direct marketing association
Once more with feeling, Direct Mail is here to stay!
You know the old expression, “talk til your blue in the face?”
Well this is how I feel right now…
I’ve written in this very forum the following posts..
Direct Mail Alive And Kicking…
Why Direct Mail Will Always Be In Style
Apparently shock waves are again abounding as according to a recent presentation for the Direct Marketing Association, Winterberry Group said that:
- From 2007 through 2009, spending on several categories of digital marketing grew at compound annual growth rates that exceeded 10%
- Over the same period, spending on direct mail fell at an annual rate of 10.7%, and spending on print advertising declined by almost 20% per year
- For 2011, Winterberry Group expects spending on digital marketing to increase about 21% compared to 2010, while spending on direct mail might be up 1-4%
Then there’s this from a Forrester Research survey…
- 60% of marketers said they would fund increases in their digital marketing budget by taking money from traditional marketing programs
- 40% of the survey respondents said they expect to cut direct mail spending
Many believe that the move away from direct mail reflects a growing belief that digital marketing methods are essential to creating engagement with today’s Internet-savvy prospects. It is also based on the perception that direct mail has somehow become a less effective and efficient marketing tool.
Hogwash!
Go back and read the two aforementioned posts and then come back and tell me you still think Direct Mail will go away completely.
It won’t!
They key will be integration… a mix of traditional media and digital media.
So, please for once and for all… can we stop with the “Direct Mail is Dead!” cries…
Postal Increase Denied – The Day After
By now you’ve heard the news that the Postal Regulatory Commission (PRC) denied… check that, unanimously denied the USPS requests 
to raise postage rates in January beyond the rate
of inflation, ruling that the mail agency’s recent financial woes were caused by a flawed business model and not the recent recession.
So a rise in stamp prices and other postage rates will not take effect in January as the Postal Service had hoped – at least not yet.
Here’s what some are saying about the PRC’s decision…
John E. Potter, Postmaster General of the United States, CEO of the U.S. Postal Service in a statement said:
“We are disappointed to learn that the Postal Regulatory Commission (PRC) has denied our price filing. But we are encouraged by their acknowledgment and understanding of the larger financial risk we face through the mandated prefunding of Retiree Health Benefits.
Clearly, the Postal Service is a viable business. Maintaining that status requires elimination of several legislatively-imposed constraints that hamper our ability to operate efficiently and profitably.”
The phrase “Clearly the Postal Service is a viable business…” surely caught my eye. Most viable businesses don’t lose $6 billion in a year, which is what the USPS is projected to lose this year.
Click here to read the full statement from John Potter…
The Direct Marketing Association (DMA) chimed in saying they “praised the decision of the Postal Regulatory Commission (PRC) to reject an excessive postal rate hike proposed by the US Postal Service (USPS).”
“Today’s decision is a great victory for businesses and consumers. The US Mail will remain a viable and affordable communications channel. The knowledge that postage rates will not rise faster than inflation is also an important element for the business community already operating in an extremely challenging business environment,” said Lawrence M. Kimmel, DMA’s CEO. “This, however, is only a first step. USPS customers must continue to work together, and with Congress, to help the Postal Service maintain competitiveness in the marketplace.”
Full DMA response here…
Meanwhile Sen. Tom Carper (D-Del.), Chairman of the Senate subcommittee with jurisdiction over the U.S. Postal Service, released a statement…
“I’d like to thank the members of the Postal Regulatory Commission and their staff for their work. I know this was a hard-fought and complicated case so I appreciate the thought and the long hours that went into producing this important decision.
The Postal Service is clearly in a financial crisis. It lost $4 billion last year and will likely lose as much as $7 billion this year once it closes its books for the 
fiscal year later today. Postmaster General Potter announced this past spring that, if nothing were done, the Postal Service could accumulate as much as $230 billion or more in losses by 2020. This is clearly an unsustainable path. In fact – if these trends continue and no major changes occur – I understand that the Postal Service will actually run out of cash by the end of fiscal year 2011, just a year from today.”
