running or exercising But this sort of kind of at least put me back into into the game you

know so I had a basis to know what I was doing and I know what I was looking for I was looking for a non-disruptible or a

disruptor type business with a recurring revenue model that is basically

softwaredgenerated And I’ve always been into advertising and marketing and

e-commerce and tech So it’s sort of it’s sort of checked all the boxes and I’m like “All right let’s go Let’s do it.”

You know yeah That’s where the rubber uh rubber hit the road Um so moving more

into you know our traditional you know mail service providers you know they’ve

been printing and mailing for decades and decades These are you know typically generational family-owned businesses in

some aspects and I’d imagine especially with you know the folks I talk to

they’re also scared They’re looking at this changing industry and they probably have some of those similar feelings like

“Oh my god this industry that was so rock solid is starting to slip through my fingers.” You know postage rates are

going up volumes are decreasing So what would you tell them when it comes to you

know making that pivot and finding a way back into relevancy i mean that’s a great point because there’s so many

converging uh points at this besides the fact of the technology you have a a

multi-gener you know most most male service providers are multigenerational family businesses I don’t want to

necessarily make say mom and pops but they’ve been doing this for a couple generations The younger generation is

not excired excited to be a manufacturer printing stuff I mean if I was a kid

coming out of college at 23 22 years old I’m going to take over my parents’

business that’s been printing postcards and letters for 50 years It’s not a real

sexy industry So one of the things is is the embracing of the technology and it’s

it’s not just the omni channel marketing There’s other points of this variable

data printing laser jets and at mass scale you know back 40 years ago offset

you know web presses that was it That was the that was the name of the game So there’s so much new technology coming in

It’s I think it’s made it a little harder for some of the older generation to actually embrace it You know

um this this new generation coming in is very open to new technology They

understand the value of the variable data in inkjet technology They understand the power of digital

marketing along with the print marketing They understand that there’s tracking and attribution tools that traditional

print marketing or direct mail did not have 10 15 25 years ago So there they

understand it and they embrace it quicker And sometimes that there’s a generational gap where the the younger

generation is schooling the older generation and that’s not in all cases I’ve talked to some very astute 60 and

70 year olds who just get it with it Yeah But they’re the minority I I will say they they they understand what

they’re being told but it’s hard for someone to invest millions or tens of

thousands of dollars into something they really don’t fundamentally understand you know So there is a turning of the

tide and it’s almost to the point where if you are not embracing this these

smorgas board of technologies you are a dinosaur and you will either be gobbled up or you will be out of business or

liquidated or and there’s a lot of consolidation going on in the market because there are some moving with that

and and I’ll tell you that the the market consolidation is you know is

tough on some Because if I had to make a prediction I I’ll state it with a fact

that I noticed when I came into this business 7 years ago we would buy mailing lists of mail service providers

Those lists ranged between 10 and 15,000 in the United States All right i buy one

every year I I start my own direct mail campaign and we bought one in December

of 24 and it with the same criteria and it was under 4,000 So you have this

massive consolidation and I think another 10 years of this you’ll you’ll

probably have 80% of the commercial printing done by a couple dozen or maybe a hundred

different largecale printers And I think that’s an interesting point because even if consolidation is more or

less inevitable even being able to implement these types of technologies these types of tools and grow the

business and position it in a way where you’re getting the best bang for your buck when you do go to sell your

business I think is also valuable if you’re not wanting to stay on the track of keeping your business and holding on

to it Absolutely And and those that are not embracing the change or don’t have the capital resources to invest in that

change or technology they’re they’re probably it’s probably the best move to

liquidate merge get bought out because at least there’s a there’s a life after

for that owner You know he can get some money move on and he’s not he’s not

digging his own grave by standing in the way of the march of technology Yeah

definitely So then if I am one of those traditional mail service providers you

know I’m typically have only been doing you know maybe it’s statement printing or mail and I’m starting to dabble in

direct mail How do I approach getting into this new line of business and all

of these different technologies like where do I start well look at what

obviously I think most people in the print business because you know we pretty much promote to everyone They’ve probably gotten our promotion or seen

our emails or seen us at a trade show So they can just respond to one of those emails Yeah Yeah They start with you I

guess But but short of that you know I would

suggest all of them to just start talking to their other people in the industry see

what s what they found successful I mean my company aside if I was looking into a

new uh technology or a new a new service that I was going to provide I would be

talking to people every day I’d be learning as much as I can Talk to your friendly competitor printers that may

not be in your market They may be a lot of these printers have peer groups That’s really one of the best sources to

see you know keeping your ear to the rail as they say I would go to trade shows You know there’s a as I

