DOCKET SECTION
POSTAL RATE COMMISSION i]);~;;“,
WASHINGTON, DC 20268-0001
Docket No. R97-1
POSTAL RATE AND FEE CHANGES
RESPONSEOF
AISOP WITNESS GODFRED OTUTEYE
TO INTERROGATORIES OF
NEWSPAPERASSOCIATION OF AMERICA
(NAA/AISOP-TI-l-8)
Communicationswith respectto this documentmay be sentto:
Donna E. Hanbery, Esq.
Hanbery,Neumeyer& Camey, P.A.
3725 Multifoods Tower
Minneapolis,MN 55402
Counselfor
ALLIANCE OF INDEPENDENT STORE
OWNERS AND PROFESSIONALS
February 5, 1998
AISOP WITNESS OTUTEYE RESPONSESTO NAA
NAA/AISOP-Tl-1.
For the most recent fiscal year, please provide the following data on the
StandardA mailingsofyour company.(Ifprecise data are not available,estimatescan be provided.)
a.
What was the total volume of StandardA mail for the most recent fiscal year?
b.
What percentageof your volumeswere sharedmail packagesversussolo mail advertising?
C.
What percentageof your sharedmail packagesqualified for the letter rate?
d.
What was the averageweight of your sharedmail packages?
e.
What percentageof your sharedmail packageswere dropshippedto:
i.
ii.
...
111.
the destinationBMC,
the destination SCF, and
the destination deliveryunit.
E
What percentageof your sharedmail packageswere entered at the saturationrate?
g.
What percentageof your sharedmail packageswere enteredat the high density rate?
h.
What percentageof your total mailingswere enteredat the pound rate’?
i.
What percentageof your total mailings,if any, qualified for StandardA Non-Profit rates?
i
What percentageof your total mailingswere enteredas StandardA Regular (non-ECR) mail?
a.
90,626,404
b.
Approximately 97.5% sharedmail, 2.5% solo
C.
All of our sharedmail packagesare letter size but mail enteredat the pound rate does not
qualify for the letter rate. Seeanswerto lh.
d.
.1757 pounds
AISOP WITNESS OTUTEYE RESPONSESTO NAA
e.
i.
ii.
...
111.
less than 1%
approximately 30%
less than 1%
f.
Approximately 80%
g.
Approximately 15%
h.
Approximately 20.3%
i.
None
j.
Less than 1%
2
AISOP WITNESS OTUTEYE RESPONSESTO NAA
NAA/AISOP-Tl-2. Pleaselist Money Mailers’ principal competitors in its sharedmail coupon
business, Please indicate which of these competitors rely on the Postal %-vice to deliver their
product.
Our principal competitors include:
1.
2.
3.
4.
5.
6.
Daily newspaperswith classifiedads and free-standinginserts.
Weekly, community, and specialty newspaperswith display ads, classified ads, and t?eestanding inserts.
Shoppersand flyers delivereddoor-to-door.
National and regional direct mail advertising programs including, Val-Pak, SuperCoups,
United Coupon, and Advo. These companiesrely on the Postal Service to deliver their
product.
Yellow Pagesand directories.
Coupon magazinesand coupon booklets publishedby a variety of small, local companies.
Some of these may rely on the Postal Serviceto deliver their product.
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AISOP WITNESS OTUTEYE RESPONSESTO NAA
NAA/AISOP-Tl-3. Pleaselist Money Mailers’ principal competitors in its solo mail advertising
services. Please indicate which of these competitors rely on the Postal Se:rviceto deliver their
advertising product.
Our principal competitors in the delivery of solo mail advertising services are generally local
companies with a direct mail or letter shop business. Val Pak also operatesa solo mail business,
Companies offering solo mail advertising services rely on the Postal Service to deliver their
advertising product.
AISOP WITNESS OTUTEYE RESPONSESTO NAA
NAA/AISOP-TI-4. Pleaselist Money Mailers’ principal competitorsin its programtargeted to new
movers. Pleaseindicate which of thesecompetitorsrely on the Postal Serviceto delivery[sic] their
product.