Complete statement from Senator Carper here…
Then we have #U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee and author of the 2006 Postal Accountability and Enhancement Act…
Her response to the PRC’s decision was not unexpected…
“American consumers and businesses that rely on the Postal Service won a major victory today,” said Senator Collins. “I am pleased with this decision, which I argued was required by the language of the 2006 postal reform law.”
Earlier in the week the same Senator Collins released the findings of three investigations of the Postal Service (USPS) by the Postal Inspector General (IG), which she had requested to determine whether the agency could realize additional efficiencies and cost savings in three areas: employee benefits, purchasing policies, and the area and district field office structure. 
The findings revealed some “incredible perks” for USPS executives.
*the USPS awarded 359 contracts to former Postal Service executives without competition. In three cases that the IG examined most closely, the former employees were hired at nearly twice their former pay to advise new executives, a practice which the IG found raised serious ethical concerns and hurts employee morale;
*the Postal Service pays 100 percent of its senior executives’ health benefits, a perk that is not provided to comparable employees in any federal agency;
*postal employees participate in many of the same health insurance and life insurance programs as federal employees, yet the Postal Services pays a greater share of the premiums
“It is unbelievable to me that the Postal Service – awash in red ink and asking for huge postal rate hikes, service reductions and relief from its financial obligations – is paying the full health care premiums for its top executives,” said Senator Collins.
###
So it’s now been over 24 hours since the decision was handed down.
Do you think this is the last we will hear of a new increase for now?
Will the USPS file an appeal?
Can the USPS ever be a “viable business?”
#Source: Postal News Blog
This just in from the USPS…price increase on the horizon
Release No. 10-064
Postal Service Proposes Price Changes
WASHINGTON —The U.S. Postal Service Governors recommended increasing the price of a First-Class stamp 2 cents to 46 cents and authorized the production of a pane of four evergreen tree branches as the newest image for Forever Stamps. The price of a postcard would increase 2 cents to 30 cents.
The Postal Regulatory Commission must approve the recommended price changes. The increases would not go into effect until January 2, 2011. It would be the first stamp price increase in almost two years.
Holiday Evergreen Forever Stamps will be available to the public in October at the current rate of 44 cents. Once purchased, the stamps are valid literally forever – despite any future price changes. No additional postage will ever be needed.
Faced with plummeting mail volume traced to the recession and increased use of the Internet, the Postal Service is projecting a deficit of nearly $7 billion for the next fiscal year. Despite eliminating 1 million work hours and reducing expenses by more than $1 billion every year since 2001, a budget gap remains.
The proposed price changes, if approved, will raise about $2.3 billion for the first nine months of 2011. Postmaster General John E. Potter said he does not want customers to bear the burden of dramatic price increases. Instead, Potter announced in March that pricing would be one in a series of solutions the Postal Service is pursuing to become financially sound.
“There is no one single solution to the dire financial situation that the Postal Service faces,” Potter said. “These proposed rate adjustments are moderate and part of a fair and balanced approach to insuring mail service for all Americans well into the future.”
Other actions outlined in March included changes to delivery frequency, restructuring prepayments of retiree health benefits, creating a more flexible workforce and expanding access to products and services to places more convenient to customers.
The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.
Complete details of today’s filing can be found on usps.com. No prices will change before 2011.
USPS summer sale, look for your letter!!
Release No. 09-020 Summer Mail Sale Returns
Customer Loyalty to Be Rewarded Again in 2010
WASHINGTON—The U.S. Postal Service did something for the first time last year, and it was so successful, they’re planning to do it again: launch a summer sale.
The 2010 Summer Sale is scheduled to run July 1 through Sept. 30 and will provide a 30 percent rebate to eligible mailers on Standard Mail letters and flats volume above a predetermined threshold. The threshold will be five percent over each participating mailer’s volume for the same period in 2009. Invitations to participate in the sale will be sent to customers in early March.
“The 2010 Summer Sale is our way of rewarding our most loyal customers and demonstrates that we value their business,†said Robert F. Bernstock, president, Mailing and Shipping Services. “We expect the 2010 Summer Sale to provide as much excitement about direct mail as the sale did last year and to generate between 300 million and 1 billion new mailpieces.â€
Nearly half the 960 customers enrolled in the 2009 Summer Sale increased their mailing volumes. This resulted in approximately 1 billion incremental pieces during the sale period, producing a net revenue contribution of $24 million.
