USPS Looks to Advertising for New Revenue Streams

The U.S. Postal Service is accelerating an advertising initiative it began last year in an effort to increase revenue for the organization and offset rising costs for fuel, real estate and labor.

The initiative, called the Postal Ad Network, involves offering marketers advertising space to peddle private goods and services in places where paid pitches had never appeared until last year, including on the sides of mail trucks and collection boxes, in post office lobbies and on the USPS Web site.

The program is targeted to national advertisers who need national reach, and the agency is grouping properties for sale to advertisers the same way media conglomerates do.

“We're looking for alternative sources of revenues to help keep our prices lower,” said John Ward, vice president of core business marketing for the USPS, especially after the rate increase last month.

In addition, last year, the USPS incurred a deficit of almost $200 million and projects a $480 million deficit in fiscal 2001, despite the average 4.6 percent rate increase that went into effect this month.

The goal is to sell ad space on postal assets, expanding a program that brought ads in this year and last from America Online and Visa International.

The USPS began working with Visa last year, when the company bought ad space on 20 million Priority Mail envelopes.

The USPS also began a six-week, co-branded advertising campaign last month with AOL that promoted AOL and the USPS' Expedited Package Services products on postal trucks in 10,000 cities in 11 major markets. In addition, AOL is a partner with the post office in Internet marketing initiatives on both the America Online and post office Web sites.

The post office also sells ad space to marketers like AT&T, The Home Depot and Sears, Roebuck in a “movers' guide” that began carrying ads in 1995.

Ward said he expects the program to bring “several hundred millions of dollars to the agency.”

Ward also said the agency is negotiating with several other advertisers, including many of the very large customers it already does business with such as financial services and Internet companies.

Ward said the program also offers an important branding opportunity for the agency.

“So far, it has worked real well for us in terms of branding, while at the same time gives us an additional revenue stream,” Ward said.

Ward also said that before the program was launched, the USPS “did market research and focus groups, and [people were] very enthusiastic about the idea.”

But, Ward said they cautioned: ” 'You've got to do it right. You've got to do it tastefully.' “

As a result, the USPS has developed a policy for commercial advertising that excludes from consideration issue-oriented ads, ads that are “indecent or obscene,” ads “that depict violent or sexual material that would be harmful to minors” or ads for products and services that compete against post office offerings.

Ward declined to offer details of the rates the Postal Ad Network would charge but said the prices would be “more competitive” than those charged for comparable media like ad panels on the sides of buses.

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