re-educated myself to remarket myself into the business world a a giant

technology shift requires the same type of re-education All right i think all of

us are going through it with this AI shift All right if you’re not embracing

this at least learning it it’s you’re going to be left behind And I’ve been

around long enough to I remember the internet explosion in the late 90s early 2000s All right It was a matter there

was so much new technology coming out so many new things It was impossible to stay up todate on that stuff But you

know don’t let that scare you Just just learn one thing a week You know listen to the tech reports from the tech news

subscribe to a few things and you will slowly start absorbing the information

It will become common place to you Yeah So it’s important to stay connected to

other industry sources to the news sources of which there’s plenty Uh you

almost have to live in a cave for it not to be exposed to it but you still have to take that step to follow up and and

and immerse yourself a little further Yeah Yeah definitely So you know I’ve

seen these mailhouses and these print shops um look at omni channel and maybe they offer it but it’s by no means you

know the data analytics you know multi-acceted sort of campaign

orchestration that you know direct mail 2.0 helps with and uh you know are you

seeing the ones who have really you know embraced direct mail 2.0

you know offer that as like a new revenue stream for their clients kind of how have they seen success in that a

absolutely and and I won’t sit here and say that we’re the only ones in the world that can do this Everything we do

they can do themselves All right We’re doing digitally targeted campaigns geoence campaigns We’re doing call

tracking We’re doing mail tracking We’re doing QR codes and and record We’re

we’re using offtheshelf technology but the the value ad is we’re bringing it all into one place with all the

analytics in a white labelled environment so they can just show it right to their customer So sure they can

go hire a couple of guys who can do everything we’re doing create custom reports for their clients and deliver

them or you know not to pat my own back but you can just license our software

and we’ll do all the heavy lifting All you got to do is sell it But you talk about a an additional revenue stream

Yes And and it’s it’s a pretty simple USP

uh universal sales position or proposition If I could show you a 50%

lift in your direct mail revenue This talking to a client here an advertiser If I can give you a

50% lift in your response rate for only a 15% lift in what you’re pay what

you’re paying would that be worth it it’s a no-brainer So combining the

digital and the print you get a lift most of the time I’m not g Nothing’s

guaranteed in marketing but you usually see some kind of a lift So if you can

get a lift of 20 30 40% on your on the other side reaching your clients is it

worth paying 10 or 15% more to get that usually the answer is yes Yes typically

it should be Um it should be you know uh and are you starting to see you know

different types of industries start to pivot and build this into their you know strategic plan yeah So what I’ve noticed

and because I’m constantly trying to learn new things I’ve noticed that you have companies like ours that are very

industry specific There’s marketing companies that combine print with digital for auto dealerships and they

have a very specific set of benchmarks that that are kind of tweaked for that

industry We’ve seen it for nonprofits We’ve seen it for new home buyers So

those companies obviously have honed it specifically for those industries Our offering is a little more

of a rinse and repeat with small tweaks for any industry So um now if your

clientele is only in the real estate industry well then it might be great to go with one of those companies I’ll be

honest with you If your clients are across the boards well then maybe our offering is more correct Again it really

depends on what your clientele base is You know uh nonprofits is a is probably

one of the biggest sweet spots for for direct mail And there are a lot of

companies that offer digital solutions to interchange that do social media and

email for for nonprofit type clients So again it depends on the clientele of the

ma of the male service provider where they would look That makes sense And you know most of

the time these service bureaus they have you know MIS’s and storefronts and maybe

some legacy databases that are hanging on in there and a CRM and uh some

digital front-end printers and I mean the list goes on and on and they have this sort of technology stack that

they’re not moving away from Um so how to how do they leverage you know a direct mail 2.0 know into the offering

that they’re selling to their clients You know that’s probably the biggest hurdle because you know like any company

they want everyone wants to build sort of a an automated a rinse and repeat process that they can just scale up and

do over and over again Yeah So if they’ve got a process internally obviously anytime you’re offering a new

product line or service line that has to fit into that operational structure it’s

it’s there there’s a pain point There’s a friction points there because the sales guys are used to doing it this way

