Yesterday, Senator Tom Coburn announced he will introduce an amendment that would allow states to pass laws to allow mail recipients to pay to not receive saturation advertising. The amendment would allow states to set “do not mail” lists that consumers could pay to get on. If a consumer pays the fee, mail that has non-standard addresses, which includes most, if not all, saturation advertising could not be delivered.
“Do Not Mail” legislation has been proposed in many states and cities but has never passed in any jurisdiction. Senator Tom Coburn’s amendment makes little sense given the Postal Service’s financial problems, the availability of alternative delivery firms that can handle the saturation advertising most likely to be affected, and the impact on both small businesses and political campaigns and elected officials. This post illustrates a number of reasons why the amendment will likely fail in the Senate as well.
The Amendment Affects One of the Postal Service’s Most Profitable Products.
Senator Coburn’s amendment would affect two of the Postal Service’s most profitable products, Standard Saturation and High Density Letters, and Standard Saturation and High Density Flats and Parcels. Both products have a mark-up over attributable costs of over 100%, and generate more than $1.4 billion in profits annually.
Setting “Do Not Mail” Fees Would Not Be Easy.
Senator Coburn’s amendment requires the Postal Regulatory Commission to develop a fee for not receiving mail. The Commission would need to develop a fee that would apply nationally for not receiving a product when the number of pieces that a particular recipient be able to remove from their mailbox is unknown. The problem is particularly difficult because the amount of mail that use non-standard addresses can vary from community to community. The Household Diary study indicates that the amount of saturation advertisements may average more than 170 pieces per year in neighborhoods that have average household incomes over 100.000 a year, and less than 80 in neighborhoods with an average household income under 30,000 per year.
If one assumes that the fee would equal 150% of the current contribution of this mail to take account of the dis-economies of scale generated by reducing mail volume, the fee could range from $9.38 and $20.64 annually. (This was calculated using data from the 2010 Household Diary Study, the 2010 Annual Compliance Report and the Statistical Summary Report for the 3rd quarter of 2011.)
The Amendment Would Create Logistical Problems.
Senator Coburn creates a logistical nightmare in his proposal, as well. He proposes that mail recipients would buy a sticker that they would put on their mail box. As the fee would have to be paid annually, new stickers would need to be issued annually in a manner similar to registration stickers on automobiles. Presumably stickers would have to have a year on them and counterfeiting the stickers would have to be difficult.
Even with different stickers for each year, other problems exist due to the fact that households move and many addresses have multiple recipients. If a person moves, the “sticker” should go with them to the new address. However, it is likely that recipients will forget to take their mailbox sticker in the rush of moving. In residences that has multiple roommates, how does the bill deal with the situation when one resident wants the saturation advertising and another does not?
For the Postal Service, non-standard addressed mail may be sorted with standard addressed mail before a carrier is given the mail to be delivered. When this happens, the carrier would have to look at the address of every piece and remove the pieces for addresses that have a “do not mail” sticker for return to the station. Alternatively, the Postal Service would have to return to requiring standard addresses on saturation advertising so that mail can be sorted automatically. This would put the onus on the mailer to keep on top of the “do not mail” list” so that that the addresses printed on the mail only includes addresses of residences that want saturation advertising.
The Postal Service would have a second option for handling mail with non-standard addresses. It could deliver this mail with a separate workforce. If the workforce were Postal employees, they would have to have compensation tied to the revenue that saturation advertising generates. This would likely be between one-third and one-half what letter carriers currently earn. Alternatively, the Postal Service could deliver mail with non-standard addresses using contractors.
Senator Coburn’s Amendment Creates a Protected Service for Alternative Delivery.
As this fee is relatively small, one can expect that a significant share of addresses in middle and upper income neighborhoods will pay the fee rather than get the mail. This means that the fee will most likely be paid in neighborhoods where recipients are the most attractive to advertisers. This does not mean that the saturation advertising in upper-income neighborhoods will not be delivered. Instead the advertisements would be delivered by alternative-delivery carriers that would not have the same restrictions regarding delivering saturation advertisements. Alternative-delivery carriers currently effectively compete with the Postal Service in most metropolitan areas and leave the advertisements on the door knob, front step, or lawn of houses in the neighborhoods they serve. This restriction would create the equivalent of another “non-postal” product that the Postal Service, by law, could not deliver. Many of the people who pay the fee would find that the saturation advertising would now be deposited on their doorstep instead of their mail box.
Senator Coburn’s Amendment Reduces the Value of Mail.
The amendment would brand mail as a nuisance. Creating a fee to not receive something clearly labels mail as “junk.” The fee is almost designed to remind those paying of blackmail. “You will pay the fee, or the Postal Service will become a nuisance in your life”
Senator Coburn’s Amendment Adversely Affects Small and Local Businesses
Saturation advertising using non-standard addresses is designed to serve advertisers that are trying to reach customers in a specific local geographic market. Much of this advertising is delivered in shared mail pieces produces by companies like Val-pak and Valises and in shoppers guides produced by local printers. These products serve businesses that know their customers want a local merchant. Even the pizza advertisements for national chains actually advertise the pizzas produced by local franchisees.
For these advertisers, saturation advertising is often the only form of advertising that works. Even local coupon sites like Group On and Living Social cannot possibly meet the needs of the thousands of small businesses that now use mail to advertise weekly specials that bring in new customers or generate additional sales from old ones. It seems strange that Senator Coburn would propose an amendment that would add another barrier to generating sales in an economy where new customers are difficult to find.
Senator Coburn’s Amendment Adversely Affects Politicians at All Levels.
Most candidates for office run in districts or jurisdictions that cover a small part of a media market. For these candidates, there is no advertising media other than saturation mail that can cost-effectively reach voters in the month before a general election.
Without saturation advertising that hits all addresses, candidates would have little choice but either recruit an army of volunteers to go door-to-door to hand out literature or pay an alternative-delivery carrier to handle the delivery of political advertising to the voter’s doorstep. Finding volunteers to go door to door to deliver campaign literature is difficult. It is particularly difficult for races for the state legislature, town council or district judge. (I know, because I did it back in the 1970′s) Using alternative delivery has significant drawbacks due to both the expense and the fact that saturation advertising delivered through the mail is more likely to be looked at than advertising dropped on a doorstep, or hung on a door knob.
The amendment will also affect newsletters from elected officials to their constituents. For example, a member of Congress can now send a letter to all addresses in his or her district using non-standard addresses at a very low cost. If a “do not mail” list was instituted, newsletters would only go those addresses that want saturation advertising, unless the member of Congress used a standard addresses on the newsletter to ensure that all voters received the mailing. This would increase the cost of the mailing by adding the costs associated with ensuring that the addresses are accurate, printing the addresses, and sorting the mail in the proper sequence for the Postal Service.
