Proposal for “Mail Works Guarantee” market test to begin mid-May, 2011
The postal service is looking to increase their slice of national advertising budgets by offering a Postage-Back guarantee. This Mail Works Guarantee program is expected to run for up to 2 years.
Only 16 companies will be included in the initial test, so the average mailers won’t be feeling the direct benefit any time soon. The requirements for consideration are pretty stringent; a company must spend a minimum of $250 Million annually on advertising (as identified by Advertising Age magazine) and mail cannot currently be a large part of their advertising mix: postage must be less than 0.5 percent of the current advertising budget.
Each of the test companies will be expected to mail between 500,000 and a million pieces. They will be offered a postage-back guarantee based on the effectiveness of mail advertisements using First-Class Mail and Standard Mail.
“Effectiveness” will be defined by a set of metrics, based on the goals of the campaign. Both the mailer and postal service will collaborate on the goals and expected outcomes. For example,
- A retail company’s Direct Mail offer could be designed to increase store traffic
- The e-commerce company’s offer could be designed to drive Web traffic
- A product goods company’s offer could be designed to promote increasing sales of a specific product.
If the Direct Mail campaign falls below the expectations of the metrics established in the plan, (verified of course by a Postal Service representative) the USPS will credit the postage paid for the market test, up to $250,000. The refund will not include any production and printing costs.
Currently, the USPS captures about 3% of the $90 Billion spent on media advertising by the top advertisers in America. The postal service is looking at a huge revenue potential if they can get more of these companies to open up a larger portion of their budget to direct mail.
What will this mean for the average mailer? Not much in the near term, but….
If all works out the way the post office is hoping, they will prove to the skeptics that direct mail works.
They will collect specific data for using mail to advertise both on-line and off-line products and services. This should provide us with some facts and figures that can be used in planning the campaigns for the other companies who don’t happen to be part of the who’s who of advertisers.
Maybe this will provide the boost needed to rejuvenate the mail volumes and stem the tide of negative cash flow at the USPS. That could mean that we won’t be seeing as many increases in postage which is what we really hope for.
After all, so many of us already know, direct mail lets us target our advertising budget directly into the mail boxes of the people most likely to want our products and services.