How the USPS Financial Problems Look from Overseas and the Advertising Biz

The challenges facing the Postal Service is a global story.  A recent blog post on The Safe Shop’s blog leaves the impression that the Postal Service’s business strategy will make mail a less attractive option than it now is compared to either courier or electronic delivery.    While this blog will not likely have much impact on decisionmaking of U.S. mailers, the tone of the post suggests that the cost-cutting focused strategy has left an impression that printed-delivery of communications by the Postal Service will be less effective in the future.  It is no wonder that mailers are actively expanding their use of alternative print-delivery networks and accelerating their switch to electronic delivery.

The Postal Service is in the midst of hiring an advertising agency to improve its corporate image.    Whoever wins that contract faces a more difficult challenge than existed over a year ago when the tender was first issued.   Over this period, the Postal Service has issued a plan for profitability that lowers service quality of its flagship product, First Class Mail, and  the audience for that campaign has heard little but bad news about Postal Service finances and the ability of the Postal Service to meet their print communications needs in the future.

Three quotes from a recent Adweek story illustrate the problem

“I don’t think advertising can do a whole lot at this point,” said Russel Wohlwerth of External View Consulting Group. “They’ve got so many issues, [the review] is almost akin to rearranging the deck chairs on the Titanic.” Also, said Avi Dan of Avidan Strategies, “It’s not clear what the post office would look like at the end of the process.”

That’s not to say that marketing won’t play a key role once the macro issues are resolved. Indeed, the CEO of a shop chasing the account relishes the opportunity to help reshape the business. What has been a big, relatively secure, multiyear account is now just an interesting strategic challenge.

On the brand strategy front, the USPS faces the tall task of redefining its relevance in the digital age, said Mark Kaminsky of brand consultancy SS+K. He rated the challenge as a seven on a scale of one to 10.

Text of Blog Post from the Safe Shop Blog

USPS to End Next-Day Delivery of Letters

US Postal Service announced that it will soon drop any promises of next-day delivery for first-class letters in an effort to avoid bankruptcy in 2012. The forty per cent of the first-class mail that currently reaches people within a day will now arrive in two, or even three.

“It’s going to make the customer-service experience more difficult for people who want to send mail. It’s going to take longer. For an item that definitively needs to be there next-day, things are going to shift to FedEx or UPS,” said Jim Corridore, an analyst at S&P Capital IQ, for the International Business Times.

The cash-strapped U.S. Postal Service is looking to find $20 billion in annual savings by 2015. It sees reducing its network of post offices and processing plants as key to adjusting as consumers increasingly pay bills online and correspond by email.

“The U.S. Postal Service must reduce its operating costs by $20 billion by 2015 in order to return to profitability. The proposed changes to service standards will allow for significant consolidation of the postal network in terms of facilities, processing equipment, vehicles and employee workforce and will generate projected net annual savings of approximately $2.1 billion,” said David Williams, USPS vice president for network operations.

Besides ending Saturday delivery, the bill would eliminate door-to-door delivery for an estimated 35 million customers. Those that do not have a curbside mail box or a P.O. Box would start receiving mail at a cluster box located at street corners. Moreover, two hundred and fifty-two local post offices are being considered for elimination and 80,000 U.S. Postal Service jobs will be lost.




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