Moody’s Projects the Future of Transaction and Advertising Mail

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In assigning a rating on new debt issued by Harland Clarke to cover the purchase of Valassis, Moody’s made an assessment of a business that is primarily dependent on check printing and mail advertising.   Its comments suggests that Wall Street sees both the transaction and advertising mail businesses as profitable but in a secular decline.  More importantly for holders of bonds due in 2021, Moody’s expects the secular decline in both checks and mail advertising to accelerate towards the end of the decade. Harland Clarke’s B2 Corporate Family Rating reflects Moody’s ongoing concern that the combined business model is subject to secular decline in both its check printing and Valassis’ [...] Read more »

Understanding Why Service Quality Affects The Future of the Postal Service

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The New York Times yesterday reported on the problems that mailers are having with service the Postal Service provides to business mailers using First, Standard and Periodical Mail offerings.   The article notes that these problems have existed for some time and mailers are finally realizing that changes in the network that the Postal Service is now implementing will force them to change decisions where they print, prepare, and deposit mail with the Postal Service and more troubling for the future of the Postal Service whether they mail at all. The New York Times story included the following excerpt from the post “Is Poor Service Causing the USPS to lose Standard Mail [...] Read more »

Mail’s Higher Response Rates Make it Cost Competive with Internet Advertising

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The Direct Marketing Association has just published its 2012 Response Rate Trends Report that indicates that direct mail is as cost effective as web based direct marketing.  Cost per order or lead for acquisition campaigns were roughly equivalent for direct mail ($51.40), post card ($54.10), email ($55.24), and paid search ($52.58). While this result may sound counter-intuitive given the minuscule cost per impression for web-delivered direct marketing as compared to direct mail, mail is competitive because of the mail’s higher costs results in as much as 40 times more sales per impression than web delivered ads.  For example, catalogs are 4.2 times more effective than paid search at generating a sale from new customers and [...] Read more »

Is Poor Service Causing the USPS to lose Standard Mail Customers?

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For the First six months of the Postal Service’s fiscal year Standard Mail volume revenue is down 5.1% on a 6.2% in volume. While it is easy to blame the decline on a shift in advertising expenditures from away from mail advertising, the simultaneous release of Standard mail service performance data raises a different question. Is the postal Service losing customers because its print communications delivery product is not good enough to allow advertisers to coordinate their print advertising campaigns with advertising using other modes? The following table provides the percentage of Standard Mail Regular that meets the Postal Service’s service commitment for both destination entry and end-to-end. In five [...] Read more »

S.1789 Is Unlikely To Save Overnight First Class Mail As We Know It

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Section 201 of S.1789, The 21st Century Postal Reform Act, purports to save overnight delivery.  However, a closer look at the language of this section of the bill shows that an overnight delivery commitment will truly be available to fewer customers than most members of the Senate think.  In particular, First Class single-piece mailers will see little benefit from the delivery standard provisions in S.1789 that were designed to ensure overnight service as they are unlikely to tender their mail to the Postal Service before the critical entry time required to ensure delivery overnight. The Geographic Reach of Overnight Service is Now Significantly Less The current S.1789 limits next day service to [...] Read more »

USPS 1st Quarter Volumes and Revenues Better than Forecast

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With its filing of its 1st Quarter 2012 10-Q, the Postal Service reported another quarter of substantial losses.   While the report clearly indicated that the Postal Service’s financial position is unsustainable, the decline in volume and revenue is substantially less than projected in the Postal Service’s 2012 Integrated Financial Plan.  In the First quarter of fiscal year of 2012, the Postal Service has handled nearly 2 billion more pieces and generated $745 million more revenue than the forecast that the the Postal Service filed on January 20, 2012 with the Postal Regulatory Commission that the Postal Service more than likely used in its 2012 Integrated Financial Plan. Comparison of 1st Quarter 2012 Volume [...] Read more »

Why Mail Matters: Santorum’s Rise Came Too Late for Direct Mail Attacks

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Former Pennsylvania Senator Rick Santorum experienced a unique bit of luck in his last minute rise in the polls. It came too late for opponents to direct a direct mail campaign against him like the one that devastated former Speaker Newt Gingrich and to a lesser extent Congressman Ron Paul. The possibility that Rick Santorum’s poll numbers would rise in Iowa was talked about nearly as a joke for weeks after nearly every other Republican presidential hopeful had his or her place on top of the leaderboard. Even as late as the Wednesday before tomorrow’s Iowa’s Caucus no one had any hard evidence that a Santorum surge was coming. Public [...] Read more »

The Incredible Shrinking Postal Serivce

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In its letter to Senators Joseph Lieberman and Susan Collins. the GAO illustrated the seriousness of the Postal Service’s financial problems and the need for a solution that will make most stakeholders uncomfortable in a single chart.   The chart is even more disturbing when it is compared to similar volume projections made in the Postal Service’s Strategic Transformation Plan: 2005-2006 and the Postal Service’s Action - published September, 2005 Ensuring a Viable Postal Service for America: An Action Plan For The Future -  published March, 2010 In both documents, the Postal Service presented multiple forecasts for the future of postal volumes.   In each document, the most pessimistic forecast was the most accurate.  [...] Read more »

Rate Increase Coming in 2011

In a letter to the Postal Regulatory Commission, the Postal Service asked for clarification regarding the total increase in rates under the cap.   The Postal Service stated that it wanted the clarification so that it could better to do its financial planning for Fiscal Year 2011.  However, mailers should clearly understand that rates will be rising in calendar year 2011. Rate increases will be relatively modest.   Rate increases will be rising on average around 2% and most likely slightly below that figure.   The price of  a single piece stamp will likely increase by a penny to 45 cents. (2.3%)   Bulk First Class mail will rise slightly less [...] Read more »

USPS: February Financial Results, Still Not Good Enough

In February, the Postal Service continued to show financial results that were significantly better than plan and slightly better than last year.   Its results reflect a more robust advertising environment that resulted in the first month of growth in Standard mail volume in revenue this year and a smaller decline in periodical revenue than volume that most likely indicated that periodicals in February had more advertising pages per issue than a year earlier. The results for February continue to illustrate the risks going forward for the Postal Service.  The continuation of high single digit declines in First Class mail at a time that advertising is flat if not growing, suggests [...] Read more »