“Direct mail works, and our customers know that,†said Bernstock. “That’s why we will continue to invest in programs that promote the health of our customers’ businesses as well as our own. We very much appreciate our customers’ business, and we will compete aggressively for their advertising and promotion dollars in this highly competitive marketplace.â€
To be eligible to participate in the 2010 Summer Sale, a company must have mailed 350,000 or more Standard Mail letters and flats between July 1 and Sept. 30, 2009. Approximately 3,525 customers are expected to be eligible to participate in the sale, representing 67 percent of the Postal Service’s Standard Mail volume.
The 2010 Summer Sale is a component of a broader pricing strategy that creates incentives to grow and retain volume. It was one of many solutions discussed this week at a Washington, D.C.-stakeholder event in which Postmaster General and CEO John E. Potter addressed hundreds of customers, business partners, employees and the media during a presentation: Envisioning America’s Future Postal Service. At the event, Potter outlined an aggressive plan of cost cutting, increased productivity, and an array of legislative and regulatory changes necessary to maintain a viable Postal Service.
The 2010 Standard Mail Summer Sale is subject to approval by the Postal Regulatory
How Would You Make Over the U.S. Postal Service?
From Inc.com
With bankruptcy looming, the U.S. post office needs a major fix. We asked Inc. 500 CEOs how they would approach the problem
By Darren Dahl | Oct 1, 2009
Everyone agrees that the U.S. Postal Service could do better. With bankruptcy looming, there’s a consensus that big changes need to happen, most involving cutting staff and scaling back services. But what if we could unleash the creative ingenuity of entrepreneurs to improve the post office? We asked Inc. 500 CEOs how they would approach the problem. Here are some of their responses.
The USPS needs a digital mail system. Your physical address could become your username, with the post office allowing you to turn off physical delivery of mail, like banks have done with bank statements. Recipients could choose to have their physical mail delivered to their home mailboxes for archiving once a month. By creating and owning the digital postal service market, the USPS could greatly reduce costs and become profitable, useful, and relevant for the next 100 years.
Aaron Houghton
Chairman and co-founder, iContact
Durham, North Carolina
The mail carrier could do pickups and charge a monthly pickup fee, just like FedEx and UPS, while keeping the letterbox as a free service. Simply adding a $25 monthly fee for businesses that want a daily mail pickup would be something that many businesses would jump on. If you had even 20 percent of the small-business market, you could generate an extra $60 million a year. If the USPS also cut retiree benefits by 40 percent and operating costs by 10 percent, along with raising rates by 5 percent, it could turn a $7 billion loss into a $4 billion profit.
Sandeep Walia
CEO, Ignify
Cerritos, California
Raise the rates on first-class mail. It is the postal service’s core, and it has a monopoly to deliver it. This system actually works and is the most profitable part of the USPS. When the USPS’s first-class rates are compared with those in other industrialized countries, though, they are grossly underpriced. A similar-size letter mailed in the U.K. costs 65 cents versus 44 cents with the USPS; in Germany, it costs 78 cents. Using 2008 statistics, each one-penny increase in the first-class mail rate would add over $900 million in revenue. If you raise it by 5 cents, you add another $4.5 billion.
Harry Geller
CEO, SoDel Concepts
Bethany Beach, Delaware
When it comes to shipping small packages, the USPS is cheaper than its competitors and offers comparable and sometimes even faster delivery times. However, since it doesn’t offer reliable tracking, we pay a premium to ship most of our packages with UPS. If the USPS tracked packages as well as UPS, it could capture a lot of business.
Sean Harper
Co-founder, TSS-Radio
Chicago
The USPS is an out-of-date concept. I don’t think my 18-year-old son has ever written a letter. For him, the post office is about as relevant as cassette tapes, rotary phones, and broadcast television. The USPS doesn’t need to be fixed — it needs to be sold off.
