The U.S. Postal Service will cut back on its brand and direct marketing initiatives this fall as part of a plan to tighten its ad budget for the coming fiscal year, officials acknowledged last week.
The cutbacks won't affect advertising plans for a new e-commerce initiative the postal service is launching Sept. 1 called ePriority, an online shipping service for online shoppers who use Priority Mail. The USPS will use a multidimensional advertising campaign — including direct, brand and Internet marketing — to spread the word about the service. No other details were available about ePriority.
Postal service officials have not decided which direct marketing programs will be cut.
“The majority of cuts are in mass media, but there are cuts across the board,” said Judy de Torok, manager of marketing communications at the USPS.
Postal officials would not say exactly how much the agency will reduce advertising for fiscal year 2000, but admitted that the entire advertising budget will be restructured to control costs.
“The budget will be substantially less than last year,” said spokesman Norm Scherstrom. The USPS spent $301 million on advertising in FY98 and about $250 million in FY99, which ends next month.
Scherstrom said the cutbacks are part of the changes Postmaster General William J. Henderson enacted this year to cut costs across the entire organization and reach its projected $200 million surplus in FY99.
“There are dollar figures out there that we've got to reach for, and instructions were given at every level in the organization — including the advertising department — to try to figure out how to contribute to making the surplus happen,” Scherstrom said.
Postal officials have been cutting back on spending since Henderson's announcement this spring, and the FY99 ad budget was affected. However, FY00 “is even tougher than the one that has gone by because we have costs in the pipeline that are going to increase, but we don't have a rate increase coming on,” Scherstrom said.
As part its streamlining program, USPS also said last week that it will consolidate all of its mass-consumer creative advertising at Foote, Cone & Belding, New York, beginning Oct. 1. Young & Rubicam, New York, which handled its corporate image, global delivery services and special services advertising, will turn over its creative assignments to FCB. Direct marketing work at Y&R subsidiary Wunderman Cato Johnson is expected to go to USPS' main direct marketing agency, DraftWorldwide, Chicago — which is now responsible for all direct marketing. Y&R, however, will continue to handle media buying, planning and ethnic advertising. Frankel & Co., Chicago, also will continue to create in-store materials and Internet ads.
“What we realized with our advertising cuts was that we had to be much more strategic in our advertising and how we spent our resources,” de Torok said, “and we decided that the best way to utilize our agencies and resources was to shift the assignments.”
This will move USPS advertising from a product-focused to a media-focused strategy.
“Sometimes, [because of] past relationships and different circumstances, we would have different agencies doing similar kind of work for different product groups,” de Torok said. For example, at one given time, direct marketing programs for different products and services could have been handled by both FCB and Draft. Now, Draft will handle all direct marketing for all products.
Direct marketing is a key part of the postal service's marketing strategy, and de Torok said the realignment will help it manage the DM programs more effectively.
“Now, one agency is going to be responsible for the overall management of all direct marketing pieces,” she said. “[In the past,] the recipient of a direct marketing piece for one product line vs. another may have been the same person. Now, we can be much more efficient in terms of who we are sending our mailings to.”
FCB, which currently handles assignments including Priority Mail and stamps, created the postal service's “Fly Like an Eagle” theme, which recently was recognized as one of the top five marketing songs in America. The theme will continue to be used in FY00. FCB also created an award-winning campaign for Priority Mail with the tag line “What's your priority?” and showed double-digit growth. These successes helped USPS officials pick FCB as its main agency.
All four agencies' reworked contracts are effective through September 2000, and the USPS plans to review contract again for FY2001. It will begin reviewing requests for proposals in January or February.