USPS to lure big brands with postage-back guarantee

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The US Postal Service will begin to test a postage-back guarantee next month for large marketers that agree to advertise their products through First-Class and Standard mail. The USPS will offer the “Mail Works Guarantee” to a group of companies that spend at least $250 million a year on advertising, beginning May 16, in its latest initiative to attract large advertisers.

The Postal Service said in a filing with the Postal Regulatory Commission that although the top US marketers spend about $90 billion annually on media advertising, the USPS' share is only 3.1% of that, or $3 billion per year. The possibility of additional revenues from large advertisers “represents a huge revenue potential for the Postal Service,” it said in the PRC filing.

“The Postal Service recognizes that there are a number of large advertisers that do not employ the mail as a key component of their advertising mix. We strongly believe that in any intelligent, integrated campaign, mail can play a part,” said Dennis Nicoski, manager of field strategy and contract sales at the USPS. “The objective behind offering this is to put our money where our mouth is and to prove to the large advertisers that mail will improve the ROI of their marketing campaigns.”

The organization will offer the test to 16 advertisers, which it declined to identify, and will develop a unique set of metrics with each to measure the success of their campaigns. Each participating brand will be expected to mail between 500,000 and 1 million pieces of First Class or Standard mail. If the campaign fails to meet the expected metrics, the USPS will refund the companies up to $250,000 in postage costs. However, the organization will not reimburse participants for printing and production costs. The test, which will continue for as long as two years, is limited to companies whose postage is less than 0.36% of their total ad spending.

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