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Postal Alternatives and Rates

Postal Alternatives and Rates. An NTMC Webinar 9/15/10. Your moderator:. Keith Gilpin , Vice President Advertising Distribution & Operations, Orange County Register Welcome to our first NTMC webinar! All panelists audible, attendees muted. Attendees encouraged to submit typed questions.

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Postal Alternatives and Rates

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  1. Postal Alternatives and Rates An NTMC Webinar 9/15/10

  2. Your moderator: Keith Gilpin, Vice President Advertising Distribution & Operations, Orange County Register • Welcome to our first NTMC webinar! • All panelists audible, attendees muted. • Attendees encouraged to submit typed questions. • We will have Q&A for each panelist, but no more than ten minutes total for each segment. • Final Q&A following at end will be available for additional questions. Assisting today: Philip Brown, NTMC Executive Director and Program Organizer – will manage slides, the clock and field questions from attendees.

  3. Your panelists: • Jim Hart, President, Integrated Advertising Solutions • Duff Heyl, TMC Sales and Operations Manager, Arizona Republic                     • Ernie Chenault, TMC Manager, The Virginian-Pilot               • Perry Corsetti, Director of Customer Relations, Philadelphia Inquirer  • Paul Boyle, Senior Vice President / Public Policy, Newspaper Association of America

  4. Impact of postal rate increases on newspaper TMC programs Jim Hart, President, Integrated Advertising Solutions

  5. 2011 USPS Increase A 6-year trend…

  6. Standard Flats up to 3.3oz.

  7. Standard Flats up to 3.3oz. Proposed 2011 Increase

  8. Standard Flats Piece/Pound

  9. HD DDU 2005-2011

  10. CPI 2005-2010 +12.6% GDP 2005-2010 +17.7%

  11. Where you really need to be ……..…

  12. SAT DDU 2005-2011

  13. SAT DDU 2005-2011

  14. SAT DDU 2005-2011

  15. Compound Problem? Newspaper TMCs Our competition

  16. Jim Hart jim@jimhart.com 623-261-6709

  17. Arizona Republic 100% mail delivery… Duff Heyl, TMC Sales and Operations Manager, Arizona Republic    

  18. Arizona Republic 100% mail delivery… Product overview: • Branded as Buyer’s Edge • 8-page tab, 100% advertising • Zoned into 15 geographical zones • Not bagged

  19. Arizona Republic - 100% mail delivery… Product image:

  20. Arizona Republic 100% mail delivery… • What is your current mail footprint mail? • 1.3 million packages mailed each week to non subscribers via USPS Mail • What do you see as benefits for staying in the mail? • Proven Distribution Model • Proven Success • Consumers Expectations • Clients Needs • Local Competitive Landscape

  21. Arizona Republic 100% mail delivery… • What are your factors for staying in the mail? • Continued Success • Established Marketplace • Consumers & Clients Expectations • Targeting • Strong Brand/Distribution Model • High Density vs. Saturation Levels • Higher Levels of Saturation • Future Incentive Programs • Controlling Non-Postal Costs • Vendors/Printers • Leveraging Products to Offset Postage Increase • Footprint Changes

  22. Arizona Republic 100% mail delivery… • What concerns do you have for the future of USPS Mail Delivery? • Future of rate increases • Sustaining Future Rate Increases on our Clients • Controlling costs/margins • What will Advertisers/Consumers want in the future? • Will they prefer Mail vs. Alternate Delivery vs. what? • Ever changing competitive landscape • What will future competition look like?

  23. Arizona Republic 100% mail delivery… • Have actions or communication from the post office influenced your decision to stay in the mail?” • No one key past action/communication – but future actions are key. • Future Rate Increases. • The incentive plans (Current & Proposed). • Flat Sequencing System.

  24. Arizona Republic 100% mail delivery… • Are you considering a rate increase next year as the postal rates go up? • Considering a rate increase – but not impose across the board. • Strategically look at accounts/products to help offset any postage rate increase. • Ultimately will depend on the PRC’s decision in October. • How often are you evaluating staying in mail? • Constantly looking at our overall costs & margins.

  25. Arizona Republic 100% mail delivery… Duff Heyl Duff.Heyl@pni.com 602-444-4586

  26. The Virginian-Pilot Hybrid mail and alternate delivery … Ernie Chenault, TMC Manager, The Virginian-Pilot  

  27. The Virginian-Pilot Hybrid mail and alternate delivery … Product overview: “Hampton Roads Savings Weekly”  • Broadsheet product, printed on regular newsprint • Strong grocery content • Inside advertising is b/w classifieds.  • No editorial content. It can run a maximum of 10 pages, which happened a few times a few years ago before recruitment dropped off. • Mailed copies are delivered to the Post Office flat, while the alternate delivery copies are bagged. 

  28. The Virginian-Pilot Hybrid mail and alternate delivery … Product image:

  29. The Virginian-Pilot Hybrid mail and alternate delivery … •  How many pieces did you convert to carrier delivery?   • Approx 105,000 • What percentage was that of your total delivery?   • Approx 55% • When did you do it?   • Two stages: • the majority in March, 2010 • an additional 15,000 in May, 2010.