We’re used to pitching our clients this way We’re used to delivering our reporting and our results this way Well

obviously we come in with a fully packaged solution and they have certain expectations that they like to see that

they are clients are used to Well how does this work if we want to do this so

there there there is a barrier to overcome and a lot of times when a

company’s looking for change it may require re-examining their internal processes and making changes to to more

easily integrate this new technology So it’s it’s a pain point that has to be examined and decided if

it’s worth it Definitely I mean that’s with anything even just trying to replace one of those

legacy systems is you know a two-year painful process So I think that’s with

anything Change is a good thing but it’s painful But the nice thing is is these these are considered add-on products

that don’t necessarily have to integrate with their legacy systems They’re standalone Our our system specifically

is just a reporting dashboard that can be white labelled and shown to clients as a freestanding But I’ll I’ll tell you

some some large mail service providers have their own portals and they want the

clients logging into their own portal not some other place So for things like that we’ve confronted that we’ve solved

it by having open APIs where they can pull the data in and build it into their own portal So we’re

making we too obviously want to work towards the customers easy integration

So more and more is being done through APIs So their integration is easier to

integrate with their internal systems Okay Well that’s amazing That actually kind of bleeds into my next topic where

you know software companies we’re never done Um there’s always a new release a new version new technology we’re

incorporating It’s almost comical like if you want to never be static be in

technology Um because you will be on that hamster wheel But um from direct

mail’s perspective you know what are you guys planning for are there any pivots

coming in the future yeah absolutely I mean if I had to define my personal role

at the company I would sort of label it as chief product officer I hobby horse

or or gravitate towards what’s around the bend What is the next product or

service that we can use to improve the results of direct mail that’s that’s

what I eat for breakfast lunch and dinner So um last summer we acquired a

company called Who’s Mailing What which is a giant database of direct mail intelligence All right that was sort of

step zero The last year we’ve also been working on a new platform called

DM2O.ai What that is is we’re building with all this direct mail data we have

Not only do we have oodles and oodles hundreds of thousands of different campaigns from thousands of different

advertisers we also have the results from the customer campaigns that we’ve

managed And when I I say that with caution we’re not si we’re not divulging

that John Smith at 123 Main Street bought this this and this What we’re doing is we’re cohorting it by vertical

by geographical region and we’re able to match that with certain

types of um creatives So I I’ll give you a use case of what we’re what we’re

actually going to market with in a private beta in about two weeks Imagine

you’re doing a direct mail campaign and you’ve designed this beautiful piece of creative You’ve got your target list you

you obviously know who you’re targeting You can come to our direct

mail dm2.ai site and you can upload your PDF of your creative You answer about

seven or eight different questions What verticals when is your attended mail date how many pieces what type of list

is it a house list prospect list is it a purchase list and all this is fed into

our AI And what happens is it it it takes what you’ve input and it plots it

based on 80,000 other campaigns we’ve done in all of their results and it shows based on this location timing

quantity type of mail postage level It’ll it will give a benchmark of where

that piece will fall We go and we look at the creative and we break it down into like 26 different attributes Okay

from postcard image to text ratio keywords in the headline Is there a call

to action is there a QR code how big is it is there a phone number a URL what

are the sizes what’s the font what are the colors you know what are the background versus the text colors i mean

you name it Is it full bleed we put it all we put it all together And what

happens is it spits out a result and says “Hey your campaign should perform you know above or below this baseline

But if you do these things these keywords this this and this we would

expect it would perform you know 10% above baseline.” All right So here are five things to get a 20% improvement in

engagement Now I don’t know ROI but I do know engagement Did they scan a QR code

do they go to the website if they click on informed delivery Exactly So if that piece got people to

engage and we can help change whether it’s a zip code a timing uh a type of

mailer is this better as a postcard is it better as a as a envelope mailer we have that data on 80,000 campaigns and

we get more every day So this is a constantly learning database that will

then predict the output of somebody’s intended mailing So again if you’re going to spend $10,000 on a direct mail

campaign and it cost you a hundred bucks to get some information across 80,000

other campaigns is that worth it would you would you spend 10 Would you spend a

hundred bucks to hopefully not make a lay an egg on a $10,000 campaign you know yeah No absolutely And I think

that’s so interesting when you look at it from you know the service bureaus or the mailing houses You know they’re

typically just taking the orders They might not be doing composition or design work inhouse They’re probably working

with their clients who maybe have a couple of marketing folks or a graphic designer and they’re getting the fully

composed pieces Maybe they’re doing some variable data and all of that before it goes to the printer but that’s typically

the setup And uh we’re always trying to create more you know stickier client relationships move into that

consultative selling where we’re not just taking orders but we’re adding value And I see if there’s such an easy

platform like you just described to go in ask a client you know those five or six questions upload the current design

of the piece and then to provide back as a service this is what we would do Um it

kind of takes pre-press to a whole another level I I agree And and and you

know as much as and as an excited as I get about this product you know I get

asked well well how much h how much are you going to sell of it i have no idea I don’t even know if anyone will spend a

dollar to be honest It’s never existed before You know I feel a little bit like Steve Jobs before he released the iPhone

You know this is a category that never existed Uh wow

But I’ve invested thousands of hours hundreds of thousands of dollars if not millions and

