Incentivising DM by price is not the answer

The US Postal Service is on its uppers. With a pension debt that dwarves that of our own Royal Mail’s, it has taken to introducing a series of some might say drastic measures designed to generate income.

Russell Parsons

The latest attempt to make a dent in its $5.2bn losses could be confidently filed in the drastic folder. The USPS has offered direct mailer Valassis Communications the kind of deep discounts that would usually be reserved for a favourite child.

The deal, which the USPS hopes will rake in £15m over three-years, is about boosting DM volume. Valassis must increase the amount of direct mail by a million over the next 12 months before seeing any hint of a discount.

The deal has caused outrage in the States. From Valassis’ rivals, who claim it has been handed an unfair advantage, and from the newspaper industry trade body, which argues the “sweetheart deal” will rob its members of millions in revenue from inserts.

By making it about volume, the USPS also risks damaging the already flagging health of direct mail.

Incentivising by the amount produced is a rather crude way of encouraging take-up. Although discounts might have an instant impact on the amount of mail advertisers send in the short-term, in isolation all it will serve to achieve is resentment among consumers disgruntled about receiving a piece of mail that says nothing to them about their lives.

The venerable organisation should be taking its lead from its UK counterpart, the Royal Mail. Although no stranger to offering discounts, the UK postal operator has augmented its direct marketing services to offer data, creativity and media services in recent months.

The aim Is to offer marketers the tools to produce relevant, targeted and accountable communication campaigns not, as the UPSS deep discounting scheme may result in doing, producing ill-thought out carpet bombing.

Price should be a key component of any media owner’s offer. It should not, however, dominate it. In the case of direct mail, a channel suffering from the unhelpful “junk” tag both in the States and here, key stakeholders need to be presenting marketers with a package of compelling reasons to consider the medium. Otherwise, short-term gain will come at the expense of long-term prosperity for mail.

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