  30. The Virginian-Pilot Hybrid mail and alternate delivery …  • What prompted you to make this decision:   • Expense reduction • Some issues with timely postal delivery. • What has the customer commentary been like:   • Some smaller customers dropped out citing declining returns. • What has the consumer commentary been like:   • Many complaints with driveway delivery the first month; • Complaints have declined over time.

  31. The Virginian-Pilot Hybrid mail and alternate delivery … • How do you handle mixed delivery system complaints? • Because we don’t split zip codes between mail and alternate delivery, we can quickly pinpoint the distribution method for each household.   • Complaints from homes receiving the TMC via the USPS are handled internally. • Complaints from alternate delivery households are directed to circulation who forward them to alternate delivery vendor.   • We provide advertisers information on which geographies are mailed and which are alternate delivery.     

  32. The Virginian-Pilot Hybrid mail and alternate delivery … • What benefits have you seen from your mixed delivery system:  • Significant expense reduction offsetting higher postal rates. • More consistency on delivery dates. • What negatives have you seen from your mixed delivery system:  • Homeowners prefer to get unsolicited packages through the mail. • Handling consumer complaints are often time consuming and frustrating.

  33. The Virginian-Pilot Hybrid mail and alternate delivery … • Have you altered your pricing strategy as a result of the changes?  • No, we had an internal alternate delivery system several years ago and our pricing has historically been low from a CPM basis.   • We did raise rates when we moved to mail a few years ago, but not significantly enough where we felt our prices were too high for alternate delivery.

  34. The Virginian-Pilot Hybrid mail and alternate delivery … • What will make you consider moving more pieces from the mail to alternate delivery or from alternate delivery back to the mail: • We would consider returning to the mail if the two primary reasons we left were resolved: • Elevating costs and timely delivery • If not, we will likely continue to move pieces tactfully to alternate delivery over time.   • We will be careful to make sure we are still able to provide approx 90% overall penetration and minimize any concerns from advertisers.  

  35. The Virginian-Pilot Hybrid mail and alternate delivery … Ernie Chenault ernie.chenault@pilotonline.com 757-446-2030

  36. Philadelphia Newspapers100% alternate delivery…  Perry Corsetti, Director of Customer Relations, Philadelphia Inquirer  

  37. Philadelphia Newspapers100% alternate delivery…  Product overview: • TMC product called My Community Trend • Tab paper with editorial content  • Averages around 28 to 32 pages • 46 geographical zones • Bagged every week 

  38. Philadelphia Newspapers100% alternate delivery…  Product image (Bucks):

  39. Philadelphia Newspapers100% alternate delivery…  Product image (NJ):

  40. Philadelphia Newspapers 100% alternate delivery… 

  41. Philadelphia Newspapers100% alternate delivery…  • How many copies converted to carrier delivery? • 983,672 copies • Pennsylvania - 39 zones • New Jersey - 21 zones • When did you do it? • September 2008. • 18 different phases. • What prompted you to make this decision? • Strictly expense reduction.

  42. Philadelphia Newspapers100% alternate delivery…  • What has the customer commentary been like? • Some advertisers pulled out of the paper. • Other advertisers had concerns but were willing to give carrier delivery a chance. • What has the consumer commentary been like? • Complaints usually first few weeks of each phase. • Notification ads in paper. • More editorial content help eased concerns.   

  43. Philadelphia Newspapers 100% alternate delivery…  • How did you handle complaints with a carrier delivery system? • Circulation customer Service Department. • Complaints then forwarded to email list. • What benefits have you seen from your complete conversion from mail? • Significant expense reduction. • Increased insert business.     

  44. Philadelphia Newspapers 100% alternate delivery…  • What negatives have you seen from your complete conversion from mail? • Lost circulation. • Lost Advertising accounts = less revenue with some accounts. • Have you altered your pricing strategy as a result of the changes? • Yes for insert business. • No for ROP Advertising, with some exceptions. • How often will you evaluate your change to ADS? • Annually.                 

  45. Philadelphia Newspapers 100% alternate delivery…  Perry Corsetti pcorsetti@phillynews.com 215-854-5881

  46. NAA update: proposed postal rate increase and other dialogue with the U.S.P.S. Paul Boyle, Senior Vice President / Public Policy, Newspaper Association of America   

  47. Postal Alternatives and Rates Newspaper Target Marketing Coalition - Webinar September 15, 2010 Paul J. Boyle Senior Vice President / Public Policy

  48. (What We Will Cover) Postal Reform Law – Rate Setting Process Mailer / NAA Opposition Possible Outcomes in Rate Case Status of the Elimination of Saturday Delivery NAA Postal Activities in 2011

  49. Rate Setting ProcessPostal Accountability and Enhancement Act Rate Cap to Force Cost Discipline Rate Cap Tied to CPI Negative CPI in 2009; No Increase in 2010 + 0.58% CPI in 2010 Exception in Law for “Extraordinary or Exceptional Circumstances” USPS Says Volume Decline (36 billion pieces/ ’07-’09) = “Extraordinary Circumstances”

  50. Opposition in Precedent Setting Case • Affordable Mail Alliance (1,000 mailers across classes) • NAA Files Separate Comments • Downturn in Economy Not “Extraordinary or Exceptional” • Support Standard Volume Incentive Program (13-22% per piece rebate/ volume > 105 percent) • Support Legislative Remedies for USPS Financial Problems

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