Tony Paquin
CEO, Paquin Healthcare Companies
Celebration, Florida
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Postal Service announces mix of price cuts, increases for 2010
From DMNews: Frank Washkuch November 09, 2009
Less than a month after the US Postal Service announced it will not raise rates for 2010 on its “market dominant products,†a category that includes services used largely by direct mailers and publishers, the agency revealed a mix of increases and rate cuts on other services for next year.
The agency disclosed that the price of a domestic priority mail flat-rate envelope will drop from $4.95 to $4.90, while the cost of a priority mail small flat-rate box will remain at $4.95 for next year.
However, the agency also disclosed that priority mail customers will see an average price increase of 3.3% next year, while express mail users will see prices jump by 4.5% and international shipping services prices will go up by an average of 3.3%. The price changes are effective January 4, 2010. The price of a first-class mail stamp will remain at 44 cents next year.
“The object is always to ensure that each particular product category handles its own individual institutional costs, and I think these prices reflect that,†said Dave Lewin, PR representative for the USPS.
In a frequently asked questions section on the USPS’ Web site, the federal agency explained that prices are increasing due to “the cost of doing business – for things like transportation, utilities and healthcare benefits.â€
The Postal Service told customers last month that it will not raise rates for next year on its first-class and standard mail, periodicals and single-piece parcel post services, although it has said its fiscal-year 2009 mail volume is as much as 20 billion pieces lighter than the year before. Direct mailers told DMNews at the time that the decision not to raise those rates will have a positive impact on mailers. The announcements also come at a time when the USPS is deciding what local postal office branches to close.
Delivering Something Extra
From the New York Times
By Stuart Elliot
Published: September 23, 2009
Since 1907, United Parcel Service has been delivering packages ordered by consumers. Next week, the company plans to deliver packages they have not ordered, in a test of an effort to expand into direct marketing.
United Parcel Service will begin testing its direct marketing service on Monday.
Beginning on Monday, U.P.S. will experiment in five major markets with a service it calls Direct to Door, giving advertisers and retailers a chance to provide offers and product samples to U.P.S. customers. The marketing materials will come inside small boxes labeled Direct to Door Paks, and will be delivered to customers along with merchandise they actually ordered.
The test, to run through Oct. 2, is intended to gauge whether there is interest in having U.P.S. serve as an alternative to marketing mail delivered by the United States Postal Service or by companies like Valpak.
If Direct to Door goes forward, the added revenue could help United Parcel offset declines in demand for its mainstay package delivery service since the recession started.
In July, U.P.S. reported its sixth consecutive quarter of lower package volume in this country. The decline in the second quarter was 4.6 percent compared with the period a year earlier, which Bloomberg News described as the worst result since United Parcel went public in 1999.
“I wouldn’t say it was developed as a result of the economy,†said Lisa Lynn, marketing director for new-product research and development at United Parcel in Atlanta.
Rather, she said, it stems from “some opportunity we saw at the heart of what we do every day working off our delivery network.â€
The test is also meant to see if U.P.S. customers welcome unsolicited packages or dismiss them as some new type of junk mail.
One effect of the economy is that “people are very receptive to offers right now,†Ms. Lynn said.
An experiment in figuring out how to better aim traditional, tangible marketing materials at consumers may seem quaint when so much of the buzz along Madison Avenue is about aiming virtual pitches at them online.
But direct marketing remains a lucrative business. According to the Direct Marketing Association, it accounted for $176.9 billion in ad spending last year in the United States — 52.1 percent of the total, by the association’s tally.
“We did some focus-group research and it really indicated that people were receptive to receiving offers from U.P.S.,†Ms. Lynn said. “What we heard was, ‘If U.P.S. brings it to me, it’s not junk.’ â€
Still, the company is taking several steps to try to ensure that a Direct to Door Pak is received more like a gift than another application for another credit card.
For one thing, the offers inside each box are intended to be special rather than “mass offers distributed through other channels,†Ms. Lynn said.
For another, no Direct to Door Paks will be delivered unaccompanied by packages ordered by that household, she said.