The principalcompetitorsof our new mover program are WelcomeWagon, Getting To Know You,
and regional telephone companies. Most of thesebusinessesdo not rely on the Postal Serviceto
deliver their product.
AISOP WITNESS OTUTEYE RESPONSESTO NAA
NAA/AISOP-Tl-5. Pleasereferto your testimonyat page8-9. Did factors other than postal rates,
such as increasesin the prices of paper, contribute to the “big step backward for [your] company”
in number of franchiseesand mail volumesin 1995 and 1996? Pleasediscuss.
Increases in paper prices did contribute to the reduction in franchiseesand mail volumes for our
companyin 1995and 1996. However,MoneyMailer was ableto negotiatewith our paper suppliers
and vendorsto better control the timing and amount of theseprice increases.Money Mailer as the
fkanchisorabsorbedthe cost of paper increasesin its printing and mail preparation pricing structure
andthesepriceswere not passedon to our fknchiseesas additional costs. It is frustrating for us as
a companythat our largestvendor,the United StatesPostalService,can increaseprices in a way that
is unpredictable and uncontrollable. The price increaseof 1995 of more than 14% was passedon
directly to our franchiseesand had the biggest impact on their ability to stay in businessand mail
volumes.
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AISOP WITNESS OTUTEYE RESPONSESTO NAA
NAA/AISOP-Tl-6. Is it in your interestto maintaina viable alternativedelivery option evenif you
do not chooseto use it?
Ifthe point ofthis questionis to suggestthat the rates for the United StatesPostal Serviceshould be
higher than they need to be to help or stimulate the economicviability of the alternate delivery
business,we are not interested. It is our desire to have the United StatesPostal Servicebe an
efficient and effective vendor at affordableprices.
AISOP WITNESS OTUTEYE RESPONSESTO NAA
NAA/AISOP-Tl-7. Do you believe that your customersget a better responserate when their
advertisementsare mailed than when they are deliveredwith a newspaper?
This questioncannot be accuratelyansweredaswritten. You are askingme to make an applesand
orangestype of comparison,The type of advertisementour customersdeliver through Money Mailer
is a geographically targeted, four color coupon. Most newspapersdo not olfer this sametype of
advertising service or product.
Absoluteresponseratesdo not meananything,as such,in advertising. What mattersis the return on
investment to the advertiser, the responsein relationshipto the investment. Even in our own
envelope, a home improvement contractor gets a very different responserate than a hamburger
restaurant. Viewed this way, businessesadvertisein the newspaperbecausethey get an acceptable
rate of return and businessesuse direct mail becausethey get an acceptablerate of return. As
discussedin my testimony,the turnkey,geographicallytargetedadvertisingserviceoffered by Money
Mailer to smallbusinessoften gives local merchantstheir most affordable and most efficient buy for
their advertising dollar. Ever increasing postage rates for the mail diminiishthe return of our
advertiserson their investmentand make it more difficult for smallbusinessto be able to afford to
advertise.
AISOP WITNESS OTUTEYE RESPONSESTO NAA
NAA/AISOP-Tl-8. Are the prices that you chargecustomersusually more or lessthan the prices
chargedto them by newspapers?
Once again, this question cannot be meaningfuIly answered as written. (See my answer to
NAA/AISOP-Tl-7.) What mattersis price per lead or price per order from the ad. Again, I believe
businessesadvertise where they do becausethey find these numbers acceptable. The home
improvementcontractormight be ableto placea classifiedadin a newspaperfor one-tenth of the cost
of a one-zonecoupon in Money Mailer. A four-color insert deliveredwith the ~papermight cost the
same contractor 10 times more than a Money Mailer coupon. Depending on the circulation,
penetration, and readership of the paper, these newspaperadvertising choices may, or may not,
provide acceptableratesof return for the advertiserand be a meaningfitl, competitive choice for the
business.
The point of my testimony remainsthat increasesin postageprices raise the cost per lead for our
clientsandcan havethe affectofdriving businessawayfrom us and the United StatesPostal Service.
CERTIFICATE OF SERVICE
I hereby certify that I have this date servedthe foregoing document on all participants of
record in this proceeding in accordancewith set
February 5, 1998
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