I’m going to bring it to market and I’m either going to be a hero or a zero as they say you know

Oh my gosh I hope you have just so much Pepto-Bismol and like acid reflux medicine just littered everywhere over

your office your house because my stomach would be in knots I do think I know I know what you just described is

so exciting though because it sounds easy even those who are not you know AI

or digital digitally savvy Um I think that makes sense and is easy to navigate

and you know derive value from because I’m even thinking about you know these

sales guys who are out there selling you know print and mail and uh they’re working with you know substrates and uh

different you know stock types and turnaround times They haven’t been selling digital They’re not necessarily

so much in the consulting sales business but if there’s little services that they

can add on to enhance the customer experience make their campaigns more valuable that might be an easy baby step

into you know selling the broader sort of digital direct mail I hope you’re

right I really do And uh you know th and the other thing is this is a this is a

there’s a lot of products out there that that call themselves AI but for AI you have to be able to learn from your

mistakes You have to learn as new data comes in and adjust your output based on new data coming in And that’s really the

crux of this product because we’re tracking and delivering you know

thousands of campaigns a month So all the new data will re-educate and improve

the results for the customers who use it you know So and and we even have plans

to get feedback from the customers who use it you know rate how good those recommendations were Did you use them

and did you get a good result and then we know we can upvote those recommendations or reinforce that

learning so that it continues to make the right decisions for people It’s like when they first came out with

the self-cleaning oven This is the self-cleaning you know AI model when you

have that cyclical flow of data coming That’s what it’s supposed to do It’s supposed to continue to learn That’s

what intelligence is It learns with continually added data It’s not static And that this product will not be static

Definitely not Um so going more into just what you see uh in the direct mail

space Um so we’re talking about all the great things the exciting things but if you

were to just wave a magic wand what’s one thing in the direct mail space that is a pain point today that you would

want to change you know I don’t think anything in terms of

the the dissemination or proliferation of the technology It’s

really the people and and willing to embrace change and invest in that change So I if I had to say

there’s you know what are the road bumps ahead obviously it’s the consolidation of the industry the the the fluidity of

the situation at the USPS you know everybody’s got an idea on what should or shouldn’t be happening there And so

so these type of uncertainties affect the entire print industry and the direct

mail market And unfortunately when there’s uncertainties there’s stagnation

People are even more resistant to change or invest because of that concern about

the future And I like to look at things of you know we can make the future by taking bold steps And you know there’s

always that fear what if you’re wrong well if I’m wrong I’m going back and I’m hitting my MBA books and I’ll be

learning about the next career I don’t know what to say You know I still got a few more good years left in me

Oh that’s amazing So um when you look at you know the relationship between

digital and physical like we’ve already seen a whole evolution there but when you project out this is crystal ball

time Get out the crystal ball Where are you seeing it in the next three to five years and how do we prepare ourselves

well after the fact of the consolidation of the market I I do believe that there

will be more growth in the print or tactile advertising market Everything is

so screen and digital based there’s too much noise Now I’m not saying that

there’s digital will always be here and print will always be here but that marriage will become tighter and it will

extend to further avenues you know whether it’s uh VR or it’s drone

advertising or digital billboards there’s so many other interaction points

where you can merge offline and online and I think you’ll see more of that you know you know you you’ve seen some of

these drone shows where you can put giant images in the sky 2,000 times as big as a as a billboard You’ve seen the

mobile billboards that you could almost personalize as certain types of traffic

comes by it at certain times of the day for certain industries So I think this sort of you’ve probably

seen some of these movies like um Minority Report where you walk into a store and it gives you an ad of you in

that piece of clothing you know but these are the things that I would agree with are coming More personalization

more instant advertising in different types of venues and locations that are

hyperpersonalized which again can work with the direct mail You get your tactile thing in the mail and then you

get reminded of that as you shop as you drive as you eat in a restaurant you

know Yeah And I think that just gives all of these you know print shops and print printers and mailers the

opportunity to move more upstream when they’re working with their clients and to really become more integrated with

the marketing departments and the digital campaigns and really tying it all together and bringing you know a

unique perspective and their expertise and uh not just being you know the print

shop that’s printing the postcards and sending them out Exactly I I agree 100%

and it’s why I say always be learning always be learning that next thing you

know so that you can take charge and maybe be the first one off the starting line with that you know Yeah that’s the

goal Well thank you Brad This has been just such a great interview Thank you for hopping on and uh telling us what’s

moving and shaking over at Direct Mail 2.0 Absolutely Kaitlin Anytime you want

to hear hear a prediction of the future give me a call and I’ll I’ll be first up I love it Thanks Brad Bye guys