Broker Roundtable: How Much Will Mailers Be Able to Take Advantage of Unchanged Postage Rates?

By Nov 04, 2010

This week’s question: Now that the Postal Regulatory Commission has nullified the upcoming postal rate hikes, how much will mailers be able to take advantage of the situation?

Our current panel features: Tracy Egan of Media Horizons Inc.; Jeremy Johnson of Specialists Marketing Services; Wendy McLaughlin of DSA Direct; Al Schonwald of Chilcutt Direct Marketing and Paul Theriot of Alesco Data Group. (Would you like to be considered to be a member of our roundtable? Contact Larry Riggs at larry.riggs@penton.com.)

Tracy Egan, media director, Media Horizons Inc.:
Mailers may be getting a short reprieve from January to possibly May when another rate case is sure to be presented, but it is certain that postage will go up again. Over the last few years mailers have seen so many rate increases that it has become a regular job function to juggle budgets to maximize the number of pieces in the mail. Unfortunately for most, it is not as easy as just shifting dollars from month to month to get ahead of the impending doom.

There are so many cost factors affecting mail plans including postage, paper, print and production, list costs, modeling fees and merge/purge that mailers are constantly looking for new ways to fulfill acquisition and retention goals. Mailers need to be flexible and willing to test new formats and media channels to be one step ahead of the curve. They need to lean on their agency partners that can draw on the experience of multiple clients to bring them through turbulent times. Whether through formal production recommendations, analytics, or spreading budget dollars across multiple media platforms agencies are equipped to offer expert strategies within each of these disciplines. In this day and age taking advantage of the situation is having a solid solution waiting in the wings

Jeremy Johnson, vice president of brokerage at Specialists Marketing Services Inc.:
There was a collective sigh of relief when the news was announced a couple of weeks ago. However, we’re not quite out of the woods yet as there is an appeal taking place.

We saw some mailers move up their mail dates when the threat of an increase was looming. Now, mailers can breathe and stick with their budgeted mail volumes. Some mailers were anticipating an increase and factored this into their 2011 budgets. Now, assuming the appeal is not successful, mailers can put that money back into their pockets and look to allocate it to more mail or other marketing efforts. In fact, we have already seen some mailers increase their anticipated volumes for 2011.

Wendy McLaughlin, vice president, list brokerage, DSA Direct:
Mailers are thrilled the Postal Regulatory Commission has put the postal hike on hold for now, but they are still quite cautious in their mailing plans. We are not seeing cutbacks for the upcoming spring mailings, but no huge growth plans either. Response rates and average orders need to strengthen in order for a greater depth of prospecting to occur. Thus far, Holiday mailings for our clients are fairly strong, so we are optimistic.

Al Schonwald, vice president, Chilcutt Direct Marketing:
The decision to deny the postal increase is not likely to increase standard mail volume in 2011. Its impact is more likely to prevent mailers from curtailing volume if the postal increase had been approved.

Paul Theriot, president, Alesco Data Group:

If anything, I think mailers have simply dodged a bullet. The U.S. Postal Service is appealing the Postal Regulatory Commission’s ruling which, by the way, left the door open for the USPS to file another exigent rate increase request using “different arguments” that would allow an increase within the framework of existing legislation.

Sooner rather than later there will be an increase in postage. Inflation is running between 1% and 2% this year so at a minimum you can expect the USPS to file an inflation-based rate increase next year. However, it is more likely the USPS will file an additional exigent rate request, if necessary, once it has a ruling on its current appeal.

Had the rate hike gone through, we probably would have seen a compression of mail calendars from most of the larger mailers, particularly financial, as they rushed to get mail out the door before the rate increase took effect.