And the boxes will not bear the addresses of the recipients, Ms. Lynn said. Rather, they will carry phrases like this one: “Inside are premium offers from some of America’s best-known brands.†They will also include a photograph of the familiar brown United Parcel truck next to the words “Delivered to you by U.P.S.â€
About a dozen companies — advertisers and retailers that use United Parcel to deliver orders to customers — are taking part in the test, Ms. Lynn said. They include the Finish Line; Men’s Wearhouse; Sephora; two Williams-Sonoma home furnishings brands, Pottery Barn and West Elm; and Zappos.com, the online retailer of shoes and housewares recently acquired by Amazon.
“It’s an interesting way to reach out to our customers and partner with one of our closest business partners,†said Aaron Magness, director for business development and brand marketing at Zappos.com in Henderson, Nev.
“We are an online retailer,†he added, “but we want to maintain a high-touch relationship with customers, constantly trying to find different ways to interact with them in whatever means they’re comfortable with.â€
Mr. Magness said he liked the idea that the boxes would not arrive “out of nowhere, from random people knocking on your door.â€
The offer to be made by Zappos.com during the test will invite recipients to “become a member of our V.I.P. program,†he added, entitling them to “free next-business-day shipping on every order.â€
United Parcel plans to deliver about 250,000 Direct to Door Paks in about 150 ZIP codes in Chicago, Dallas-Fort Worth, Miami, Phoenix and Washington.
Those chosen to participate in the test are “high-opportunity consumers,†Ms. Lynn said, meaning that they often order merchandise delivered by United Parcel Service.
“Our drivers have relationships with these people because they deliver to them frequently,†she added. “There’s a lot of trust in the driver and the brand.â€
Mr. Magness also cited the trust factor as a reason Zappos.com was interested in the test.
Ms. Lynn described the customers to receive Direct to Door Paks as ages 35 to 54 in households of two persons or larger and living in single-family, owner-occupied homes.
As for what the service will cost marketers, “I can’t go into specific pricing,†Ms. Lynn said, “but the pricing model is similar to other media.â€
The goal is for the cost to reach each 1,000 consumers — a common media measurement known as cpm — to be “comparable or less than an equivalent piece of direct mail,†she added.
Reader’s Digest Plans Bankruptcy Filing
From the New York Times
August 17, 2009, 2:00 pm
By Stephanie Clifford
UPDATE Aug. 17, 3:52 p.m. With comments from the Reader’s Digest Association chief financial officer, Tom Williams, and on the banks’ involvement.
The Reader’s Digest Association announced on Monday that it would file for Chapter 11 bankruptcy protection for its United States businesses within 30 days.
As part of the reorganization, Ripplewood Holdings, the private equity firm that owned Reader’s Digest and installed Mary Berner as its chief executive, will shed its shares and board seats, and existing debt holders will become the company’s owners. Ms. Berner will continue to run the company, and Tom Williams will remain as chief financial officer. The company does not expect to lay off any employees or close any of its publications, Mr. Williams said in an interview.
The value of the company will be much lower under the overhaul. Its debt of $2.2 billion will be reduced to $550 million, according to the agreement it has already struck with the majority of the banks. Ripplewood had bought Reader’s Digest for $2.8 billion in 2007 in a leveraged buyout.
“The bank lenders are taking a fairly significant haircut,†said John Puchalla, a senior analyst at Moody’s. While it was common for junior creditors to take a loss, for the senior creditors to take such a loss is “notable,†he said. “It’s certainly a lot less than the value the lenders viewed at the time of the L.B.O.,†he said.
Mr. Williams said a majority of its lenders had agreed to the terms of the restructuring, and the company expected to speed through bankruptcy, completing proceedings 45 to 90 days after it files, he said.
The filing does not cover its businesses outside the United States; it sells publications and products in 78 countries.
The company has lined up $150 million from lenders, through a debtor-in-possession loan, to help finance it through the restructuring, and will get $400 million more upon exiting bankruptcy, for the
total new debt of $550 million.
“Our banks are 100 percent aligned on the vendors that we choose and serve, so there’s no issue associated with paying any vendors,†Mr. Williams said.
