Marketers forge through dire times for US Postal Service
Marketers who use the USPS are remaining composed despite the organization's financial issues
Massive layoffs. Post office closures. Price increases. The end of Saturday delivery. Threats of default. Although the headlines about the US Postal Service staring into a financial abyss are disturbing, many marketers who use the mail are relatively unperturbed.
"It's really hard right now for us to say, 'OK, we have to make contingency plans in case the US Postal Service shuts down in six months.' We just don't really see that happening," said Adam Leavitt, VP of marketing at travel company Trafalgar.
Surveying the Postal Service's belt-tightening proposals on the table, Leavitt said an accelerated price increase would have the largest potential impact on Trafalgar's direct mail program. Yet, "if pricing goes up X% and we have budgetary constraints, then we would sharpen our pencils and narrow our targets," he said.
Even direct mail couponing giant Valpak Direct Marketing Systems, which generates more than 90% of its revenue from the 485 million envelopes it mails to 43 million consumers every year, is at ease among the doomsday headlines.
"We're getting calls from some advertisers asking if there's something to be concerned about because Valpak's always been on time and on schedule and USPS has been our key delivery partner," said Jim Sampey, EVP and COO of Valpak. "I think [the advertisers are] just hearing a lot of the saber-rattling going on."
Postmaster General and CEO Patrick Donahoe told Congress last month that USPS could shut down next summer without legislation to ease the organization's financial burden. It posted a $3.1 billion net loss in the third quarter of its 2011 fiscal year.
"The financial challenges are real," said Tom Foti, manager of marketing mail at USPS. While the decline in revenue from First-Class mail has kneecapped the organization's finances, Foti said he is seeing growth in direct-mail revenue.
Bloomberg Businessweek is one print periodical that has explored alternate delivery channels. This month, 210,000 of the weekly magazine's subscribers will receive the publication via means other than USPS, said Bernie Schraml, director of manufacturing and distribution at Bloomberg Businessweek.
The decision to bundle Bloomberg Businessweek with local newspapers has had a negligible cost impact, and it's opened up advertising options, he said.