Do-Not-Mail?

For a variety of reasons -- email, online billing/payment, and a slowing economy -- the US Postal Service is anticipating a billion dollar deficit this year.

"We cannot afford, literally or figuratively, to begin [the year] . . . more than $1 billion in the red," Postmaster General John E. Potter testified before a Senate subcommittee yesterday. "We would never be able to dig out of that hole."

The one area of growth for the USPS is what they call "standard mail" (recipients are more likely to call it "junk mail" or something less printable).

... standard mail -- advertising circulars, catalogues, fundraising appeals -- has grown to 104 billion pieces in 2007 from 101 billion in 2005.

I'm surprised it's that little, actually. It only works out to about three pieces of mail per day per household -- not all that much really (I suspect I get more than that, but who has time to count before dumping it in the garbage?)

In any case, this mail is very profitable to deliver. Unfortunately, to add to the postal service's woes, eighteen states are considering "do-not-mail" lists, patterned on the popular "do-not-call".

At yesterday's hearing before the Senate subcommittee, Potter talked about the Postal Service's lobbying efforts against "do not mail."

"We're working very hard to inform people about the role that mail plays in the economy, as an employer of millions of Americans," said Potter, adding that it is unclear whether states have the authority to create laws that affect the Postal Service. "Fortunately, no legislation has passed."

There may be some traction to this. Most consumers hate junk mail (though not, I suspect, anywhere nearly as much as they hate telemarketing calls). Marketers should keep an eye on the issue, since the effects on all of us would be huge.

Retailers changing ad strategies

This Reuters article discusses the changing strategies of retailers, in response to the fragmentation of media.

The "new" strategies mentioned didn't strike me as innovative.

For consumers, it means they can expect more direct mail, more targeted e-mail pitching products based on what Web pages they have visited, and more in-store advertising.

You wouldn't kid me, would you? Certainly I'm getting a lot more direct mail, especially catalogs.

Gap Inc., the largest U.S. clothing retailer, did away with television advertising for its namesake brand during the crucial holiday shopping season in 2005 -- a risky move that left some on Wall Street scratching their heads.

Gap instead sent out a greater number of thin catalogs -- known as "magalogs" because they are about the size of a magazine. Retailers are finding that those magalogs can be highly effective because they can showcase more clothes and literally stay in the hands of potential shoppers in a way that no 30-second TV spot can match.

Even so, Gap's sales were down sharply in December, typically the biggest shopping month of the year.

Sounds like a lot of their targeted customers sort their mail like I do. I have to pass my garbage can on the way from the mailbox to my door, so the junk mail never even gets inside.

It's going to be tough finding the mix of media that works, and there will be a lot of trial and error along the way. All the more reason to invest in analytics packages that tell you which media/promo types are working, and under what circumstances.

Direct mail: declining effectiveness?

The Economist reports that studies indicate a drop in direct mail effectiveness:

The response rate from some campaigns has fallen to just 1.4%, according to America's Direct Marketing Association (DMA). In previous years it was well above 2%. When it comes to responding to “direct-order” mail shots (signing up to an offer, as opposed to merely expressing an interest), the rate has fallen even more dramatically, to 0.7% from 3.5% in 2004.

(Note: link may require subscription).

The report says (quoting AdAge) that the drop may be due to mailbox clutter, "leading many consumers to discard the blizzard of solicitations they receive." While I can certainly testify to having a cluttered mailbox, I wonder if the clutter is that much worse than the recent past.