That money comes from its new owners: J.P. Morgan, the company’s agent, G.E. Capital, Merrill Lynch, Eaton Vance, Regiment Capital Advisors, Ares Management, and Davidson Kempner. Although Ripplewood made an offer, “the offer from the lender group looks more compelling,†Mr. Williams said.
The company has an additional $100 million in cash on hand, Mr. Williams said.
The overhaul will save Reader’s Digest $65 million a year in cash-interest expense payments, reducing its annual payments from $145 million to $80 million, Mr. Williams said.
The company will continue to operate as usual once it comes out of bankruptcy, but with significantly less debt, Mr. Williams said. “No employees are going to be affected by this, there’s no-to-little
effect on our vendors, our operational performance remains very sound,†he said.
In the company’s most recent fiscal year, ended in June, its revenues, excluding the effects of foreign exchange, declined 1.4 percent, and gross margins and operating profit were flat with last year, Mr. Williams said. Additionally, ad revenue, which makes up about 9 percent of the company’s sales, were down only 3 percent from last year.
The magazine was founded in 1922, summarizing articles published elsewhere, and grew quickly. The company developed other titles, and, in 1990, went public.
The Reader’s Digest Association has been through a turbulent time in the last several years. In 2007, a consortium led by Ripplewood bought the company for $2.8 billion. Ms. Berner, a publishing executive, was installed as chief executive; her brother, Robert Berner, was then a managing director at Ripplewood.
But the company has lost money every year since 2005. The high debt load of the company had led analysts including Mr. Puchalla to downgrade its debt at the beginning of this year. In June, the company announced it was cutting the guaranteed circulation of the flagship magazine to 5.5 million, from 8 million, and decreasing the frequency to 10 times a year, from 12, along with focusing the magazine on socially conservative values.
Plunge in Credit-Card Mailings Slows
Could this be some good news for a change!From Brandweek
Aug 14, 2009
- Mark Dolliver
When the credit crunch took hold last year, it stanched the usual flood of direct-mail credit-card mailings to U.S. consumers. The subsequent meltdown of the financial system had its own restraining effect on such offerings. But now, a report from Synovate says the research firm’s Mail Monitor operation has detected a bottoming out in the volume of such solicitations.
In the second quarter of this year, says the report, households received 349.1 million credit-car offers in the mail. That’s 67 percent lower than the level of mailings in the same quarter of 2008. But it’s down just 6 percent from the level of first-quarter 2009. Some of the big mailers even increased their volume during the second quarter. Bank of America’s mailings were up 77 percent from the first-quarter-2009 level, and Citibank’s were up 65 percent. Noting that credit-card issuers have been growing less risk-averse than they were earlier in the recession, Synovate goes so far as to predict an “uptick” in card offers next year.
An earlier report from Mintel Comperemedia noted a stabilization (after two years of declines) in the number of mailings sent to households promoting mortgages and home-equity loans. But the nature of the offers has shifted, given lessons consumers have learned the hard way in the past year. Notably, direct-mail offers of adjustable-rate mortgages have “fallen out of favor,” according to Mintel’s analysis.
Of course, the fact that companies are making offers of credit cards and loans doesn’t necessarily mean people are taking them up on it. Polls during the past year have consistently found consumers professing their aversion to taking on more debt of any sort. Typical of the genre was a Gallup poll released last month (based on fieldwork in June) in which 46 percent of respondents said it’s “a bad time to borrow money,” vs. 17 percent saying it’s a “good time” to do so.
Mailbox Explodes in Northeast DC
Updated: Thursday, 13 Aug 2009, 11:43 PM EDT
Published : Thursday, 13 Aug 2009, 11:43 PM EDT
By MYFOXDC STAFF/myfoxdc
WASHINGTON, D.C. – D.C. fire crews say a mailbox explosion shut down several streets and forced evacuations in Northeast Washington on Thursday night.
It happened at 49th Street NE and Meade Street NE just before 10 p.m. Officials say a blue U.S. Postal Service mailbox was destroyed by an explosive device.
D.C. Fire and EMS had to close off several streets in the area, and they were checking to see if there was a second device. There were no injuries reported.
Witnesses said debris was scattered over a large area after the explosion.
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