The amount of personally addressed junk mail could double as New Zealand Post tries to find ways to arrest falling letter volumes.

The state-owned postal service is looking for ways to improve the quality of the household mailing lists it sells to business customers who in turn use the information to send personalised advertising.

Letter volumes have been falling by up to 4 per cent annually for several years as people replace pen and paper with email and other electronic communication.

Chief executive John Allen said the "biggest single challenge" NZ Post faced was continuing the use of letters as a means of communication.

The best way to do that was to increase the use of mail by business customers, he said.

Mail's share of total advertising spending in New Zealand was just 8 per cent, compared with more than 15 per cent in Australia and nearly 20 per cent in the United States.

"We have a relatively small percentage of the overall advertising spend in mail by comparison to other developed countries and our view is that there is real opportunity to grow that," Mr Allen said.

There had been good growth in marketing mail volumes in the December half, which had helped offset most of the decline in personal letter volumes, he said.

NZ Post will issue its December half result next week.

A controversial trial last month using four workers to record houses in Petone and Eastbourne that could do with repainting was aimed at tailoring a mailing list for paint company Resene.

The public backlash over using the trusted postie to "snoop" on properties forced NZ Post to axe the trial - but the information collected was still sold to Resene.

Mr Allen said NZ Post must innovate in order to compete with electronic mail.

"Clearly we need to be finding ways to offer new services to our customers and to enhance the services we can provide," he said.

Targeted mail cut through the clutter of the plethora of competing media clambering for attention, he said.

New Zealanders' reluctance to use postcodes had held back personalised direct marketing.

Whereas in most developed countries people were as familiar with their postcode as their telephone number, New Zealanders had not caught on to the idea, Mr Allen said.

Ask three people in the same street what suburb they lived in and they would give three different answers, he said. As a result, 20 per cent of mail going into Auckland was incorrectly addressed.

While a greater use of postal codes would provide revenue to NZ Post through the sale of more accurate mailing lists, the upside for members of the public was a generally improved on-time mail delivery service, Mr Allen said.

The value of a handwritten letter had been elevated as email took over from the written letter.

Mr Allen said he was receiving more handwritten business letters "because they are trying to differentiate themselves. It means more when it is a letter, it means more when it is by hand".