Postal Pieces: Service Performance, Household Diary, Value of the Mail, Promotion Reviews
In August, the USPS held one of its quarterly Mailers Technical Advisory Council (MTAC) meetings with the mailing industry and posted a number of reports of interest to mailers and free papers that use the Postal Service for distribution. This column is a summary of some of the news of interest, MTAC announcements, and postings in the last month.

SERVICE PERFORMANCE REPORT

One of the regulatory requirements covering the Postal Service under current law is the requirement to file periodic service performance reports. These reports show whether or not the Postal Service is meeting its service performance targets for individual classes in mail products. The filing of the quarterly service reports can be found on the Postal Service website as well as its required filing with the Postal Regulatory Commission (PRC).

For another quarter, the Postal Service has failed to meet its service performance standards in many categories of mail including first class, much of standard, and for periodicals and newspapers. This report contained, for the first time, a service performance report on the standard mail product known as EDDM Retail. Previously the EDDM Retail product was included with the aggregate figures for other types of Standard Mail. For the third quarter of the year, the EDDM Retail service performance report showed that it made its service performance standards for destination entry, two-day standard, delivering 79.02% of the time.

The Standard Mail quarterly report showed, for most postal products, a deterioration of Standard Mail performance over the same period of time last year. But for High Density/saturation flats and parcels, the USPS met its two-day performance standard of 91%.

Industry complaints, and particularly concerns coming from mailers and businesses in more rural areas, about declining service has fueled Congressional criticism of the Postal Services' performance and contributed to the current freeze on the additional closings of processing facilities. The freeze put a hold on this year's planned reductions in facilities that were part of the 2015 network reduction plans of the USPS.

HOUSEHOLD DIARY STUDY

Once again the Postal Service published its annual household diary study showing consumer use and response to the mail. Based on a detailed survey of 5,200 households and mail use, the study is designed to examine mail volumes, types of mail used, and business and consumer response to the mail.

The USPS delivers 45% of the world's mail. In line with past trends, the volume of pieces delivered by the USPS declined in 2014 with a 1.8% reduction from 2013. The Postal Service delivered a total of 155.4 billion pieces of mail.

As it has in the past, the Postal Service and household diary study points out that the Postal Service depends on users of the mail and postage payers to support its network and universal service obligation. Although the number of pieces has declined each year, the Postal Service continues to expand the number of delivery points it must serve.

As in past years, the number of pieces of First Class correspondence and transactional mail declined. This is in keeping with the electronic diversion of personal communications in transaction mail. In 2004 only 25% of all consumers would pay bills electronically. That number has now increased to 63%.

Advertising mail continues to represent a growing share of the mail - 62% of all household mail was advertising.

From the standpoint of American business, the commitment to direct mail as an advertising medium has remained relatively constant. In spite of the explosion of Internet and electronic media, direct mail continues to hold its own as an important piece of any advertisers' mail mix with advertisers spending, year over year, a fairly constant share of 10% - 12% of their advertising budget on advertising mail.

Although direct mail spending on advertising grew modestly by 5.4%, Internet spending continues to be the greatest area of growth, with an increase of over 15%.

The Household Diaries study shows that advertising mail continues to attract the interest and response of consumers. Fifty-seven percent of responders stated that they read advertising mail. A smaller number scanned or paid some attention to the mail. Only 9% of responders stated that they did not read advertising mail. Read rates seem to decline slightly as households report greater quantities of advertising mail received.

A "BRAINY" LOOK AT THE VALUE OF THE MAIL

In recent weeks the Office of Inspector General (OIG) has released a neuromarketing study done under contract with Temple University that evaluated how consumers respond alternatively to hardcopy mail versus digital advertising. The study evaluated the participants' responses to questionnaires, but also measured and tracked eye movement, core biometrics (through sensors placed on fingertips, heart rate, perspiration, motion and breathing) with brain scans revealing how different areas of the brain responded during a specific task or experience.

The participants were exposed to, or interacted with, 40 different physical or digital advertisements. Later the participants were tested on their memory of ad content and their stated preferences and perceived value of the advertised products.

The highlights of the study suggest a more positive, stronger, and lasting response, including a greater desire to respond or "buy" to advertisements delivered in a physical mail piece. Some of these responses or desires were not perceived or acknowledged on a conscious level. Study participants often gave a similar response in questionnaires to the perceived value and interest of digital and physical ad content. But when physiological and neurological response were measured with an MRI to determine areas of the brain that were engaged in responding, it appeared that physical ads generated a stronger emotional response and a longer retention time.

It is anticipated that this study, and further studies that will consider age and demographic impacts of different types of media, will be used for the Postal Service and industry to explore optimal use and combinations of digital and physical media.

2015 PROMOTION REVIEW AND 2016 PREVIEWS

Vice President of New Products and Innovation for the USPS, Gary Reblin, discussed 2015 promotions and potential 2016 promotions at the August MTAC meeting.

2016 promotions are currently under review. The Postal Service anticipates filing its proposed promotions for approval in early fall. The 2016 promotions are likely to be similar to, and build upon, promotions like those in place in 2015 and continue to support the integration of mail with technology.

It is anticipated that the 2016 promotion calendar will include promotions for First Class mail that are similar to what was offered in 2015. The Postal Service plans to offer two emerging technology proposals that would be available for Standard Mail. With an emerging technology program for augmented reality, NFC, and advances in interactive pieces, and a separate emerging technology promotion that would be available for tactical innovations in mail pieces, the Postal Service is also planning to offer standard mailers a mobile engagement/buy-it-now promotion.

Reblin also discussed a promotion concept that might consider an incentive for mail service providers that rewarded frequency and volume or bringing new business to the Postal Service. In concept, this appears similar to the previous incentives offered for growth of saturation and High Density mail programs. SMC has long advocated incentives or promotions that would help encourage mailers to expand their geographic footprint, or add frequency, via the Postal Service rewarding new business with a discount or incentive.

Time will tell if the 2016 promotion calendar or other incentives propose any rewards for saturation program mailers that promote and bring advertisers to the mail through their shared mail programs.


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